This document summarizes various audit reporting standards and bulletins. It includes examples of unmodified audit reports, modified reports that include disagreements, uncertainties and scope limitations, as well as emphasis of matter and other matter paragraphs. It also discusses auditor responsibilities in relation to listed company reporting and reviews of financial statements.

1. AUDIT REPORT STANDARDS / BULLETINS
 ISA 700 (DEC 04)– THE AUDITOR’S REPORT ON F.S.
 DRAFT ISA 700 (JULY 05) – UNMODIFIED REPORTS
 DRAFT ISA 705 (APRIL 05) - MODIFIED ( EXCEPT EMPHASIS
OF MATTER)
 DRAFT ISA 706 (APRIL 05)– EMPHASIS OF MATTER /
OTHER REPORTS
 DRAFT APB BULLETIN 2005/4 (NOV 05)– E.G.’S OF UK
REPORTS UNDER SAS’S 700,705,706 ( SUPERCEEDED)
 DRAFT BULLETIN 2006/06 (SEPT 06) – UPDATED AS NEED
TO REPORT ON CONSISTENCY OF DIRECTORS’ REPORT

2. AUDITOR’S REPORTS ON F.S.
DRAFT APB BULLETIN 2006/6 E.G.3
(UNLISTED/INDIVIDUAL A/CS)
Independent Auditors’ Report to Shareholders of XYZ Ltd
We have audited the fin statements of … for the y/e ….which
comprise P/L ,B/S,Cash Flow Statement,STRGL and the related
notes.These fin. statements have been prepared under the a/c
policies set out therein.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report and
the financial statements in accordance with applicable law and
UK A/c standards are set out in the Statement of Directors’
Responsibilities.
Our responsibility is to audit the fin. statements in accordance with
relevant legal and regulatory requirements and ISA’s (UK & Ire).

3. AUDITOR’S REPORTS ON F.S.
DRAFT APB BULLETIN 2006/6 E.G.3
(UNLISTED/INDIVIDUAL A/CS)
Respective responsibilities of directors and auditors (cont’d)
We report to you our opinion as to whether the F/S give a T/F view
and are properly prepared etc re the Coys Act 1985.
We also report to you whether in our opinion the info given in the
Directors’ Report is consistent with the F.S.
In addition we also report to you ….(exception reporting items) .
We read other info in the Annual Report, and consider if it is
consistent with the audited F.S. This other info comprises ….
Our responsibilities do not extend to any other information .

4. AUDITOR’S REPORTS ON F.S.
DRAFT APB BULLETIN 2006/ E.G.3
Basis of audit opinion
We conducted our audit in accordance with ISA’s on Auditing (UK
& Ire). An audit includes an examination on a test basis etc
Opinion
In our opinion:
 the F.S. give a T/F view, in accordance with UK GAAP, of the
state of the company’s affairs as at …. and of its profit (loss) for
the year then ended;and
 the F.S. have been properly prepared in accordance with the
Companies Act 1985
 the information given in the Directors’ Report is consistent
with the financial statements.
Registered auditors Address
Date

5. AUDIT QUALIFICATIONS
Problem Material Pervasive
Disagreement “Except” “Adverse”
Uncertainty –
Scope “ Except” “Disclaimer”

6. E.G. 7 DISAGREEMENT - EXCEPT
Disagreement re accounting treatment
Included in debtors shown on the B/S is an amount of
£Y due from a company which has ceased trading .
XYZ plc has no security for this debt. In our opinion
the company is unlikely to receive any payment and
full provision of £Y should have been made,reducing
profit before tax and net assets by that amount.
Except for the absence of this provision, in our opinion
etc …

7. E.G. 10 ADVERSE OPINION
As more fully explained in note ….no provision has
been made for the losses expected to arise on
certain long term contracts currently in progress, as
the directors consider that such losses should be off-
set against amounts recoverable on other long-term
contracts. In our opinion, provision should have been
made for foreseeable losses on individual contracts
as required by SSAP 9 . If losses had been so
recognised the effect would have been to reduce
profit and contract WIP at 31 Dec 2002 by £…
In view of the failure to provide for the losses referred to
above, in our opinion the financial statements do not
give a true and fair view etc

8. E.G 8: SCOPE LIMITATION - EXCEPT
(Basis of opinion – excerpt)
….However,the evidence available to us was limited
because £…. of the company’s recorded turnover
comprises cash sales over which there was no
system of control on which we could rely for the
purposes of our audit
Except for any adjustments that might have been found
to be necessary had we been able to obtain sufficient
evidence concerning cash sales, in our opinion etc

9. E.G. 9 DISCLAIMER
(Basis of opinion – excerpt)
….However,the evidence available to us was limited
because we were appointed auditors on …. And in
consequence were unable to carry out auditing
procedures to obtain adequate assurance re stock
and WIP appearing in the B/S at £……
Because of the possible effect of the limitation in
evidence available to us ,we are unable to form an
opinion as to whether the financial statements give a
true and fair view of the …… etc

10. DRAFT ISA 706 - EMPHASIS OF MATTER/
OTHER MATTER PARAGRAPHS
Distinction between "emphasis of matter”/
“other matter” reports
 Emphasis of matter - when matter of
fundamental importance to F.S and unusual.
 OM – when referring to matters other than
those in the F.S. e.g. director’s report or
chairman’s statement (ED ISA 706 E.G. 1)

11. “EMPHASIS OF MATTER” SITUATIONS
(OTHER THAN GOING CONCERN)
 Significant uncertainties e.g. litigation
 Significant and unusual RP transactions
 Subsequent event disclosed in F.S.
 Major catastrophe , which is disclosed but
continues to have a significant impact on
business

12. REVIEW OF FINANCIAL REPORTS –
ISRE 2400 (ISA 910)
 Obtain an understanding of the business
 Enquiries re a/c practices,a/c records and
procedures re summarising info for report
 Enquiries re material assertions in report
 Analytical procedures – budgets/prior periods
 Negative opinion
 Moderate assurance

13. UNQUALIFIED REVIEW REPORT
REVIEW REPORT TO
We have reviewed the B/S ,P&L and cash flows of ABC Ltd
for the year ended ….
We conducted our review in accordance with the ISA applicable to
review engagements.This standard requires that we plan &
perform the review to obtain moderate assurance as to whether
the F/S are free of material misstatement. A review is limited
primarily to enquiries of personnel and analytical procedures
and thus provides less assurance than an audit.
Based on our review, nothing has come to our attention etc

14. SAS 610 COMMUNICATION OF AUDIT
MATTERS TO THOSE CHARGED WITH
CORPORATE GOVERNANCE
Those charged with governance include the
directors,partners,proprietors,management
committee
Listed company
Auditors disclose in writing to audit committee:
 Relationships with client entity /related
entities relevant to independence
 Related safeguards in place
 Confirm firm independent / staff objective

15. SAS 610 ( CONT’D)
Auditors should communicate:
 Expected modifications to the auditors’ report
 Unadjusted misstatements
 Material weaknesses in internal control
 Views re qualitative aspects of a/c & fin
reporting
 Any other relevant matters

16. SMALL COMPANY AUDIT PROBLEMS
 Simple book-keeping and accounting controls
 Emphasis on personal participation by
management – opportunity to override
controls
 Easy access by staff to assets
 Informal procedures of
reporting,analysis,planning and control
 Accountancy services etc often provided by
auditor (when regulations permit)

17. CHARITIES – INTERNAL CONTROLS
 Cash Donations – numbered/sealed tins,2 people
count
 Postal Receipts – 2 people / post list
 GAD’s – follow-up o/s amounts / reconcile to tax
repayments
 Legacies – correspondence files retained / follow up
o/s legacies
 Fund raising activities – records maintained / receipts
for cash takings / 2 people count

18. CHARITIES – AUDIT WORK
Substantive tests designed to check:
 Incompleteness of income
 Overstatement of expenses / grants
 Misanalysis or misuse in application of funds
 Misstatement or omission of assets
 Appropriateness of a/c policies e.g. income
gross / accruals basis

19. APB BULLETIN 2001/2
WORDING OF AUDITORS’ REPORTS
(LISTED)
Independent Auditors’ Report to the Shareholders of XYZ Plc
(Extracts)
We have audited the financial statements etc
Respective responsibilities of directors and auditors
The directors’ responsibilities etc
Our responsibility is to audit the fin.statements in accordance with
relevant legal and regulatory requirements,UK standards and
the Listing Rules of the FSA.
We report to you etc……info specified by law or Listing Rules re
directors’ remuneration and transactions with the company.

20. APB BULLETIN 2001/2 WORDING OF
AUDITORS’ REPORTS (LISTED- CONT’D)
We review whether the Corporate Governance
Statement reflects the company’s compliance with
the seven provisions of the Combined Code specified
for our review by the Listing Rules, and we report if it
does not. We are not required to consider whether
the board’s statements on internal control cover all
risks and controls,or form an opinion on the
effectiveness of the company’s (group’s) corporate
governance procedures or its risk and control
procedures.
We read other info contained in the Annual Report and
consider whether it is consistent etc

21. APB BULLETIN2001/1 THE ELECTRONIC
PUBLICATION OF AUDITORS’ REPORTS
1)Where it is not possible to use page no.s to identify the location
of parts of fin info on a web site – the report should specify the
location/ description in another way.
2) Possible footnotes to report re integrity of web site / legislation
 The maintenance and integrity of the XYZ plc website is the
directors’ responsibility;the work carried out by the auditors does
not involve consideration of these matters,and accordingly, the
auditors accept no responsibility for any changes that may have
occurred to the fin. statements since they were initially
presented on the website.
 Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.

22. APB BULLETIN 2001/2 REVISIONS TO THE
WORDING OF AUDITORS’ REPORTS
(UNLISTED)
Independent Auditors’ Report to Shareholders of XYZ Ltd
We have audited the fin statements of … for the y/e ….which
comprise P/L ,B/S,Cash Flow Statement,STRGL and the related
notes.These fin. statements have been prepared etc
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report and
the financial statements in accordance with applicable law and
UK A/c standards are set out in the Statement of Directors’
Responsibilities.
Our responsibility is to audit the fin. statements in accordance with
relevant regulatory requirements and UK standards. We also
report to you ….(exception reporting items) Our responsibilities
do not extend to any other information.

23. APB BULLETIN 2001/2 REVISIONS TO THE
WORDING OF AUDITORS’ REPORTS
(UNLISTED)
Basis of audit opinion
We conducted our audit in accordance with international
auditing standards etc
We planned and performed our audit so as to obtain all
the info & explanations etc
Opinion
In our opinion the financial statements. give a true and
fair view of the state of the company’s affairs as at
and of its profit for the year then ended and have
been properly prepared in accordance with the
Companies Act 1985.
Registered auditors /Date Address

24. AUDITOR’S REPORTS ON F.S.
DRAFT APB BULLETIN 2005/4 (UNLISTED)
Independent Auditors’ Report to Shareholders of XYZ Ltd
We have audited the fin statements of … for the y/e ….which
comprise P/L ,B/S,Cash Flow Statement,STRGL and the related
notes.These fin. statements have been prepared etc
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report and
the financial statements in accordance with applicable law and
UK A/c standards are set out in the Statement of Directors’
Responsibilities.
Our responsibility is to audit the fin. statements in accordance with
relevant regulatory requirements and ISA’s (UK & Ire). We also
report to you ….(exception reporting items) . We read other info
in the Annual Report, and consider if it is consistent with the
audited F.S. This other info comprises …. Our responsibilities
do not extend to any other information.

25. AUDITOR’S REPORTS ON F.S.
DRAFT APB BULLETIN 2005/4 (UNLISTED)
Basis of audit opinion
We conducted our audit in accordance with ISA’s on Auditing (UK
& Ire). An audit includes an examination on a test basis etc
Opinion
In our opinion:
 the F.S. give a T/F view, in accordance with UK GAAP, of the
state of the company’s affairs as at …. and of its profit (loss) for
the year then ended;and
 the F.S. have been properly prepared in accordance with the
Companies Act 1985
Registered auditors Address
Date