Chapter 13: Reporting

Question 1

Two key reports produced by the auditor

Answer 1

1. Auditors report - for shareholders
2. Management letter - to those charged with governance

Question 2

Matters to be communicated to those charged with governance prior to the audit (3 things)

Answer 2

1. Planning the audit’s scope and timing
2. Declaring independence as the auditor - implementing safeguards to address any threats.
3. Auditors responsibilities in relation to the FS audit.

Question 3

Two benefits of having standardised auditor reports

Answer 3

1. Provides a degree of consistency between auditors reports.
2. Enhances their understandability

Question 4

Two types of opinions that may be included in the auditors report *note an opinion must always been included!

Answer 4

1. Unmodified opinion
2. Modified opinion

Question 5

Unmodified auditor opinion

Answer 5

Auditor is satisfied that the evidence obtained is sufficient and appropriate. It supports the view presented in the FS prepared by management.

Question 6

Modified auditor opinion

Answer 6

Auditor is either:

• NOT satisfied that the evidence is sufficient or appropriate compare to what could reasonably be expected. OR
• Has issues with the content of the FS.

Question 7

Does a modified opinion always lead to modified auditor report?

Answer 7

Yes

Question 8

Main components of an auditors report (18 things)

Answer 8

1. Title
2. Addressee
3. Auditor’s Opinion Section
4. Basis for Opinion Section
5. Conclusions Relating to Going Concern Section
6. Emphasis of Matter Section
7. Our Application of Materiality Section
8. Our Approach – Key Audit Matters Section
9. Other Information Section
10. Opinion on Other Matters Required by Companies Act Section
11. Matters on Which the Auditor Is Required to Report on by Exception
12. Responsibilities of the Directors
13. Auditor’s Responsibilities
14. Other Matters We Are Required to Address
15. Name of engagement partner
16. Signature
17. Auditor’s address
18. Date of the report

Question 9

Modified auditors report: inability to obtain sufficient and appropriate evidence

Material but not pervasive

Answer 9

Qualified opinion

Question 10

Modified auditors report: misstatement

Material but not pervasive

Answer 10

Qualified opinion

Question 11

Modified auditors report: misstatement

Material and pervasive

Answer 11

Adverse opinion

Question 12

Modified auditors report: inability to obtain sufficient and appropriate evidence

Material and pervasive

Answer 12

Disclaimer opinion

Question 13

What is a modified qualified auditor opinion

Answer 13

Except for the effects of the matter described in the basis of qualified opinion, the financial statements do give a true and fair view.

Question 14

What is a modified disclaimer auditor opinion

Answer 14

We do not express an opinion as to whether the financial statements give a true and fair view. This matter is discussed in the basis of disclaimer opinion.

Question 15

What is a modified adverse auditor opinion

Answer 15

The financial statements do not show a true and fair view. This matter is discussed in the basis of adverse opinion.