PSA 700- Forming Objective: To form Opinion on Scope: Auditors Responsibility to form

an Opinion and Financial statements based on Opinion on Financial Statement and

evaluation of the conclusion drawn
Reporting on communicating Key Audit Matters, it
and to express clearly that opinion applies to an Audit of a complete set of
Financial Statements through a written report. Financial Statements

 Adequately disclose significant policies

applied, the accounting policies
EVALUATE!!
Forming an Audit Report selected and applied are consistent
with the applicable financial reporting
The Auditor shall framework and are appropriate; the
conclude as to whether
the auditor has
obtained reasonable
FS accounting estimates made by
management are reasonable; the
information presented in the financial
assurance that the statements is relevant, reliable,
Financial Statement as comparable, and understandable; the
a whole are free from financial statements provide adequate
 Whether
material the Financial Statement are
misstatement, disclosures to enable the intended
prepared
whether due to fraudin accordance with the users to understand the effect of
or error requirements of the applicable material transactions and events on the
reporting framework, this shall information conveyed in the financial
include the qualitative aspects of statements and the terminology used
entity’s accounting practice. in the financial statements, including
the title of each financial statement is
appropriate.
The Auditor’s Report Forms of Audit Opinion
 Title - indicates that it is report of an  The auditor shall express an unmodified
Independent Auditor’s Report opinion when the auditor concludes that
 Addressee - based on circumstances the financial statements are prepared, in
 Auditor’s Opinion - conveying the opinion on all material respects, in accordance with
the Financial Statements Audited the applicable financial reporting
 Basis for Opinion - states that the audit is in framework.
accordance with PSA, Refer to section of  If the auditor:
Auditor’s Responsibilities under PSA, Statement (a) Concludes that, based on the audit
of the Auditor’s Independence to the Entity, evidence obtained, the financial statements
Statement that the Auditor believe that as a whole are not free from material
evidences are sufficient to support Conclusion misstatement; or
 Going Concern (b) is unable to obtain sufficient
 Key Audit Matter in accordance with PSA701 appropriate audit evidence to conclude that
 Responsibilities of Management to the the financial statements as a whole are free
Financial Statements from material misstatement, the auditor shall
 Auditors Responsibility for the Audit of modify the opinion in the auditor’s report in
Financial Statements and other reporting accordance with PSA 705 (Revised).
responsibilities  If financial statements prepared in
 Name of the Engagement partner accordance with the requirements of a
 Signature and address of auditor fair presentation framework do not
 Date of Auditor’s Report achieve fair presentation, the auditor
shall discuss the matter with
management and, depending on the
requirements of the applicable financial
reporting framework and how the matter
is resolved, shall determine whether it is
necessary to modify the opinion in the
auditor’s report in accordance with PSA
705 (Revised).
 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
 PSA 701: KEY AUDIT MATTERS
Communicating Key Those matters that, in the auditor’s professional
Audit Matters in the judgment, were of most significance in the audit of the
financial statements of the current period. Key audit
Independent matters are selected from matters communicated with
Auditor’s Report those charged with governance. Scope:
The purpose of
communicating key audit matters is to
Objective: enhance
Scope: the communicative value of
Scope:
the auditor’s
The report by providing
purpose of
To determine key audit The purpose of transparency
greater
communicating about
key audit the audit
matters is to
matters and, having formed an communicating key audit matters is was
that to performed.
enhance
Scope: the communicative value of
opinion on the financial enhance the communicative value
the ofauditor’s report
The by providing
purpose of
statements, communicate the auditor’s report by providing
greater transparency about
communicating key the audit
audit
those matters by describing greater transparency about thethat was performed.
audit matters is to enhance the
them in the auditor’s report that was performed. communicative value of the
auditor’s report by providing
greater transparency about
 Determine from the matters communicated with those charged with governance,
the audit that was performed.
those matters that required significant auditor attention in performing the audit. In
Determining making this determination, the auditor shall take into account the following:
 Areas of higher assessed risk of material misstatement, or significant risks
Key Audit identified in accordance with PSA 315 (Revised).
 Significant auditor judgments relating to areas in the financial statements that
Matters involved significant management judgment, including accounting estimates that
have been identified as having high estimation uncertainty.
 The effect on the audit of significant events or transactions that occurred during
the period.

 The introductory language in this section of the auditor’s report shall state that:
 Key audit matters are those matters that, in the auditor’s professional judgment,
were of most significance in the audit of the financial statements;
 These matters were addressed in the context of the audit of the financial
Communicating Key Audit Matters

statements as a whole, and in forming the auditor’s opinion thereon, and the
auditor does not provide a separate opinion on these matters.
 Key Audit Matters Not a Substitute for Expressing a Modified Opinion
The auditor shall not communicate a matter in the Key Audit Matters section of the
auditor’s report when the auditor would be required to modify the opinion in accordance
with PSA 705 (Revised) as a result of the matter.
 Descriptions of Individual Key Audit Matters (a) Why the matter was
considered to be one of most significance in the audit and therefore
determined to be a key audit matter; and (b) How the matter was
addressed in the audit
 Circumstances in Which a Matter Determined to Be a Key Audit Matter
Is Not Communicated in the Auditor’s Report (a) Law or regulation
precludes public disclosure about the matter; or (b) In extremely rare
circumstances, the auditor determines that the matter should not be
communicated in the auditor’s report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest
benefits of such communication. This shall not apply if the entity has
publicly disclosed information about the matter.
 Form and Content of the Key Audit Matters Section in Other
Circumstances If the auditor determines, depending on the facts and
circumstances of the entity and the audit, that there are no key audit
matters to communicate or that the only key audit matters
communicated are hose matters addressed by paragraph 15, the auditor
shall include a statement to this effect in a separate section of the
auditor’s report under the heading “Key Audit Matters”

Communication The auditor shall communicate with those charged with governance:

with those  Those matters the auditor has determined to be the key audit
matters; or
Charged with  If applicable, depending on the facts and circumstances of the
Governance entity and the audit, the auditor’s determination that there are no
key audit matters to communicate in the auditor’s report.