Audit Reporting Flashcards
General Purpose Financial Statement
Financial statements prepared in accordance with general-purpose framework
Objectives of the Auditor
- Form an opinion on the financial statements based on the evaluation of the conclusions drawn from the audit evidence obtained; and
- To express clearly that opinion through a written report
Formation of Opinion
Take into account the following:
1. Sufficient and appropriate evidence has been obtained
2. Uncorrected misstatements are material
3. Whether FS are prepared in accordance with the requirements of the applicable financial reporting framework
Unmodified or Unqualified Opinion
When: Presented fairly in all material respects in accordance with applicable financial reporting framework.
Phrase Used: Give a true and fair view
Qualified Opinion
When: Presented fairly but have items not presented fairly or insufficient appropriate evidence
Phrase used: Except for
Adverse Opinion
When: Completely negate the representation made by management
Phrase used: Do not present fairly, in all material Respect
Disclaimer of Opinion
When: No opinion is expressed
Phrase: We do not express a conclusion
Basic parts of Auditor’s Report (TAOB-RAON-SAD)
- Title
- Addressee
- Auditor’s Opinion
- Basis of Opinion
- Responsibilities for the Financial Statements
- Auditor’s Responsibilities
- Other Reporting Responsibilities
- Name of Engagement Partner
- Signature of the Auditor
- Auditor’s Address
- Date of the Report
Addressee Type
Corporation- either the shareholders or to those charged with governance.
Partnership- either to partnership and the partners or the partnership
Unincorporate joint venture- To the participants or venturers
Proprietorship- to the proprietor
Third party/ Outside party- Normally addressed to the engaging party
Inclusion in Auditor’s Opinion
- Identify the entity
- State that Financial Statements that have been audited
- Identify the title of each statement comprising the financial statements
- Refer to the notes; and
- Specify the date each financial statements comprising the financial statements
Inclusion in Basis for Opinion
- States that the audit was conducted in accordance with PSA
- Refer to the section of auditor’s report that describes the auditor’s responsibilities
- Includes a statement that auditor is independent of the entity and has fulfilled the auditor’s other ethical responsibilities
- State whether auditor believes that audit evidence is sufficient and appropriate to provide a basis for the auditor’s opinion
Inclusions in Auditors Signature
- License, including secondary licenses
- Tax Identification Number
- Privilege Tax Receipt Number
- Registration number with PRC/BOA
- Accreditation issued by regulatory agencies
Key Audit Matters
Those matters that in the auditor’s professional judgement were of most significance in the audit of the FS of the current period
When should Auditor not communicate key audit matters
- Law or Regulation precludes public disclosure about the matter; or
- The auditor determines that the matter should not be communicated in the auditor’s report because the adverse consequence of doing so would reasonably be expected to outweigh the public interest
When to give a Qualified Opinion
When FS misstatements and inability to obtain sufficient appropriate evidence are material but not pervasive
