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Understanding Auditor's Professional Judgment and Audit Reporting in Financial Statements

This resource outlines key learning objectives for understanding the role of professional judgment in auditing financial statements, as per CAS 200. It explains how auditors evaluate accumulated misstatements to form opinions on financial statements' fairness and discusses the different forms of audit opinions. Additionally, it highlights the purpose and significance of Emphasis of Matter (EOM) and Other Matter (OM) paragraphs in audit reports, as well as the auditor's communications throughout the audit engagement. Gain insights into essential audit concepts for successful financial evaluations.

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Understanding Auditor's Professional Judgment and Audit Reporting in Financial Statements

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  1. Learning Objectives LO1 Describe the role of professional judgment in achieving the overall objectives of the independent auditor in conducting an audit of financial statements as set out in CAS 200. LO2 Explain how accumulated misstatements are evaluated at the conclusion of an audit to form an opinion on the fair presentation of general purpose financial statements. LO3 Describe the different forms of audit opinion and the decisions underlying the auditor’s choice of form. LO4 Explain the purpose of emphasis of matter (EOM) and other matter (OM) paragraphs in an audit report. LO5 Summarize the auditor’s communications throughout and at the conclusion of the engagement.

  2. SIGNIFICANT MATTER PARAGRAPHS: ADDITIONAL INFORMATION IN THE AUDIT REPORT There are two types of additions possible under CAS 706: emphasis of matter (EOM) paragraphs or other matter (OM) paragraphs. • EOM paragraphs are required when a material uncertainty regarding the going concern assumption is properly disclosed, and an unmodified opinion is given. • OMs can refer to other information included with the financial statements, such as MD&A or comparative information from other periods, LO4

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