ISA 700 Audit Report (& its Elements) Flashcards
What is the scope of ISA 700?
1Audit Report of, 2Complete Set, 3General Purpose, 4Financial Statements.
[Ref. ISA 700]
List the elements of Audit Report?
- Title
- Addressee
- Opinion
- Basis for Opinion
- Material Uncertainty relating to Going Concern (if relevant)
- “Emphasis of Matter” (if relevant)
- Key Audit Matters
- Other Information and Auditor’s Report Thereon
- Responsibilities of Management and TCWG for the Financial Statements
- Auditor’s Responsibilities for the Audit of the Financial Statements
- Other Reporting Responsibilities
- “Other Matter” Paragraph (if relevant)
- Signature
- Name
- Date of the Auditor’s Report
- Auditor’s Address
[Ref. ISA 700]
What must be title of audit report under ISA 700?
“Independent Auditor’s Report”
[Ref. ISA 700]
Who may be addressee of audit report under ISA 700?
Normally Shareholders, or TCWG. However, some other parties may also be addressee depending on circumstances.
[Ref. ISA 700]
What information must be included in Opinion Paragraph?
Opinion
We have audited the financial statements of ABC Company (the Company), which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at December 31, 20X1, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
[Ref. ISA 700]
What information must be included in Basis for Opinion Paragraph?
Basis for Opinion
(If auditor expresses modified opinion, nature of misstatement/scope limitation will be explained here)
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
[Ref. ISA 700]
In addition to responsibility to obtain reasonable assurance, what other responsibilities are discussed in Auditor’s Responsibility section in audit report under ISA 700?
- Responsibility to communicate TCWG (planned scope and timing of the audit and significant audit findings)
- Responsibility in case of Listed Client (to communicate compliance with ethical requirements and Key Audit Matters to TCWG).
- Responsibility in case of Group Audit.
[Ref. ISA 700]
How many locations ISA 700 specifies to describe auditor’s responsibilities?
- Within the body of the auditor’s report, or
- As an appendix to the auditor’s report, or
- on a website of an appropriate authority, (if expressly permitted by law or regulation).
In case of (b) and (c), reference to the location shall be included in audit report.
[Ref. ISA 700]
How shall auditor draft auditor’s responsibility paragraph if he elects to refer to website of appropriate authority?
Auditor’s Responsibilities for the Audit of the Financial Statements:
Our objectives are to obtain reasonable assurance about ……….
A further description of the auditor’s responsibilities for the audit of the financial statements is located at [Organization’s] website at: [website link].This description forms part of our auditor’s report.
[Ref. ISA 700]
Name two sections in which audit report is divided if local laws also require auditor to report on additional matters?
- “Report on the Audit of the Financial Statements”, and
- “Report on Other Legal and Regulatory Requirements”.
[Ref. ISA 700]
In Pakistan, what are the other matters on which “Statutory Auditor” is required to report?
- Whether proper books of accounts have been kept as required by Companies Act.
- Whether financial statements are drawn up conformity with the Companies Act and are in agreement with the books of account and returns.
- Whether investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company’s business.
- Whether Zakat deductible at source, was deducted by the company and deposited in the Central Zakat Fund
[Ref. ISA 700]
Whose signature shall be placed on audit report?
Audit report shall be signed in the name of audit firm, or in the personal name of auditor or both as appropriate in local jurisdiction.
[Ref. ISA 700]
In which cases, audit report is required to include name of engagement partner?
For listed entities (unless there is significant personal security threat).
[Ref. ISA 700]
Which appropriate authority’s approval is required before signing audit report?
Approval of Board of Directors.
Shareholders’ approval is not required.
[Ref. ISA 700]
Does ISA 700 requires any ordering of elements?
ISAs do not require ordering of elements of audit report, except for Opinion (first) and Basis for Opinion (after opinion) Sections. However, ISAs require use of specific headings.
[Ref. ISA 700]
