Audit Report

Question 1

Emphasis of matter paragraph situations?

Answer 1

-Material uncertainty relating to exceptional litigation
-significant subsequent event
-major disaster significantly effects F/s
-financial reporting framework is unacceptable
-Special reporting framework

Question 2

Emphasis of matter paragraph placement?

Answer 2

After basis of opinion
Depend when KAM given

Question 3

Other matter situations?

Answer 3

-when F/S of prior period werent audited or audited by other auditor (initial audit)
-when audit reports on more than one sets of F/S
-when auditor restricts distribution of auditor report
-if there is scope limitation imposed by management whose effect is pervasive and it is not possible to withdraw from engagement

Question 4

Going concern definition

Answer 4

If there are events/conditions casting doubts on going concern, auditor shall perform procedures to confirm nd report whether going concern assumption is appropriate or material uncertainty exists.

Question 5

Procedures to identify material uncertainty in going concern?

Answer 5

-evaluate managements plan for future action
-cash flow forecast
-effect of subsequent events on going concern
-minutes, loan agreements latest available financial information
-inquire legal council
-confirm existence and adequacy of borrowing facilities

Question 6

Implications on report if going concern is appropriate

Answer 6

Unmodified opinion + KAM on event/conditions

Question 7

Implications on report if going concern is appropriate but material uncertainty exists that is disclosed in f/s

Answer 7

Unmodified opinion + material uncertainty relating to going concern para

Question 8

Implications on report if going concern is appropriate hut material uncertainty exists which is not disclosed

Answer 8

Misstatement- qualified or adverse opinion

Question 9

Implications on report if going concern is not appropriate and F/s prepred on going concern basis

Answer 9

Misstatement ( effect is pervasive ) so adverse opinion

Question 10

Implications on report if going concern is not appropriate but F/S prepared as non going concern basis

Answer 10

Unmodified opinion + emphasis of matter

Question 11

When is Key audit matter section in report is required

Answer 11

Required for listed Co except when disclaimer of opinion is given
Optional in unlisted co but necessary if public interest entity

Question 12

Situations of key audit matter

Answer 12

-Revaluation/impairments of tangible nd intangible fixed assets
-changes in frameworks or policies
-acquisition,disposal,restructuring of business
-deferred tax, pensions, gratuity
-use of expert/component auditor
-tax contingencies
-significant related party transaction