ISA 700: Audit Opinion and Report

Question 1

Subject of ISA 700.

Answer 1

1. Elements of Audit report.

2. Impact on audit report in different situations.

Question 2

What is the first type of question that could be asked in ISA 700 question.

Answer 2

Audit report will be given and examiner would ask to identify the mistake/deficiency in the report.
Tip: learn the Audit report.

Question 3

What is the second type of question that could be asked in ISA 700 question,.

Answer 3

The examiner would give a scenario and would ask the impact on the audit report.

Question 4

What are the scenarios that could be given in a ISA 700 question.

Answer 4

1. Detection of a misstatement.
2. Going concern issue.
3. Legal case filed against the company.
4. Evidence not available.
   Above are the few examples of scenarios that could be given in the question relating to ISA 700.

Question 5

What is the third type of question that could be asked in ISA 700 question

Answer 5

Situation will be given and the examiner would ask to draft the section (relating to scenario) of audit report.

Question 6

What is the first element of Audit Report?

Answer 6

1. The title of audit report. ie;
   INDEPENDENT AUDITOR’S REPORT.
   Independent is important here as it shall not be confused with internal auditor’s report and signifies that the auditor is independent of the company.

Question 7

What is the second element of the audit report and what are its types.

Answer 7

2nd element is Addressee as appropriate.
Type:
1. In case of statutory audit the addressee is shareholder/members.
2. In other case of special audit it can be a bank, director/management, investor as appropriate.

Question 8

What is third element of audit report and draft it.

Answer 8

Third element is Auditor's opinion. 
Draft:
We have AUDITED the FINANCIAL STATEMENTS* of COMPANY XYZ LTD(name) for the year ended YY.(date). 
1.SOFP
2.SOCI
3.SOCIE
4. CASH FLOW statement
5.notes to the account
Then the main opinion. 
                   XXX

Question 9

What are the types of opinion?

Answer 9

1. Modified opinion

2. Unmodified opinion

Question 10

What’s the basis of opinion in case of unmodified opinion?

Answer 10

1. We have conducted audit in accordance with ISA’s
2. We have remained independent as per the requirements of code of ethics.
3. We have obtained sufficient (quantity) and appropriate (quality) audit evidence.

Question 11

What is the basis of audit opinion if the opinion is modified due to misstatement?

Answer 11

The nature of misstatement.

Question 12

What is the basis of audit opinion if the opinion is modified due to non availability of audit evidence?

Answer 12

Nature of scope limitation.

Question 13

What is the fourth element of audit report?

Answer 13

Basis of Opinion.

Question 14

What is the 5th element of audit report?

Answer 14

MATERIAL UNCERTAINTY RELATING TO GOING CONCERN
eg;
Financial issues
Company losses
It's a CONDITIONAL paragraph.

Question 15

What is the 6th element of audit report?

Answer 15

EMPHASIS MATTER PARAGRAPH.
it’s a conditional paragraph included in audit report if;
1. The matter is disclosed in notes to F/S.
2. And in auditor’s judgement it is necessary to draw shareholder attention toward this matter for better understanding of F/S.
Eg;
Legal case against company disclosed in notes to F/S. IAS-37.