Module 22 Audit Process: Reporting

Question 1

What does ISA (UK) 700 require for an audit report?

Answer 1

13 basic elements must be included

1. Title
2. Addressee
3. Auditors opinion
4. Basis for opinon
5. Conclusions (going concern)
6. Irregularities
7. Other information
8. Other responsibilities
9. Responsibilties of managment
10. Auditors resposnsibilites
11. Signiture of auditor
12. Adress of auditor
13. Date of audit report

Question 2

What two additional sections are required for listed entities and public entities

Answer 2

• Key audit matters
• Name of engagment partner (Listed entities only)

Question 3

What does ISA (UK) 701 require?

Answer 3

The audit to include additional disclosures regarding key audit matters

Question 4

How to decide a key audit matter?

Answer 4

• Matters judged to have higest risk of material misstatment
• Significant auditor judgments
• Effect of significant events or transactions

Question 5

Each key audit matter should include what in the report?

Answer 5

• Description on why the matter is one of the most siginificant
• How the matter was adressed
• Any related disclosures

Question 6

Unmodified opinion

Answer 6

Issued when in the auditors opinion the accounts give a true and fair reflection

Question 7

Modified opinion

Answer 7

Issued when in the auditors opinion, the accounts do not give and true and fair view or cannot form an opinion

Question 8

What does ISA (UK) 705 identify

Answer 8

Three different forms of modified audit opinion

Question 9

What are the two circumstances that would give rise to a modified opinion?

Answer 9

• Financial statments not free from material misstaments
• Auditor not able to obtain sufficent apporite evidence (limitation of scope)

Question 10

What is considered pervasive

Answer 10

• Not confined to specific elements
• Represent a substantial portion
• Disclosures are fundemental to users understanding of financial statments

Question 11

Audit opinion if material misstatment in the financial statments

Answer 11

Qualified

Question 12

Audit opinion if pervasive misstatment in the financial statments

Answer 12

Adverse

Question 13

Audit opinion if material limitation on scope

Answer 13

Qualified

Question 14

Audit opinion if pervasive limitation on scope

Answer 14

Disclaimer

Question 15

What should an auditor do in modified report

Answer 15

• Amend the heading of the opinion
• Give reason for modification
• Quantify the effect

Question 16

Impact of going concern on audit opinion

Answer 16

Going concern is pervasive

Question 17

What are the requirements of ISA (UK) 720?

Answer 17

Auditor to read all other information and request managment resolve discrepancies

Question 18

Material inconsistency

Answer 18

Material contradiction between the information contained in the financial statments and information contained elsewhere in the annual report

Question 19

Auditor is required to state what in the strategic report and directors report

Answer 19

• The information is consistent with the accounts
• Prepared in accordance with legal requirements (CA 2006)

Question 20

What two reporting requirements extend the auditors resposibilites for UK listed companies

Answer 20

• Directors renumeration reports
• Corporate governance statments

Question 21

What reporting requirement extend the auditors resposibilites for SEC compnaies

Answer 21

• Due to SOX, section 404 report is required
• The auditor must attest to the and report on the 404 report

Question 22

Auditors requirments regarding standalone strategic report with supplementary information

Answer 22

• Not required to make a statment but must check consistency with the strategic report

Question 23

Auditors requirments regarding preliminary annoucnment

Answer 23

• Should be agreed with the auditor
• If modification is required this should be incluced

Question 24

Auditors requirments regarding Half-yearly Financial report

Answer 24

• Companies choice to have them reviewed or audited
• Normally only reviewed