SA 700

Question 1

Specific Evaluations by Auditor

Answer 1

• dsiclose - significant a/c policies
• a/c policies - selected & applied - consistent with applicable FRF
• A/C estimate - reasonable
• adequate disclosure - intended user - understand the effect of* info* in FS
• *information *= (CU Re Re) = Comparable,understandable.reliable,relevant
• terminology used in FS - appropriate

Linking words in italics

Question 2

Basic Elements of Auditor’s report

Auditor’s Opinion

Answer 2

• identify the entity
• state that FS are audited
• identify - title
• refer to notes, summary of significant a/c policies
• date or period covered

Question 3

Basic Elements of Auditor’s report

Basis for Opinion

Answer 3

• auditor believes - SAAE - to provide basis for auditor’s opinion
• state - audit in accordance with SA
• refer - section - auditor’s responsibilities
• statement - independent,ethical requirements - fulfilled in accordance with Code of Ethics issued by ICAI.

Question 4

Going Concern

Answer 4

• Going concern basis - inappropriate : adverse opinion
• Use of going concern basis - appropriate - but material uncertainty -
  - disclosed - unmodified opinion & separate section
  - not disclosed - qualified/adverse opinion
• Mgmt unwilling to extend assessment : consider implications on auditor’s report

Question 5

SA 701 - Communicating KAM in Independent Auditor’s Report

What are the objectives?

Answer 5

• enhance communicative value - provide greater transparency
• addl info to intended users- assist intended users to understand areas of significance.

Question 6

Scope of KAM

Answer 6

• not a substitute for Reporting in acc with SA 570
• not a substitute for Disclosures in FS
• not a substitute for a Separate opinion on individual matters
• not a substitute for expressing Modified opinion as per SA 705

RD SharMa

Question 7

Determining KAM

Answer 7

• Significant (auditor+management) Judgements
• areas of higher assessed Risk (SA 315)
• Significant events & Transactions

JRD Tata

Question 8

Audit report when audit is done in acc. with both SA & ISA

Answer 8

• can refer to SA in addition to ISA only if,
  - no conflict between requirements such that auditor has to form a dif. opinion or to not incluide EOM/OM para for aparticular circumstances that is required by SAs.
• minimum elements of audit report prescribed by law or regulation (law or regulation – reference to SAs)
• clearly identify the auditing standards of specific jurisdiction & jurisdiction of origin.