FORMS of Audit

Report
Subtitle
FORMS of Audit Report
UNMODIFIED MODIFIED
• UNQUALIFIED QUALIFIED OPINION

ADVERSE OPINION

DISCLAIMER OF OPINION
 MODIFIED opinion
 If the Financial statement is materially misstated or the auditor is
prevented from obtaining sufficient evidence
 Auditor’s judgement to pervasiveness
PERVASIVE
Material
Income
Balance sheet
statement
 Material but not Material and
pervasive pervasive
Financial report Qualified Adverse
is materially opinion opinion
misstated
Inability to Qualified Disclaimer of
obtain sufficient opinion opinion
appropriate
audit evidence
 The Unqualified opinion
 In accordance of generally accepted auditing standards
 Financial statement is presented fairly
The Unqualified opinion based on
auditor’s judgement as to:
1. The accounting principles selected and applied
2. The accounting principles are appropriate in the circumstances
3. The financial statements, including the related notes, are
informative
4. The information presented in the financial statement is classified
and summarized in a reasonable manner, that is, neither too
detailed nor too condensed
5. The financial statement reflect underlying transacting and
events in a manner that
Illustrative auditor’s report on financial
statements of a listed entity in a fair
presentation framework
1. Audit of a complete set of financial statement of a listed entity
using fair presentation framework
2. The financial statements are prepared by the management of
the entity in accordance with PFRS
3. Audit engagement reflects the management’s responsibility for
the financial statement in PSA210
4. Auditor has concluded an unmodified(unqualified) opinion
based on the audit evidence obtained
Illustrative auditor’s report on
financial statements of a listed
5. The relevant ethical requirement that apply to the audit
comprise of IESBA’s code of ethics for professional accountants
together with the ethical requirements relating to the audit in the
jurisdiction, the code of ethics for professional accountants in the
Philippines, and the auditor refers to both
6. Based on the audit evidence obtained relating to going
concern in accordance with PSA 570
Illustrative auditor’s report on
financial statements of a listed
7. Key audit matters have been communicated
8. Those responsible for oversight of the financial statements differ
from those responsible for the preparation of the financial
statement
9. The audit of the financial statements, the auditor has other
reporting responsibilities required under local law.
Basis for opinion
• In accordance to PSA
• Auditor’s responsibilities
for the audit of
financial statements
• Independent to the
company according to
IESBA
Key audit matters
• This matters are
communicated to the
appropriate individuals.
Responsibilities of
management and those
charged with governance
for financial statement

• Management prepares
FS according to PFRS
• Internal control
• Free from material
misstatement whether
due to fraud or error
• Assessing the going
concern
Auditor’s responsibilities for
the audit of financial
statement
• Reasonable assurance
about whether the FS is
free from material
misstatement
• Understanding of
internal control
• Evaluate the
accounting policies
used
• Evaluate the going
concern
REPORN ON OTHER
LEGAL AND
REGULATORY
Other reporting responsibilities
• Auditor’s other reporting responsibility prescribed by LAW,
regulation or national auditing standards shall be addressed
within this section
Additional paragraphs to the
auditor’s report
• Auditor’s report may be modified by adding an emphasis of
matter paragraph or other matter paragraph.

EMPHASIS of Other matter

matter paragraph parahraph
 EMPHASIS of matter paragraph
1. Auditor would not be required to modify the opinion
2. When PSA 701 applied, the matter has not been determined to
be a key audit matter
 EMPHASIS of matter paragraph
1. Include the paragraph within a separate section at the
auditor’s report that includes the term “Emphasis of matter”
2. Include in the paragraph a clear reference to the matter being
emphasized and to where relevant disclosures being describe
can be found in the financial statements.
3. Indicate the auditor’s opinion is not modified
Circumstances in which an emphasis of
matter paragraph may be necessary
1. When prescribe by law
2. To alert users that FS in special purpose criteria
3. When facts become know to the auditor after the auditor’s
report and the auditor provides a new or amended auditor’s
report
Circumstances when it is necessary to
include an emphasis of matter
paragraph
1. Uncertainty of litigation
2. Event occurred between the date of the financial statement
and the date of auditor’s report
3. Application of a new accounting standard
4. A major catastrophe that has significant effect
Uncertainties about entity’s ability
to continue as a going concern
• Material misstatement can affect the going concern of a
company
REPORN ON OTHER
LEGAL AND
REGULATORY
Other matter paragraph
If the auditor considers it necessary to communicate a matter
other than those disclosed. As long as not prohibited by the law
and not a key audit matter

Scope of audit imposed by management

It’s necessary to include an other matter paragraph and explain
why it is not possible for the auditor to withdraw from the
engagement
Audits of group of
Financial statements
Audits of group of Financial
statements
A. To determine whether to act as the auditor of the group of
financial statement.
B. To communicate clearly with component auditors about the
scope and timing of their work on financial information
C. To obtain sufficient appropriate audit evidence about the
financial information of the components and the consolidation
process to express an opinion
Component Entity/business activity for which group or
component management
Component auditor Auditor who performs work on financial
information related to a component
Component Responsibility of the management for
management preparing financial information of a
component
Group Refers to all components whose financial
information is included in the group of
financial statements. A group is always more
than one component
Group audit Refers to the audit of group financial
statements
Group audit opinion Is the audit opinion on the group FS
Group engagement A partner who is responsible for the group
partner audit engagement
Group engagement Refers to partners and staff who establish the
team overall group strategy, communicate with
component auditors, perform work on the
consolidation, and form an opinion
Group financial Financial statements that include financial
statements information of more than one component
Group management Refers to management responsible for
preparing and presenting the group financial
statement
Significant I. Individual financial significance to the
component group
II. Due to its specific nature or circumstances
is likely to include significant risk of material
misstatement
Acceptance and continuance and
the effect on the auditor's report
A. It will not be possible for the group engagement team to obtain
sufficient appropriate audit evidence due to restriction imposed
by the management
B. The possible effect of this inability will result in a disclaimer of
opinion on the group of financial statements, the group
engagement partner shall either
– In case of a new/unacceptable/continuing engagement resign from the
engagement
– Law or regulation prohibits the auditor from declining or resigning from an
engagement, having performed the audit of group financial statement.
Screening of component auditors
A. Whether the component auditor understands and will comply
with the ethical requirement that are relevant to the group
B. The component auditor’s professional competence
C. Whether the group engagement team will be able to be
involved in the work of the component auditor to the extent
necessary to obtain sufficient appropriate audit evidence
D. Whether the component auditor operates in a regulatory
environment that actively oversees auditors.
Additional consideration
1. When the group engagement team will use the work of the component
auditor, confirms that the component auditor will cooperate with the group
engagement
2. The ethical requirement that are relevant to the group audit and in
particular, the independent requirements
3. In case audit or review of the financial information of the component,
component materiality and the threshold which statements cannot be
regarded as clearly trivial to the group of financial statements
4. Identified significant risk of material misstatement of the group financial
statements, due to fraud and error, that are relevant to the work of the
component auditor. The group auditor shall communicate on a timely basis
any other identified significant risk of material misstatement
5. A list of related parties prepared by group management, and any other
related parties.
1. whether the component auditor has complied with ethical
requirement that are relevant to the group audit, including
independence and professional competence
2. Whether component auditor has complied with the group
engagement team’s requirement
3. Identification of the component on which component the
component auditor is reporting
4. Information on instances of non-compliance with laws or regulation
that could give rise to a material misstatement
5. A list of uncorrected misstatement of the financial information of the
component
• 6. Indicator of possible management bias

• 7. Description of any identified material weakness in internal control

over financial reporting at the component level

• 8. Other significant matter that the component auditor communicated

or expects to communicate to those charge with governance.

• 9. Any other matter that may be relevant to the group audit, or that
the component auditor wishes to draw to the attention of the group
engagement

• 10. The component auditor’s overall findings, conclusion or opinion

Evaluating the sufficiency and
appropriateness of audit evidence
obtained
A. Discuss significant matters arising from the evaluation with the
component auditor, component management or group
management, as appropriate
B. Determine whether it is necessary to review other relevant parts
of the component auditor’s documentation
Sufficiency and appropriateness of
audit evidence
• The group engagement team shall evaluate whether sufficient
appropriate audit evidence has been obtained from the audit
procedures performed on the consolidation process and the
work performed by the group engagement team and the
component auditors
The group engagement partner shall evaluate the effect on the group audit
opinion of any uncorrected misstatements and any instances where there
has been an inability to obtain sufficient appropriate audit evidence.