Module 22 Audit Process: Reporting Flashcards
What does ISA (UK) 700 require for an audit report?
13 basic elements must be included
- Title
- Addressee
- Auditors opinion
- Basis for opinon
- Conclusions (going concern)
- Irregularities
- Other information
- Other responsibilities
- Responsibilties of managment
- Auditors resposnsibilites
- Signiture of auditor
- Adress of auditor
- Date of audit report
What two additional sections are required for listed entities and public entities
- Key audit matters
- Name of engagment partner (Listed entities only)
What does ISA (UK) 701 require?
The audit to include additional disclosures regarding key audit matters
How to decide a key audit matter?
- Matters judged to have higest risk of material misstatment
- Significant auditor judgments
- Effect of significant events or transactions
Each key audit matter should include what in the report?
- Description on why the matter is one of the most siginificant
- How the matter was adressed
- Any related disclosures
Unmodified opinion
Issued when in the auditors opinion the accounts give a true and fair reflection
Modified opinion
Issued when in the auditors opinion, the accounts do not give and true and fair view or cannot form an opinion
What does ISA (UK) 705 identify
Three different forms of modified audit opinion
What are the two circumstances that would give rise to a modified opinion?
- Financial statments not free from material misstaments
- Auditor not able to obtain sufficent apporite evidence (limitation of scope)
What is considered pervasive
- Not confined to specific elements
- Represent a substantial portion
- Disclosures are fundemental to users understanding of financial statments
Audit opinion if material misstatment in the financial statments
Qualified
Audit opinion if pervasive misstatment in the financial statments
Adverse
Audit opinion if material limitation on scope
Qualified
Audit opinion if pervasive limitation on scope
Disclaimer
What should an auditor do in modified report
- Amend the heading of the opinion
- Give reason for modification
- Quantify the effect
Impact of going concern on audit opinion
Going concern is pervasive
What are the requirements of ISA (UK) 720?
Auditor to read all other information and request managment resolve discrepancies
Material inconsistency
Material contradiction between the information contained in the financial statments and information contained elsewhere in the annual report
Auditor is required to state what in the strategic report and directors report
- The information is consistent with the accounts
- Prepared in accordance with legal requirements (CA 2006)
What two reporting requirements extend the auditors resposibilites for UK listed companies
- Directors renumeration reports
- Corporate governance statments
What reporting requirement extend the auditors resposibilites for SEC compnaies
- Due to SOX, section 404 report is required
- The auditor must attest to the and report on the 404 report
Auditors requirments regarding standalone strategic report with supplementary information
- Not required to make a statment but must check consistency with the strategic report
Auditors requirments regarding preliminary annoucnment
- Should be agreed with the auditor
- If modification is required this should be incluced
Auditors requirments regarding Half-yearly Financial report
- Companies choice to have them reviewed or audited
- Normally only reviewed
