ISA 700-705 provide guidance on audit reporting and the four main types of audit reports. An unqualified report is issued when the auditor concludes that the financial statements are prepared in accordance with the applicable financial reporting framework. A qualified report is issued when the auditor concludes there is a material misstatement that is not pervasive or the auditor was unable to obtain sufficient evidence. An adverse opinion is issued when the auditor concludes there are material and pervasive misstatements. A disclaimer of opinion is issued when the auditor is unable to obtain sufficient evidence to form an opinion on the financial statements as a whole.
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
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
INTERNATIONAL STANDARD ON AUDITING 200 (REVISED)
OVERALL OBJECTIVES OF THE INDEPENDENT AUDITOR AND THE
CONDUCT OF AN AUDIT IN ACCORDANCE WITH INTERNATIONAL
STANDARDS ON AUDITING
SA 706," Emphasis of Matter Paragraph and Other Matter Paragraph in the Indep...Dipendra Prasad Poudel
The very precise presentation regarding SA 706. It was prepared for technical session of Article Assistants in N.Kochhar and Co ( Chartered Accountants). Hope it will help you.
Happy Reading
This presentation explains about the meaning as well as various types of audit report which an auditor has present in his books of accounts for the sake of the company's shareholders and various other groups.
This presentation is an overview of SA 210 (R). Prepared with Prof. S. Sircar.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Audit Reports and Relevant Standards on Auditing (2019)Rohan Tauro
This presentation speaks about SAs 700 (Revised), 701, 705 (Revised) and 706 (Revised) in the context of an Independent Auditor's Report for companies incorporated in India
INTERNATIONAL STANDARD ON AUDITING 200 (REVISED)
OVERALL OBJECTIVES OF THE INDEPENDENT AUDITOR AND THE
CONDUCT OF AN AUDIT IN ACCORDANCE WITH INTERNATIONAL
STANDARDS ON AUDITING
SA 706," Emphasis of Matter Paragraph and Other Matter Paragraph in the Indep...Dipendra Prasad Poudel
The very precise presentation regarding SA 706. It was prepared for technical session of Article Assistants in N.Kochhar and Co ( Chartered Accountants). Hope it will help you.
Happy Reading
This presentation explains about the meaning as well as various types of audit report which an auditor has present in his books of accounts for the sake of the company's shareholders and various other groups.
This presentation is an overview of SA 210 (R). Prepared with Prof. S. Sircar.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Audit Reports and Relevant Standards on Auditing (2019)Rohan Tauro
This presentation speaks about SAs 700 (Revised), 701, 705 (Revised) and 706 (Revised) in the context of an Independent Auditor's Report for companies incorporated in India
he IAASB recently revised its standards related to audit reporting- IS.docxPiersMtTDavidsonl
he IAASB recently revised its standards related to audit reporting. ISA 700 (Revised), Forming an Opinion and Reporting on Financial
Statements,
requires the auditor's report to include the following paragraphs under the headings "Basis for Opinion" and "Auditor's Responsibilities for the Audit of the Financial Statements":
LOADING...
(Click the icon to review the revised Basis for Opinion and Auditor's Responsibilities for the Audit of the Financial Statements paragraphs.)
...
Question content area top right
Part 1
Read the requirements
LOADING...
.
LOADING...
(Click the icon to view the Basis for Opinion and Auditor's Responsibility sections in the standard unmodified opinion audit report example for a nonpublic company.)
LOADING...
(Click the icon to view the Basis for Opinion section in the standard unmodified opinion audit report example for a public company.)
Question content area bottom
Part 1
Requirement a. How does the information in the IAASB's revised paragraphs compare to the information in the Basis for Opinion and Auditor's Responsibility sections in the standard unmodified opinion audit report example for a nonpublic company? (Select all that apply.)
A.
The ISA report explicitly notes that the auditor is not providing an opinion on internal control. The unmodified opinion audit report for nonpublic entities does not include similar disclosures.
B.
The ISA report includes a statement containing the auditor's conclusion that the audit evidence obtained provides a basis for the opinion issued. The unmodified opinion audit report for nonpublic entities does not include similar disclosures.
C.
While the wording differs between the two reports, both the ISA report and the unmodified opinion audit report for nonpublic entities recognize that the audit entails the performance of procedures to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud.
D.
The unmodified opinion audit report for nonpublic entities notes that the audit was conducted in accordance with ISA standards rather than U.S. GAAP.
E.
The ISA report includes a sentence explicitly stating that the auditor is independent and that the auditor has complied with the IESBA Code.
F.
The ISA report notes that the audit was conducted in accordance with ISA standards rather than U.S. GAAS.
G.
While most of the auditor's responsibility paragraph is similar between the two reports, the unmodified opinion audit report for nonpublic entities includes an additional sentence indicating that the risk of not detecting a material misstatement arising from fraud is greater than the risk arising from an error due to the possibility of forgery or collusion, override of controls, intentional omissions of data, or misrepresentations.
H.
The unmodified opinion audit report for nonpublic entities includes a description of what the audit entails, including the auditor's consideration of accounting policies, accounting.
Session 1 Module 2INTRODUCTION TO AUDITING .docxklinda1
Session 1 Module 2
INTRODUCTION TO AUDITING
1
LEARNING OBJECTIVES
After this module you should be able to:
Define auditing
Differentiate between different levels of assurance
Appreciate different audit opinions (covered in depth in session11)
Differentiate between the different role of the preparer of financial statements and the auditor.
Explain the reasons for the demand for audit and assurance services
Appreciate the Corporations Act requirements for company audits
Explain the audit expectation gap.
These are the objectives that students are expected to understand and be able to explain and apply.
Students will only be assessed within the learning objectives provided for each module of the course.
2
AUDITING AND ASSURANCE DEFINED
An audit is an assurance engagement defined as ‘an engagement in which an assurance practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.’
This is a definition of an audit highlighting the main parties involved and their roles
3
1-4
Diagram of assurance engagement
4
*Comment on : main parties and their roles
Jaq (J) - add figure 1-1
1-5
Five elements ofassurance
engagement
Three-party relationships:
assurance practitioner (auditor)
responsible party (preparer)
intended user
Subject matter
Suitable criteria
Sufficient appropriate evidence
Written assurance report
Audit engagement has 5 elements
These are explained on following slides
5
AUDITING AND ASSURANCE DEFINED
‘intended users’ - the people for whom the auditor prepares their report.
Example: shareholders, creditors, employees
‘responsible party’ - the person or organisation responsible for preparing the financial statements. Example: company management
‘subject matter’ – that which the auditor is expressing a conclusion on. i.e. financial reports
‘criteria’ – the rules or principles by which the subject matter is being evaluated. i.e. Accounting standards and interpretations and Corporations laws
Comment on explanations of terms
6
AUDITING AND ASSURANCE DEFINED cont’d.
Sufficient appropriate evidence
The quantity and quality of evidence the auditor requires in order to express a conclusion on the subject matter
*Written assurance report
Written report from the auditor expressing the auditor’s conclusion on the subject matter
Comment on explanations of terms
7
DIFFERENT LEVELS OF ASSURANCE
AUDITORS MAY PROVIDE VARYING LEVELS OF ASSURANCE WHEN CONDUCTING ASSURANCE ENGAGEMENTS.
Reasonable assurance
Limited assurance
No assurance
There are 3 levels of assurance which are described on next slide
8
DIFFERENT LEVELS OF ASSURANCELEVEL OF ASSURANCE
EXAMPLE
THE ASSURANCE EXPRESSIONREASONABLE
Highest level of assurance but not absolute assurance on the reliability of the subject matterFinancial Statement AuditThe auditor has conducted sufficient tests and.
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Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
2. AUDIT REPORTING
700–799 AUDIT CONCLUSIONS AND REPORTING
Audit reporting is mainly dealt by following ISA’s:
ISA 700, Forming an Opinion and Reporting on Financial Statements
ISA 705, Modifications to the Opinion in the Independent Auditor’s Report
ISA 706, Emphasis of Matter Paragraphs and Other Matter Paragraphs in
the Independent Auditor’s Report
ISA 710 Comparative Information—Corresponding Figures and
Comparative Financial Statements
ISA 720, The Auditor’s Responsibilities Relating to Other Information in
Documents Containing Audited Financial Statements
3. AUDIT REPORTING
Scope of this ISA 700-705: This International Standard on Auditing (ISA)
deals with the auditor’s responsibility to form an opinion on the
financial statements. It also deals with the form and content of the
auditor’s report issued as a result of an audit of financial statements.
ISA 700- AUDIT REPORT is “A written report encompasses reports issued in
hard copy format and those using an electronic medium.
• The auditor’s report shall be in writing. (Ref: Para. A13–A14)
• The auditor’s report shall have a title that clearly indicates that it is the
report of an independent auditor. (Ref: Para. A15)
4. There are four (04) major types of audit report. These are:
1) Unqualified Audit report- where clean report is issued and no modifications to
the audit report are made.
2) Qualified audit report- 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
statements; or
(b) The auditor is unable to obtain sufficient appropriate audit evidence on which to base
opinion, but the auditor concludes that the possible effects on the financial statements of
undetected misstatements, if any, could be material but not pervasive.
3) 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.
4) Disclaimer of 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
and pervasive
5. Audit report
Modified Audit
report
Un qualified
report
Emphasis of
Matter Paragraph
Qualified report
Material AND
Pervasive
Disagreement with
management
Adverse
Opinion
01
Limitation of scope/ Inability
to obtain sufficient
appropriate audit evidence
Disclaimer of
Opinion
02
Material but not
Pervasive
Disagreement
with management
Except for
qualification
03
Limitation of scope/ Inability
to obtain sufficient
appropriate audit evidence
Except for
qualification
04
Un modified Audit
report
Clean report to
client
6. UNQUALIFIED AUDIT REPORT
Un qualified audit report is the most common type of independent audit report
issued by the auditors. There are no issues identified that may caste significant
doubts over the true and fair view of the Financial statements.
Example of unqualified report is like:
7. UNQUALIFIED AUDIT REPORT- EMPHASIS OF MATTER PHARAGRAPH
Emphasis of Matter Paragraph is another version of unqualified report. The auditors
do not qualify the audit report and an Emphasis of matter paragraph is added
before opinion paragraph in order to divert the shareholder attention towards a
matter that has an impact of the Financial statement and needs to be brought to
the attention of the shareholders. E.g. Going concern disclosure. Example of
modified for Emphasis of Matter Paragraph report is like:
8. QUALIFIED AUDIT REPORT
Qualified audit report may be of two types. These are
Except for qualification where the matter is Material but not Pervasive and there are
two reasons for this;
1) Disagreement with Management on matters
2) In ability to obtain sufficient Appropriate Audit evidence/ Limitation place on
the scope of work of auditors
The “Except for qualification” is issued where the matter is above the materiality
level set by auditors.
Suppose accounts receivables represents 10% of total sales for the year, for which
existence and valuation assertions cannot be verified. In this case only accounts
receivable is materially misstated and not the whole financial statements.
Another example is the client has refused to share the list of trade debtors with
auditors and no balance confirmations have been sent to major debtors, thus
placing limitation of scope on work of auditors
10. ADVERSE OPINION
Adverse opinion is issued where material misstatement exist and the matter is
related to Financial statement as a whole.
For example. The financial condition of the client is worst and auditors believe that
the company is not going concern and caste significant doubts over the going
concern assumption of management for next 12 months. Financial statement are
prepared on going concern basis while auditors believe that FS may be prepared
on break up basic. Thus an adverse opinion will be issued if not properly disclosures
are made as well. Example is;
11. DISCLAIMER OF OPINION
Disclaimer of opinion is issued where auditors are unable to obtain sufficient
appropriate audit evidence, to draw a conclusion on the figures reported in
Financial statement as a whole. Auditors do not express any opinion over the
reasonableness of figures reported. Example is;