3) Conclusion and reporting on engagements Flashcards
Modified audit opinion:
FS are materially misstated
Material AND pervasive
Adverse “F.S do NOT show a T+F view”
Modified audit opinion:
Inability to obtain SAE
Material AND pervasive
Disclaimer of opinion “we do not express an opinion”
Modified audit opinion:
FS are materially misstated or inability to obtain SAE
Material BUT NOT pervasive
Qualified “except for the matter”
Emphasis of matter paragraph
Draws users attention to a matter presented/disclosed in FS
e.g. going concern, material uncertainty in legal case
Other matters paragraph
Draws users attention to a matter presented/disclosed other than in the FS
e.g. directors report, PY FS not audited
Differences between ISRE 2400 (review) and ISAE 3400 (PFI) engagements
ISRE 2400 - historic FI
Reasonable assurance
Aims to reduce risk to a low level
Positive opinion - “In our opinion the financial show a… “
ISAE 3400 - Prospective FI
Limited assurance (narrower in scope)
Aims to reduce risk to an acceptable level
Negative opinion (write out) - “nothing has come to our attention to suggest the assumptions underlying the cash flow forecast ….”
Unmodified opinion
auditor is satisfied that the evidence obtained is sufficient and appropriate and supports the view presented in the financial statements prepared by the company’s management
Report on by exception (CA 06 requirments)
Adequate accounting records not kept,
Limitation of scope - not obtained sufficient evidence necessary for audit,
FS not in agreement with underlying records etc.
Modified opinion (qualified/adverse)
auditor is either not satisfied with the sufficiency or appropriateness of the evidence that has been obtained, compared with what could reasonably be expected, or has issues with the content of the financial statements
Modified audit report
when the auditor makes amendments to a standard audit report (be it due to modifying the audit opinion (other than T+F) or adding additional paragraphs to highlight something to user)
