Chapter 11

Question 1

standard audit report layour

Answer 1

opinion

basis for opinion

key audit matters

other information

responsibilities of management and those charged with governance

auditors responsibilities for the audit of financial statements

report on other legal and regulatory requirements

signed

Question 2

who should audit communicate with

Answer 2

those charged with governance, usually directors but can be audit committee. should be determined who at the engagement stage

Question 3

process for communicating key audit matters in audit report

Answer 3

communicate to SH’s in audit report before reporting them to those charged with governance

Question 4

3 types of audit report

Answer 4

unmodifed report
modified report with unmodified opinion
modified audit opinions

Question 5

what is the opinion of an unmodified report

Answer 5

unmodified opinion - “true and fair view”

Question 6

what is the opinion of a modified report with an unmodified opinion

Answer 6

emphasis of matter
material uncertainty related to going concern
other matter

Question 7

what opinion for insufficient or inappropriate audit evidence - material but not pervasive

Answer 7

qualified opinion “ except for”

Question 8

what opinion for insufficient or inappropriate audit evidence - material and pervasive

Answer 8

disclaimer of opinion “ do not express an opinion”

Question 9

what opinion for a material misstatement - material but not pervasive

Answer 9

qualified opinion “ except for”

Question 10

what opinion for a material misstatement - material but and pervasive

Answer 10

adverse opinion - “ do not give a true and fair view”

Question 11

examples of emphasis of matter paragraphs

Answer 11

early application of new standards
if a new audit report is issued
uncertainties of future outcomes for example a court case

Question 12

when are emphasis of matter paragraphs used

Answer 12

when something has been adequately disclosed, the auditor just wants to bring more attention to it. the paragraph will say where in the FS there is more detail on it

Question 13

what are other matters for

Answer 13

issues outside the scope of FS

Question 14

Where do you include modifications of the auditors report due to going concern issues

Answer 14

directly after basis for opinion

Question 15

three types of modified opinion

Answer 15

a qualified opinion
an adverse opinion
a disclaimer of opinion

Question 16

definition of pervasive

Answer 16

not confined to specific elements or accounts
if so confined, could represent a substantial portion of the FS
or
are fundamental to users understanding

Question 17

what circumstances could lead to a modification due to a material misstatement

Answer 17

the appropriateness of selected accounting policies
application of accounting policys ( error or inconsistency)
inappropriate or adequacy of disclosures

Question 18

examples of inability to provide sufficient evidence

Answer 18

appointment too late for something like stock take

beyond control of entity such as fire

Question 19

implications of when an auditors opinion is modified

Answer 19

TCWG need to be informed of reason
external consultation with regulators may be necessary
management integrity may need to be questioned
possible withdrawal of engagement