Types of audit report

1. Audit Reports
of
Companies
Classroom Deliberations
CA (Dr) Prithvi Ranjan Parhi
1CA. Dr. Prithvi Ranjan Parhi

2. Corporate Law & Tax Compliances
E-MBA ,DDCE
Unit- 1 INCORPATION OF COMPANY-I
Introduction to Companies act 2013- Important Definitions and Concepts- Formation of company-
Memorandum- articles- Incorporation of Company Government Company- Key Managerial Personnel-
Member- Net Worth- Officer- One Person Company- Private Company- Promoter- Prospectus.
Unit-2 INCORPATION OF COMPANY-II
Public Company-Small Company- Subsidiary Company- Unlimited Company.
Appointment of Directors, Director and Nominee Director- Disqualifications For Appointment- Number of
Directorships- Duties of Directors, Register of Members, Annual General Meetings, Notice of meeting,
Quorum for meetings, Chairman of meetings, Minutes of Meetings
Unit -3 SHARE CAPITAL,AND WINDING UP
Kinds of Share Capital- Voting Rights- Variation of Shareholders. Corporate Social Responsibility,
Circumstances of Winding Up, Legal Aspects of Accounts and Audit
Unit-4 Tax Planning and tax management
Tax evasion-Tax avoidance- Tax Planning- Tax Management- Need for Tax Planning-
Limitations of Tax Planning- Tax Planning for Employees- Tax Planning relating to income from house
property- Tax planning relating to income from business- Tax planning relating to Capital gains –Tax
planning relating to income from other sources.
Unit-5
Introduction to TDS, Introduction to Corporate Returns Introduction of GST and Applications
2CA. Dr. Prithvi Ranjan Parhi

3. Unit-3
E-MBA ,DDCE
Unit -3 SHARE CAPITAL,AND WINDING UP
Kinds of Share Capital-
Voting Rights-
Variation of Shareholders.
Corporate Social Responsibility,
Circumstances of Winding Up,
Legal Aspects of Accounts and Audit
3CA. Dr. Prithvi Ranjan Parhi

4. Chapter- X
Audit & Auditors
Sec Contents
139 Appointment of Auditors
140 Removal, resignation of auditor and giving of special notice.
141 Eligibility, qualifications and disqualifications of auditors.
142 Remuneration of auditors.
143 Powers and duties of auditors and auditing standards.
144 Auditor not to render certain services
145 Auditor to sign audit reports
146 Auditors to attend general meeting
147 Punishment for contravention
148 Central Govt to specify audit of Items of cost in respect of certain
companies
4CA. Dr. Prithvi Ranjan Parhi

5. Types of Audit Report
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6. Unmodified opinion
• The opinion expressed by the auditor when the
auditor concludes that the financial statements
are prepared, in all material respects, in
accordance with the applicable financial
reporting framework.
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7. Financial reporting framework
• A financial reporting framework designed to
meet the common financial information needs
of a wide range of users.
• It ensures
1. Fair presentation
2. Compliances
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8. General purpose framework
• A financial reporting framework designed to meet the common financial
information needs of a wide range of users.
• The financial reporting framework may be a fair presentation
framework or a compliance framework.
• The term “fair presentation framework” is used to refer to a financial
reporting framework that requires compliance with the requirements of
the framework and:
– (i) Acknowledges explicitly or implicitly that, to achieve fair presentation of
the financial statements, it may be necessary for management to provide
disclosures beyond those specifically required by the framework; or
– (ii) Acknowledges explicitly that it may be necessary for management to
depart from a requirement of the framework to achieve fair presentation
of the financial statements. Such departures are expected to be necessary
only in extremely rare circumstances.
• The term “compliance framework” is used to refer to a financial
reporting framework that requires compliance with the requirements of
the framework, but does not contain the acknowledgements in (i) or (ii)
above.
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9. Modified Opinion
• If the auditor:
• (a) concludes that, based on the audit evidence
obtained, the financial statements as a whole are
not free from material misstatement; or
• b) is unable to obtain sufficient appropriate audit
evidence to conclude that the financial statements
as a whole are free from material misstatement,
• the auditor shall modify the opinion in the
auditor’s report in accordance with SA 705.
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10. SA 705: Types of Modified Opinions
• SA 705 establishes three types of modified opinions, namely,
– a qualified opinion,
– an adverse opinion, and
– a disclaimer of opinion.
• The decision regarding which type of modified opinion is
appropriate depends upon:
• (a) The nature of the matter giving rise to the modification,
that is, whether the financial statements are materially
misstated or, in the case of an inability to obtain sufficient
appropriate audit evidence, may be materially misstated; and
• (b) The auditor’s judgment about the pervasiveness of the
effects or possible effects of the matter on the financial
statements.
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11. Determining the Type of Modification to the Auditor’s Opinion
Qualified Opinion
• 7. The auditor shall express a qualified opinion when:
• (a) The auditor, having obtained sufficient appropriate
audit evidence, concludes that misstatements, individually
or in the aggregate, are material, but not pervasive, to the
financial statements;
or
• (b) The auditor is unable to obtain sufficient appropriate
audit evidence on which to base the opinion, but the
auditor concludes that the possible effects on the financial
statements of undetected misstatements, if any, could be
material but not pervasive.
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12. Adverse Opinion
• The auditor shall express an adverse opinion
when the auditor, having obtained sufficient
appropriate audit evidence,
• concludes that misstatements,
• individually or in the aggregate,
• are both material and pervasive to the financial
statements.
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13. Disclaimer of Opinion
• The auditor shall disclaim an opinion when the auditor is unable
to obtain sufficient appropriate audit evidence on which to base
the opinion,
and
• the auditor concludes that the possible effects on the financial
statements of undetected misstatements, if any, could be both
material and pervasive.
• The auditor shall disclaim an opinion when, in extremely rare
circumstances involving multiple uncertainties, the auditor
concludes that, notwithstanding having obtained sufficient
appropriate audit evidence regarding each of the individual
uncertainties, it is not possible to form an opinion on the financial
statements due to the potential interaction of the uncertainties
and their possible cumulative effect on the financial statements.
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14. Unmodified Opinion
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15. Qualified or Adverse ?
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16. Disclaimer or Qualified
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17. Basis for Modification Paragraph
• When the auditor modifies the opinion on the
financial statements, the auditor shall, in addition
to the specific elements required by the SA 700
(Revised), include a paragraph in the auditor’s
report that provides a description of the matter
giving rise to the modification.
• The auditor shall place this paragraph
immediately before the opinion paragraph in the
auditor’s report and use the heading “Basis for
Qualified Opinion”, “Basis for Adverse Opinion”,
or “Basis for Disclaimer of Opinion”, as
appropriate.
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19. Other Reporting Responsibilities
• If the auditor addresses other reporting
responsibilities in the auditor’s report on the
financial statements that are in addition to the
auditor’s responsibility under the SAs to report
on the financial statements, these other
reporting responsibilities shall be addressed in a
separate section in the auditor’s report that shall
be sub-titled “Report on Other Legal and
Regulatory Requirements,” or otherwise as
appropriate to the content of the section.
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20. Emphasis of Matter paragraph
• A paragraph included in the auditor’s report
that refers to a matter appropriately
presented or disclosed in the financial
statements that, in the auditor’s judgment, is
of such importance that it is fundamental to
users’ understanding of the financial
statements.
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21. Requirements
• Emphasis of Matter Paragraphs in the Auditor’s Report
• If the auditor considers it necessary to draw users’
attention to a matter presented or disclosed in the
financial statements that, in the auditor’s judgment,
is of such importance that it is fundamental to users’
understanding of the financial statements, the
auditor shall include an Emphasis of Matter
paragraph in the auditor’s report provided the
auditor has obtained sufficient appropriate audit
evidence that the matter is not materially misstated
in the financial statements.
• Such a paragraph shall refer only to information
presented or disclosed in the financial statements.
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22. Key Audit Matters (KAM)
• Key audit matters are those matters that, in the
auditor’s professional judgment, were of most
significance in the audit of the financial
statements of the current period.
• Key audit matters are selected from matters
communicated with those charged with
governance.
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23. Other Matter paragraph
• A paragraph included in the auditor’s report
that refers to a matter other than those
presented or disclosed in the financial
statements that, in the auditor’s judgment, is
relevant to users’ understanding of the audit,
the auditor’s responsibilities or the auditor’s
report.
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24. Auditor to sign audit reports (145)
• The person appointed as an auditor of the company shall
sign the auditor’s report or sign or certify any other
document of the company in accordance with the provisions
of sub-section (2) of section 141, and the qualifications,
observations or comments on financial transactions or
matters, which have any adverse effect on the functioning of
the company mentioned in the auditor’s report shall be read
before the company in general meeting and shall be open to
inspection by any member of the company.
Bhubaneswar
7 June 2020 24© CA. Prithvi Ranjan Parhi

25. Signature of the Auditor
• The auditor’s report shall be signed. (Ref: Para. A36)
• Date of the Auditor’s Report
• The auditor’s report shall be dated no earlier than the date on which the
auditor has obtained sufficient appropriate audit evidence on which to
base the auditor’s opinion on the financial statements, including
evidence that:
• (a) All the statements that comprise the financial statements, including
the related notes, have been prepared; and
• (b) Those with the recognised authority have asserted that they have
taken responsibility for those financial statements.
• Place of Signature
• The auditor’s report shall name specific location, which is ordinarily the
city where the audit report is signed.
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