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Audit Report

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1.)Four Types of Audit Report by Independent Auditors
2.)The Steps to be Done by the Auditors Before They Receive New Engagement With Clients
3.)The Contents Emphasis in the Audit Engagement

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Audit Report

  1. 1. TOPIC TODAY  Four Types of Audit Report by Four Types of Audit Report by Independent Auditors Independent Auditors The Steps to be Done by the Auditors Before They Receive New Engagement With Clients The Steps to be Done by the Auditors Before They Receive New Engagement With Clients The Contents Emphasis in the The Contents Emphasis in the Audit Engagement Audit Engagement NAME : RAFIDAH BINTI YUSUF NO.MATRIC : 38441
  2. 2. INTRODUCTION
  3. 3. True and Fair View True means an accounts must be prepared in accordance with fact and reality. Fair means accounts must not be bias, it should be just and equitable. Accounts will not be true and fair unless the quality and quantity of information is sufficient to satisfy reasonable expectations of the readers to whom they are addressed (stakeholders,banker and etc) .
  4. 4. Four Types of Audit Report by Independent Auditors
  5. 5. Standard Unqualified Audit Report (SUAR) This report only being issued when : All statements are included in the FS No circumstances requiring the addition of explanatory paragraph or modification of wording ISAs have been followed In all respects on the engagement Sufficient evidence has been accumulated FS are presented in accordance with approved accounting standards. Adequate disclosure have been included #International #International SSttaannddaarrdd AAuuddiittiinngg((IISSAAss))
  6. 6. Basic Elements In The SUAR Report 1.)Title. The title used is “auditors report to the shareholders” 2.)Address. The report is addressed to the company,its stakeholder or board of director 3.)Introductory . Indicating the date and the period covered in examining the financial statements by the auditor 4.)Scope paragraph. What the auditor did in the entire audit process
  7. 7. Basic Elements In The SUAR Report 5.)Opinion paragraph.States the auditor’s conclusion/opinion on the results of audit examination. 6.)Auditor’s name 7.)Auditor’s address 8.)Date of the report
  8. 8. Unqualified Audit Report With Explanatory Paragraph or Modified Wording 55 rreeaassoonn wwhhyy aauuddiittoorr’’ss iissssuuaannccee tthhiiss rreeppoorrtt………… 11..))LLaacckk ooff ccoonnssiisstteenntt aapppplliiccaattiioonn ooff aapppprroovveedd aaccccoouunnttiinngg ssttaannddaarrddss 22..))SSuubbssttaannttiiaall ddoouubbtt aabboouutt ggooiinngg ccoonncceerrnn 33..))AAuuddiittoorr aaggrreeee wwiitthh aa ddeeppaarrttuurree ffrroomm pprroommuullggaatteedd aaccccoouunnttiinngg pprriinncciipplleess(aauuddiittoorr bbeerrsseettuujjuu ddggnn ppeenngguummuummaann ddaarrii ppeerruubbhhnn pprriinnssiipp ppeerraakkaauunnaann)) 44..))EEmmpphhaassiiss ooff aa mmaatttteerr 55..))RReeppoorrttss iinnvvoollvviinngg ootthheerr aauuddiittoorrss
  9. 9. The Factor Causes Uncertainty in Going Concern Disclosure l 1.)The significant recurring operating loosssseess oorr wwoorrkkiinngg ccaappiittaall ddeeffiicciieenncciieess 22..))IInnaabbiilliittyy ooff tthhee ccoommppaannyy ttoo ppaayy iittss oobblliiggaattiioonnss aass tthheeyy ccoommee dduuee 33..))LLoossss ooff mmaajjoorr ccuussttoommeerrss,,tthhee ooccccuurrrreennccee ooff uunniinnssuurreedd ccaattaassttrroopphheess ssuucchh aass aann eeaarrtthhqquuaakkee oorr fflloooodd oorr uunnuussuuaall llaabboorr ddiiffffiiccuullttiieess 44..))LLeeggaall pprroocceeeeddiinnggss,,lleeggiissllaattiioonn oorr ssiimmiillaarr mmaatttteerrss tthhaatt hhaavvee ooccccuurrrreedd tthhaatt mmiigghhtt jjeeooppeerrddiizzee tthhee eennttiittyy’’ss aabbiilliittyy ttoo ooppeerraattee
  10. 10. Unqualified Audit Report With Explanatory Paragraph or Modified Wording WWhhyy wwee pprreeppaarree tthhiiss rreeppoorrtt ?? AA ccoommpplleettee aauuddiitt ttooookk ppllaaccee wwiitthh ssaattiissffaaccttoorryy rreessuullttss aanndd ffiinnaanncciiaall ssttaatteemmeennttss pprreesseenntt aa ttrruuee aanndd ffaaiirr vviieeww,, bbuutt tthhee aauuddiittoorr bbeelliieevveess tthhaatt iitt iiss iimmppoorrttaanntt oorr rreeqquuiirreedd ttoo pprroovviiddee aaddddiittiioonnaall iinnffoorrmmaattiioonn aanndd eexxppllaannaattoorryy ppaarraaggrraapphh ttoo rreeccoovveerr tthhee wweeaakknneessss tthhaatt eexxiissttss iinn aauuddiittiinngg rreeppoorrtt ..
  11. 11. Condition to Required a Departure From an Unqualified Audit Report Inherent Uncertainty(ketidakpastian yg wujud) Are situations which might affect the fs and which by their nature rather than by limitations in the scope of the audit, mean that their outcome cannot be objectively or reasonable determined . Eg:Doubts on outcome of a contracts, going concern
  12. 12. Condition to Required a Departure From an Unqualified Audit Report Limitation on the Scope of the Audit Arises when the auditor is not able to obtain for any reason, all the information and explanations which he considers necessary for the audit. Two categories of limitation that is caused by restrictions imposed by the client(sekatan yg dikenakan oleh pelanggan) and those caused by circumstances beyond either the client’s or auditor’s control
  13. 13. Condition to Required a Departure From an Unqualified Audit Report Disagreement(ketidaksetujuan)  Arises in a situations where the auditor is able to form an opinion but the opinion differs from the view expressed by the management in the fs. Circumstances giving rise to disagreement would include:  Non compliance with the provisions of the companies act 1965  Non conformity with approved accounting standards  Disagreement with the facts or amounts included in the fs  Inadequate disclosure of facts or amounts included in the fs
  14. 14. Qualified Audit Report Can arise due to limitations on scope of work or failure to follow approved accounting standards. A qualified report can be used only when the auditor concludes that the overall financial statement s give a true and fair view. In the report, the auditor must use “ except for”
  15. 15. Adverse or Disclaimer Audit Report ADVERSE OPINION Only used when the overall fs are so materially misstated or misleading that they do not present a true and fair view. Normally in the absence of conformity DISCLAIMER OF OPINION Where the auditor has been unable to satisfy himself or herself that the overall fs are fairly presented . Severe limitation on audit scope
  16. 16. The Steps Should be Done by the Auditors Before They Receive New Engagement With Clients
  17. 17. TThhee PPrreelliimmiinnaarryy SStteeppss SShhoouulldd BBee DDoonnee BByy AAuuddiittoorrss BBeeffoorree EEnnggaaggee WWiitthh CClliieennttss 1.) Perform procedures regarding the continuance of the client relationship and the specific audit engagement. 2.) Ensure compliance with independence and ethics requirements, and (Note: The determination of compliance with independence and ethics requirements is not limited to preliminary engagement activities and should be reevaluated with changes in circumstances). 3.) Establish an understanding of the terms of the audit engagement with the audit committee in accordance with Auditing Standard No. 16, Communications with Audit Committees.
  18. 18. The Steps Consideration That Auditor Emphasis Before Engagement With Client is as Illustrated below :
  19. 19. 33 MMaaiinn WWhhyy AAuuddiittoorrss SShhoouulldd PPllaann PPrrooppeerrllyy PPllaann EEnnggaaggeemmeenntt wwiitthh CClliieenntt 1.)To enable auditor to obtain sufficient competent evidence for the circumstances(to minimise legal liability and maintain a good reputation in the business community) 2.)To help audit cost reasonable(helps the firm audit reputation remain competitive) 3.)To aviod misunderstanding with the clients(to have good relation with clients and for faciliate high-work quality at reasonable cost)
  20. 20. The Contents Emphasis in the Audit Engagement
  21. 21. TTHHEE EENNDD

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