Reporting Flashcards
What does pervasive mean?
Affects more than one line in the FS or affects a substantial portion (>50% of the benchmark)
What opinion if the issue is not material?
Unmodified opinion with ‘FS show a true and fair view’ wording
What opinion if the issue is material and the FS contain material misstatement?
If not pervasive:
- qualified opinion with ‘except for’ wording with a basis for qualified opinion paragraph afterwards
If pervasive:
- adverse opinion with ‘FS do not show true and fair view’ wording with basis for adverse opinion afterwards
What opinion if the issue is material but the auditor is unable to obtain sufficient appropriate evidence?
If not pervasive:
- qualified opinion with ‘except for’ wording with a basis for qualified opinion paragraph afterwards
- and report by exception paragraph stating that the firm is unable to obtain necessary information
If pervasive:
- disclaimer of opinion with a basis for disclaimer of opinion paragraph afterwards
- and report by exception paragraph stating that the firm is unable to obtain necessary information
What opinion if the going concern assumption is appropriate but material uncertainty does not exist?
include ‘conclusions relating to going concern’ paragraph
What opinion if the going concern assumption is appropriate, material uncertainty exists but a disclosure has been made?
- unmodified opinion with ‘FS show a true and fair view’ wording
- and a material uncertainty related to going concern paragraph
What opinion if the going concern assumption is appropriate, material uncertainty exists but a disclosure has not been made?
If not pervasive:
- qualified opinion with ‘except for’ wording and basis for qualified opinion paragraph afterwards
If pervasive:
- adverse opinion with ‘FS do not give a true and fair view’ wording and a basis for adverse opinion paragraph afterwards
What opinion if the going concern assumption is not appropriate and the FS have been prepared on a breakup basis?
- unmodified opinion with ‘FS show a true and fair view’ wording
- emphasis of matter paragraph
What opinion if the going concern assumption is not appropriate and the FS have not been prepared on a breakup basis?
If pervasive:
- adverse opinion with ‘FS do not give a true and fair view’ wording and basis for adverse opinion paragraph afterwards
What is an emphasis of matter paragraph used for?
Rule:
- matter correctly accounted for in the FS AND
- fundamental to users understanding
e.g.
major catastrophe that has had a significant impact on the FS
uncertainty relating to outcome of exceptional litigation action
What is material uncertainty related to going concern paragraph?
material uncertainty adequately disclosed in notes to the FS
What is other matter paragraph?
Rule:
- matter outside the FS AND
- relevant to users understanding
e.g.
prior year FS not audited/audited by another auditor
auditors report is intended solely for the intended user
What is a key audit matter paragraph?
FOR LISTED CLIENTS ONLY!
Purpose:
- to describe the matter most significant to the audit, must not contain mistake in the FS
How to qualify:
- higher risk of material misstatement or
- signficiant auditors judgement or
- significant event
What to include in paragraph:
- what the key audit matter is
- why the matter is a key audit matter and
- how the auditor audited the key audit matter
What is other information paragraph?
Purpose:
- to descrbe the auditors responsibility for other information and the outcome of fulfilling the responsibility
Responsibility of auditor:
- to read the other information to identify any material inconsistency between other information and FS or auditors knowledge
If inconsistency:
- if FS wrong - modify opinion if directors wont adjust
- if other information wrong - state mistake in other information paragraph if directors wont adjust
What is opinion on other matters prescribed by Companies Act 2006?
Purpose:
To express an opinion as to:
- whether the info in the directors report/strategic report is consistent with the FS
