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Chapter Eighteen Reports on Audited Financial Statements

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Chapter Eighteen Reports on Audited Financial Statements . The Standard Audit Report with an Unmodified Opinion. The standard audit report with an unmodified opinion is issued when the financial statements conform to the applicable financial reporting framework. Nine Elements Report title

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Presentation Transcript
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Chapter Eighteen

Reports on Audited Financial Statements

the standard audit report with an unmodified opinion
The Standard Audit Report with an Unmodified Opinion

The standard audit report with an unmodified opinion is issued when the financial statements conform to the applicable financial reporting framework.

  • Nine Elements
  • Report title
  • Addressee
  • Introductory paragraph
  • Management’s responsibility
  • Auditor’s responsibility
  • Auditor’s opinion
  • Auditor’s signature
  • Audit report date.
  • Auditor’s address
an emphasis of matter paragraph and an other matters paragraph
An Emphasis of Matter Paragraph and an Other Matters Paragraph

An emphasis of matter paragraph does not affect the auditor’s opinion

because it can only be included in the audit report if the matter is presented or disclosed in the financial statements in accordance with the applicable financial reporting framework.

An other matters paragraph does not affect the auditor’s opinion

because it relates to matters other than those required to be presented or disclosed in the financial statements.

emphasis of matter paragraphs
Emphasis of Matter Paragraphs

The matter is both unusual and of fundamental importance to the user’s understanding of the financial statements.

  • Significant uncertainties.
  • Significant and unusual related party transactions.
  • Early application of a new accounting principle.
  • A subsequent event disclosed in the financial statements.
  • A matter such as a major catastrophe which is disclosed in a note to the financial statements, that has had, or continues to have, a significant effect on the entity’s business or operations.
other matters paragraphs
Other Matters Paragraphs
  • Avoidance of auditor association with misleading information in a document containing audited financial statements.
  • Matters that provide further explanation of the auditor’s responsibilities in the audit of the financial statements or of the auditor’s report thereon that the auditor may be required or permitted to elaborate on by standards, laws, or generally accepted practice in a jurisdiction.
  • In rare and unusual circumstances, other matters that the auditor considers relevant to communicate to the user.
conditions of modification

Results from an inability to obtain sufficient appropriate evidence about some component of the financial statements.

Results when financial statements are materially affected by a departure from the applicable financial reporting framework.

Conditions of Modification

Scope Limitation

Departure from the Applicable Financial Reporting Framework

qualified opinion statements not in accordance with the applicable financial reporting framework
Qualified Opinion – Statements not in Accordance with the Applicable Financial Reporting Framework
adverse opinion statements not in accordance with the applicable financial reporting framework
Adverse Opinion – Statements not in Accordance with the Applicable Financial Reporting Framework
special reporting issues
Special Reporting Issues

Reports on comparatives.

Other information.

Special reports.

reports on comparatives
Reports on Comparatives

Corresponding figures for the prior period are an integral part of the current period financial statements and are intended to be read in conjunction with the amounts of the current period.

Comparative financialstatements are considered separate financial statements and are included for comparison with the financial statements of the current period.

other information in documents containing audited financial statements
Other Information in Documents Containing Audited Financial Statements

The auditor has no responsibility beyond the financial information contained in the report, and he or she has no obligation to perform any audit procedures to corroborate the other information. However, the auditor is required to read the other information and consider whether it is consistent with the information contained in the audited financial statements.

Annual Reports

special reports
Special Reports

Components of financial statements.

Financial statements prepared on an other comprehensive basis of accounting.

Compliance with contractual agreements related to financial statements.

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Financial Statements Prepared on a Other Comprehensive Basis of Accounting to Meet the Needs of Specific Users

Regulatory Basis

Tax Basis

Cash Basis

components of financial statements
Components of Financial Statements

In some situations an auditor may be engaged to audit a single financial statement, specified elements, accounts, or items of the financial statements.

Financial reporting framework such as IFRSs

Other comprehensive basis of accounting (OCBOA)

Basis of Accounting

Basis of accounting prescribed by a contract or agreement

reports on compliance with contractual agreements related to audited financial statements
Reports on Compliance with Contractual Agreements Related to Audited Financial Statements
  • An auditor may be asked to report on an entity’s compliance with certain contractual agreements related to audited financial statements.
  • The auditor’s report should state whether, in the auditor’s opinion, the entity has complied with the particular provisions of the agreement.
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