Audit Report

Audit Report Is An Opinion Drawn On The Entity’s Financial Statements To Make Sure That The
Records Are True And Fair Representation Of The Transactions They Claim To Represent. This
Involves Considering Whether The Financial Statements Have Been Prepared In Accordance With An
Acceptable Financial Reporting Framework

Management Is Responsible For The Preparation Of The Financial Statements. Management Also
Accepts Responsibility For Necessary Internal Controls To Enable The Preparation Of Financial
Statements That Are Free From Material Misstatement, Whether Due To Fraud Or Error.

The Purpose Of An Audit Is To Enhance The Degree Of Confidence Of Intended Users Of The
Financial Statements. The Aforesaid Purpose Is Achieved By The Expression Of An Independent
Reporting By The Auditor As To Whether The Financial Statements Exhibit A True And Fair View Of
The Affairs Of The Entity

 Clean Or Unqualified Opinion

An Unqualified Opinion Should Be Expressed When The Auditor Concludes That The Financial
Statements Give A True And Fair View.

 Sa 700 (Revised) Forming An Opinion And Reporting On Financial Statements

1. What Is Fair Presentation Framework?

If Financial Statements Prepared In Accordance With Applicable Financial Reporting Framework But
Do Not Achieve Fair Presentation, The Auditor Shall Discuss The Matter With Management And,
Depending On The Requirements Auditor Can Add/Depart From To Framework To Achieve Fair
Presentation

2. What Is Compliance Framework?

When The Financial Statements Are Prepared In Accordance With A Compliance Framework, The
Auditor Is Not Required To Evaluate Whether The Financial Statements Achieve Fair Presentation.
Auditor Cannot Deviate Or Change Compliance Framework/ Financial Reporting Framework Even
For Better Presentation.
 Evaluations By The Auditor

The Auditor Shall Evaluate Whether The Financial Statements Are Prepared In Accordance With The
Requirements Of The Applicable Financial Reporting Framework.

1. Qualitative Aspects Of The Entity’s Accounting Practice

Management Makes A Number Of Judgments About The Amounts And Disclosures In The Financial
Statements.

Auditor Evaluate The Qualitative Aspects Of The Entity’s Accounting Practices, Financial Statement
Accounting System And Possible Bias In Management’s Judgments.

2. Specific Evaluations By The Auditor/Reason To Give Unqualified Opinion

 The Financial Statements Adequately Disclose The Significant Accounting Policies

 The Accounting Policies Selected And Applied Are Consistently
 The Accounting Estimates Made By Management Are Reasonable
 The Information Presented In The Financial Statements Is Relevant, Reliable, Comparable,
And Understandable
 The Terminology Used In The Financial Statements Is Appropriate.
 Fs Are Prepared As Per Gaap

 Basic Elements/Contents Of The Auditor Report

1. Title

The Auditor’s Report Shall Have A Title That Clearly Indicates That It Is Independent Auditor’s
Report

2. Addressee

The Auditor’s Report Shall Be Addressed, As Appropriate, Based On The Terms Of The Engagement.

3. Opinion

The First Section Of The Auditor’s Report Shall Have The Heading “Opinion.”

 Identify The Entity I.E Name Of Entity

 Specify The Date Of, Or Period Covered
  State That The Financial Statements Have Been Audited
 In Fair Presentation Framework – “Whether Financial Statement Give True And Fair View”
 In Compliance Framework – “Whether Financial Statement Is As Per Compliance Framework

4. Basis For Opinion

 States That The Audit Was Conducted In Accordance With Standards On Auditing;
 Fulfilled The Auditor’s Other Ethical Responsibilities
 Includes A Statement That The Auditor Is Independent Of The Entity
 The Auditor Believes That The Audit Evidence Obtained Is Sufficient And Appropriate To
Provide Base For Opinion

5. Going Concern Where Applicable, The Auditor Shall Report In Accordance With Sa 570
(Revised)
6. Key Audit Matters

7. Management’s Responsibilities
 Preparing The Financial Statements In Accordance With The Applicable Financial Reporting
Framework
 Design And Implement Internal Control System
 Assessing The Entity’s Ability To Continue As A Going Concern

8. Auditor’s Responsibilities
 Primary Responsibility And Requirement Sa 200
 Other Reporting Responsibilities
 143(3) Principal Assertion And Caro If Applicable

9. Date Of The Auditor’s Report

The Auditor’s Report Shall Be Dated No Earlier Than The Date On Which The Auditor Has Obtained
Sufficient Appropriate Audit Evidence On Which To Base The Auditor’s Opinion

10. Place Of Signature

The Auditor’s Report Shall Name Specific Location Where The Audit Report Is Signed

11. Signature Of The Auditor

The Report Is Signed By The Auditor In His Personal Name

Mention The Membership Number Assigned By The Institute Of Chartered Accountants Of India.

They Also Include The Name Of The Audit Firm. Registration Number Of The Firm,

Sa 705 Modifications To The Opinion In The Independent Auditor’s Report

The Auditor Shall Modify The Opinion In The Auditor’s Report When:

 The Auditor Concludes That, Based On The Audit Evidence Obtained, The Financial Statements
As A Whole Are Not Free From Material Misstatement;
 The Auditor Is Unable To Obtain Sufficient Appropriate Audit Evidence To Conclude That The
Financial Statements As A Whole Are Free From Material Misstatement

 Qualified Opinion:

The Auditor, Having Obtained Sufficient Appropriate Audit Evidence, Concludes That
Misstatements, Individually Or In The Aggregate, Are Material, But Not Pervasive, To The Financial
Statements

 Adverse Opinion:

The Auditor Shall Disclaim An Opinion When He Is Unable To Obtain Sufficient Appropriate Audit
Evidence And Concludes That The Possible Effects On The Financial Statements Of Undetected
Misstatements, If Any, Could Be Both Material And Pervasive

 Changes In Form And Content Of The Auditor’s Report When The Opinion Is Modified

1. Auditor’s Opinion
When The Auditor Modifies The Audit Opinion, The Auditor Shall Use The Heading “Qualified
Opinion,” “Adverse Opinion,” Or “Disclaimer Of Opinion,” As Appropriate, For The Opinion Section.

2. Basis For Opinion

When The Auditor Modifies The Opinion On The Financial Statements, The Auditor Shall,
Amend The Heading “Basis For Opinion” Required By Sa 700 (Revised) To “Basis For Qualified
Opinion,” “Basis For Adverse Opinion,” Or “Basis For Disclaimer Of Opinion,” As Appropriate; And
Within This Section, Include A Description Of The Matter Giving Rise To The Modification.

3. Key Audit Matter

Unless Required By Law Or Regulation, When The Auditor Disclaims An Opinion On The Financial
Statements, The Auditor’s Report Shall Not Include A Key Audit Matters Section In Accordance With
Sa 701

4. Auditor’s Responsibilities
Sab Same Bs
Add Statement That Because Of The Matter Described In The Basis For Disclaimer Of Opinion
Section, The Auditor Was Not Able To Obtain Sufficient Appropriate Audit Evidence To Provide A
Basis For An Audit Opinion On The Financial Statements

Material Misstatement

 Related To Amount

If There Is A Material Misstatement Of The Financial Statements That Relates To Specific Amounts
In The Financial Statements, The Auditor Shall Include In The Basis For Opinion Section And
Quantify The Financial Effects Of The Misstatement,

 Related To Narrative Disclosures

If There Is A Material Misstatement Of The Financial Statements That Relates To Narrative

Disclosures, The Auditor Shall Include In The Basis For Opinion Section An Explanation Of How The
Disclosures Are Misstated.
 Relates To Non-Disclosure

If There Is A Material Misstatement Of The Financial Statements That Relates To The Nondisclosure
Of Information Required To Be Disclosed, The Auditor Shall:
 Discuss The Non-Disclosure With Those Charged With Governance;
 Describe In The Basis For Opinion Section The Nature Of The Omitted Information;
Inability To Obtain Sufficeint & Appropriate Evidence

When The Auditor Expresses A Qualified Or Adverse Opinion, The Auditor Shall Amend The
Statement About Whether The Audit Evidence Obtained Is Sufficient And Appropriate To Provide A
Basis For The Auditor’s Opinion To Include The Word “Qualified” Or “Adverse”, As Appropriate.
When The Auditor Disclaims An Opinion On The Financial Statements, The Auditor’s Report Shall
Not Include The
Statement About Whether The Audit Evidence Obtained Is Sufficient And Appropriate To Provide A
Basis For The Auditor’s Opinion.

Eom Om Para
From Notes

Sa 701 Communicating Key Audit Matters In The Independent Auditor’s Report

Those Matters That, In The Auditor’s Professional Judgment, Were Of Most Significance In The
Audit Of The Financial Statements Of The Current Period. Key Audit Matters Are Selected From
Matters Communicated With Those Charged With Governance.
 How To Determine Kam

1. It Should From Matters Communicated To Tcwg

2. Required Significant Auditor Attention
3. Areas Of Higher Assessed Risk Of Material Misstatement
a. Areas In The Financial Statements That Involved Significant Management Judgment
b. Significant Risk Identified
c. Significant Events Or Transactions That Occurred During The Period
4. It Should Be Of Most Significance
5. It Is Should Be From Audit Of Current Period

 Purpose

 To Enhance The Communicative Value Of The Auditor’s Report

 To Provides Additional Information To Intended Users Of The Financial Statements
  To Assist Intended Users In Understanding
 The Entity And
 Areas Of Significant Management Judgment

 Other Important Points

From Notes

 Communicating Key Audit Matters In The Auditor's Report Is Not:

 A Substitute For Disclosures In The F.S. That The Applicable Frf Requires Management To
Make,
 A Substitute For The Auditor Expressing A Modified Opinion When Required
 A Substitute For Reporting In Accordance With Sa 570 When A Material Uncertainty Exists
Relating To Events That May Cast Significant Doubt On An Entity's Ability To Continue As A
Going Concern
 A Separate Opinion On Individual Matters.

Sa710 From Notes