M6 Concluding and reporting

Question 1

What is the legislation relevant to the auditors report?

Answer 1

The main ones are,
- ISA 700R - forming an opinion and reporting on financial statements
- ISA 701 - Communicating key audit matters within the report
- ISA 705R - modifications to opinion in the auditors report
- ISA 720R - “emphasis of matter” and “other matters” paragraphs in the independent auditors report

Question 2

What is are the main sections in order of an auditor’s report?

Answer 2

1. Title
2. Addressee
3. Auditors Opinion (we need to describe the subject matter that was audited and what pages and give our final opinion)
4. Basis for Opinion (here we describe how we conducted our audit (in accordance with rules) and then why we gave the opinion that we did)
5. Material uncertainty related to going concern
6. Emphasis of matter
7. Key audit matters
8. Other information
9. responsibilities of the directors for the financial statements
10. Auditor’s responsibilities for the audit of the financial statements
11. Report on other legal and regulatory requirements
12. name of the engagement partner
13. auditors Signature
14. Auditors Address
15. Date

Question 3

What are the different types of possible Audit opinion and when are they applicable?

Answer 3

• Unqualified Audit opinion
• “financial statements present fairly, in all material respects, the
  consolidated financial position of ABC Limited…”
• when there is no material misstatements found within the financial statements
• Qualified Audit opinion
• “In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion
  section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 20X1”
• due to the auditor being unable obtain sufficient appropriate audit evidence
• Disclaimer of Audit opinion
• “We do not express an opinion on the accompanying financial statements of the Company. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report”
• due to the auditor being unable obtain sufficient appropriate audit evidence
• Qualified Audit opinion
• “In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion
  section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 20X1”
• due to there being a material misstatement
• Adverse Audit opinion
• ‘In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section
  of our report, the accompanying consolidated financial statements do not present fairly the consolidated financial position of the Group as at December 31, 20X1”
• due to there being a material misstatement