Chapter 6: Section 3

Question 1

What is the revised ISA 700 name?

Answer 1

Forming an Opinion and Reporting on Financial Statements

Question 2

As recall, what is the primary objective of the audit?

Answer 2

An expression of an opinion on the truth and fairness (or fair presentation) of the financial statements

Question 3

What does ISA 700 (revised) set out?

Answer 3

The format of the auditor’s report

Question 4

What does the independent auditor’s report begin with?

Answer 4

To the shareholders of the company (or other appropriate addressee)

Question 5

What are the 8 headings in the auditor’s report?

Answer 5

1. Opinion
2. Basis for opinion
3. Materiality uncertainty relating to going concern
4. Key audit matters
5. Other information
6. Responsibilities of management and those charged with governance for the financial statements
7. Auditor’s responsibilities for the audit of the financial statements
8. Report on other legal and regulatory requirements

Question 6

What does the opinion section include? (3)

Answer 6

1. Includes individual statements and reporting period under review for company being audited
2. Uses either ‘give a true and fair view’ or ‘presents fairly, in all material respects’
3. States relevant GAAP adopted

Question 7

Where is the basis for opinion presented?

Answer 7

Always after the opinion

Question 8

What does the basis for opinion section explain? (4)

Answer 8

1. How the audit was conducted:
2. Role of ISAs
3. IESBA code of ethics
4. Audit evidence being sufficient and appropriate to provide a basis for the auditor’s opinion

Question 9

What is recorded under the ‘materiality uncertainty relating to going concern’?

Answer 9

Where applicable, the auditor shall report in accordance with ISA 570 (Revised) Going Concern

Question 10

What is included under key audit matters section and under what ISA?

Answer 10

As per ISA 701 Key Audit Matters, matters of most significance from audit, usually only required for listed entities.

Question 11

What ISA provides info on the other info section?

Answer 11

ISA 720

Question 12

As per ISA 720, what goes in the other information section?

Answer 12

Communicates there is nothing to report regarding other information.

Question 13

What does the ‘responsibilities of management and those charged with governance for the financial statements’ section talk about? (2)

Answer 13

1. Preparation and fair presentation of the financial statements, including internal controls
2. Assessment of company’s ability to continue 5as a going concern.

Question 14

What does the section ‘Auditor’s responsibilities for the audit of the financial statements’ provide a detailed summary about?

Answer 14

Auditor’s objectives starting with obtaining reasonable assurance about the financial statements being free from material misstatements due to fraud or error

Question 15

What does the ‘Auditor’s responsibilities for the audit of the financial statement’ section stress?

Answer 15

The role of professional judgement and scepticism over accounting policies and estimates, judgements, internal controls, presentation, disclosure and communicating key audit matters and other issues with those charged with governance.

Question 16

What does the ‘Report on other legal and regulatory requirements’ section vary depending on?

Answer 16

Form and content of this section of report will vary depending on nature of the auditor’s other reporting responsibilities

Question 17

What else be put in the last section of ‘Report on other legal and regulatory requirements’?

Answer 17

Signed
(Auditor’s name and/or signature, address and date of the auditor’s report)

Question 18

(To note) What section is not examinable in the AUDT exam but is included for the sake of completeness?

Answer 18

ISA 701