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Chapter EighteenReports on Audited Financial Statements

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The Standard Audit Report with an Unmodified Opinion

The standard audit report with an unmodified opinion is issued when the financial statements conform to the

applicable financial reporting framework.

Nine Elements

1. Report title

2. Addressee

3. Introductory paragraph

4. Management’s responsibility

5. Auditor’s responsibility

6. Auditor’s opinion

7. Auditor’s signature

8. Audit report date.

9. Auditor’s address

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The Standard Audit Report with an Unmodified Opinion – Prior ISA 700

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An Emphasis of Matter Paragraph and an Other Matters Paragraph

An emphasis of matter paragraph does not affect the auditor’s

opinion because it can only be included in the audit report if the matter is

presented or disclosed in the financial statements in accordance with the

applicable financial reporting framework.

An other matters paragraph does not affect the auditor’s

opinion because it relates to

matters other than those required to be presented

or disclosed in the financial statements.

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An Emphasis of Matter Paragraph for a Going-Concern Uncertainty

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Emphasis of Matter Paragraphs The matter is both unusual and of fundamental

importance to the user’s understanding of the financial statements.

• Significant uncertainties.

• Significant and unusual related party transactions.

• Early application of a new accounting principle.

• A subsequent event disclosed in the financial statements.

• A matter such as a major catastrophe which is disclosed in a note to the financial statements, that has had, or continues to have, a significant effect on the entity’s business or operations.

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An Emphasis of Matter Paragraph for a Significant Uncertainty

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Other Matters Paragraphs

• Avoidance of auditor association with misleading information in a document containing audited financial statements.

• Matters that provide further explanation of the auditor’s responsibilities in the audit of the financial statements or of the auditor’s report thereon that the auditor may be required or permitted to elaborate on by standards, laws, or generally accepted practice in a jurisdiction.

• In rare and unusual circumstances, other matters that the auditor considers relevant to communicate to the user.

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An Other Matters Paragraph

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Audit Reports with Modification to the Auditor’s Opinion

Qualified

Adverse

Disclaimer

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Conditions of Modification

Scope Limitation

Results from an inability to obtain sufficient appropriate evidence about some component of the

financial statements.

Results when financial statements are materially affected by a

departure from the applicable financial reporting framework.

Departure from the Applicable Financial

Reporting Framework

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Disclaimer of Opinion - Scope Limitation

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Qualified Opinion – Scope Limitation

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18-17Qualified Opinion – Statements not in Accordance with the Applicable Financial Reporting Framework

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18-18Adverse Opinion – Statements not in Accordance with the Applicable Financial Reporting Framework

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Special Reporting Issues

Reports on comparatives.

Other information.

Special reports.

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Reports on Comparatives

Corresponding figures for the prior period are an integral part of the current period financial statements

and are intended to be read in conjunction with the amounts of the current period.

Comparative financial statements are considered separate financial statements and are included for

comparison with the financial statements of the current period.

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Report on Comparative Financial Statements - Unmodified Opinion

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Report on Corresponding Figures – Qualified Opinion

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Other Information in Documents Containing Audited Financial Statements

Annual Reports

The auditor has no responsibility beyond the financial information contained in the report, and he or she has

no obligation to perform any audit procedures to corroborate the other information. However, the auditor

is required to read the other information and consider whether it is consistent with the information contained

in the audited financial statements.

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Report on a Material Inconsistency

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Special Reports

Financial statements prepared on an other

comprehensive basis of accounting.

Components of financial statements.

Compliance with contractual

agreements related to financial statements.

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18-26Financial Statements Prepared on a Other Comprehensive Basis of Accounting to Meet the Needs of Specific Users

Regulatory Basis

Tax Basis

Cash Basis

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In some situations an auditor may be engaged to audit a single financial statement, specified elements, accounts, or items of the financial

statements.

Components of Financial Statements

Financial reporting framework such as

IFRSs

Other comprehensive

basis of accounting (OCBOA)

Basis of accounting prescribed by a

contract or agreement

Basis of Accounting

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Reports on Compliance with Contractual Agreements Related to Audited Financial Statements

1. An auditor may be asked to report on an entity’s compliance with certain contractual agreements related to audited financial statements.

2. The auditor’s report should state whether, in the auditor’s opinion, the entity has complied with the particular provisions of the agreement.

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End of Chapter 18