Auditor report Flashcards
What is Emphasis of matter
s used by a practitioner when it is necessary to draw the users’ attention to a matter presented or disclosed in the financial statements that is, according to the practitioner’s judgment, fundamental to the users’ understanding of the financial statements
Reasons for an emphasis of matter
• an uncertainty relating to the future outcome of exceptional litigation or regulatory action • a significant subsequent event that occurs between the date of the financial statements and the date of the auditor’s report • early application of a new accounting standard that has a material effect on the financial statements • a major catastrophe that has had, or continues to have, a significant effect on the entity’s financial position
Auditor report components
Title: Independent auditor’s report
To: The Board of Directors of XXY Company Opinion Basis for opinion
Optional: Material Uncertainty related to going concern
Optional: Key Audit Matters Other Information
Responsibilities of Management and those charged with governance
Auditor’s responsibilities for the audit of consolidated financial statements
CAS 705Modifications to the Opinion in the Independent Auditor’s Report
“the auditor shall modify the opinion in the auditor’s report when …the auditor is unable to obtain sufficient appropriate audit evidence to conclude that the financial statements as a whole are free from material misstatement.”
Possible modified opinions to the audit report
a qualified opinion: The auditor shall express a qualified opinion when… the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive. a disclaimer of opinion: The auditor shall disclaim an opinion when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive. an adverse opinion: The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.
Qualified Opinion audit report wording
in the auditor’s opinion, except for the effects of the matter(s) described in the Basis for Qualified Opinion section When reporting in accordance with a fair presentation framework, the accompanying financial statements present fairly, in all material respects in accordance with accounting framework.
Adverse Opinion audit report wording
in the auditor’s opinion, because of the significance of the matter(s) described in the Basis for Adverse Opinion section When reporting in accordance with a fair presentation framework, the accompanying financial statements do not present fairly in accordance with accounting framework.
Disclaimer of Opinion audit report wording
State that the auditor does not express an opinion on the accompanying financial statements; State that, because of the significance of the matter(s) described in the Basis for Disclaimer of Opinion section, the auditor has not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements Amend the statement required by paragraph 24(b) of CAS 700, which indicates that the financial statements have been audited, to state that the auditor was engaged to audit the financial statements.
Types of Modified Opinions matrix
Misstatements that would require a modified opinion can be because of:
(a) The appropriateness of the selected accounting policies;
(b) The application of the selected accounting policies; or
(c) The appropriateness or adequacy of disclosures in the financial statements.
