Audit Reporting

Question 1

General Purpose Financial Statement

Answer 1

Financial statements prepared in accordance with general-purpose framework

Question 2

Objectives of the Auditor

Answer 2

1. Form an opinion on the financial statements based on the evaluation of the conclusions drawn from the audit evidence obtained; and
2. To express clearly that opinion through a written report

Question 3

Formation of Opinion

Answer 3

Take into account the following:
1. Sufficient and appropriate evidence has been obtained
2. Uncorrected misstatements are material
3. Whether FS are prepared in accordance with the requirements of the applicable financial reporting framework

Question 4

Unmodified or Unqualified Opinion

Answer 4

When: Presented fairly in all material respects in accordance with applicable financial reporting framework.
Phrase Used: Give a true and fair view

Question 5

Qualified Opinion

Answer 5

When: Presented fairly but have items not presented fairly or insufficient appropriate evidence
Phrase used: Except for

Question 6

Adverse Opinion

Answer 6

When: Completely negate the representation made by management
Phrase used: Do not present fairly, in all material Respect

Question 7

Disclaimer of Opinion

Answer 7

When: No opinion is expressed
Phrase: We do not express a conclusion

Question 8

Basic parts of Auditor’s Report (TAOB-RAON-SAD)

Answer 8

1. Title
2. Addressee
3. Auditor’s Opinion
4. Basis of Opinion
5. Responsibilities for the Financial Statements
6. Auditor’s Responsibilities
7. Other Reporting Responsibilities
8. Name of Engagement Partner
9. Signature of the Auditor
10. Auditor’s Address
11. Date of the Report

Question 9

Addressee Type

Answer 9

Corporation- either the shareholders or to those charged with governance.
Partnership- either to partnership and the partners or the partnership
Unincorporate joint venture- To the participants or venturers
Proprietorship- to the proprietor
Third party/ Outside party- Normally addressed to the engaging party

Question 10

Inclusion in Auditor’s Opinion

Answer 10

1. Identify the entity
2. State that Financial Statements that have been audited
3. Identify the title of each statement comprising the financial statements
4. Refer to the notes; and
5. Specify the date each financial statements comprising the financial statements

Question 11

Inclusion in Basis for Opinion

Answer 11

1. States that the audit was conducted in accordance with PSA
2. Refer to the section of auditor’s report that describes the auditor’s responsibilities
3. Includes a statement that auditor is independent of the entity and has fulfilled the auditor’s other ethical responsibilities
4. State whether auditor believes that audit evidence is sufficient and appropriate to provide a basis for the auditor’s opinion

Question 12

Inclusions in Auditors Signature

Answer 12

1. License, including secondary licenses
2. Tax Identification Number
3. Privilege Tax Receipt Number
4. Registration number with PRC/BOA
5. Accreditation issued by regulatory agencies

Question 13

Key Audit Matters

Answer 13

Those matters that in the auditor’s professional judgement were of most significance in the audit of the FS of the current period

Question 14

When should Auditor not communicate key audit matters

Answer 14

1. Law or Regulation precludes public disclosure about the matter; or
2. The auditor determines that the matter should not be communicated in the auditor’s report because the adverse consequence of doing so would reasonably be expected to outweigh the public interest

Question 15

When to give a Qualified Opinion

Answer 15

When FS misstatements and inability to obtain sufficient appropriate evidence are material but not pervasive

Question 16

When to give adverse opinion

Answer 16

When the FS are materially misstated and is material and pervasive

Question 17

When to give disclaimer opinion

Answer 17

Auditor does not have the ability to obtain sufficient appropriate evidence and this matter is material and pervasive

Question 18

Emphasis of Matters paragraph

Answer 18

Refers to a matter appropriately presented or disclosed in the financial statements that in auditors judgement is of such importance that is fundamental to user’s understanding of the financial statements