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Topic 6 - Audit Report - Students Printing
Topic 6 - Audit Report - Students Printing
10 Audit Textbook (1): Chapter 11,12 Textbook (1): Chapter 11,12 1. Completion and review before issuing
Report Textbook (2): Chapter 6 Workbook: Chapter 6 Audit planning the auditors report.
1. Applying analytical procedures at or near completion of the audit. What is Audit Report?
2. Assessing the appropriateness and sufficiency of audit evidences.
3. Evaluating the effects of unadjusted/uncorrected misstatements. The audit statement means the written report made by
4. Perform these following procedures: practicing auditors, auditing firms, branches of foreign
Ø subsequent events review (sự kiện sau ngày kết thúc niên độ); auditing firms in Vietnam after the completion of the audit,
Ø examining related-party transactions, (giao dịch với các bên liên quan) giving opinions on financial statements and other contents
Ø assessing the appropriateness of the going concern assumption (giả định hđ liên tục) which have been audited under the audit contract.
5. Obtain “managementrepresentation letters”
6. Reviewing of working papers, FSs, and other information contained in the Law No.: 67/2011/QH12
annual report. 5
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Số hiệu phát hành theo từng năm của doanh nghiệp kiểm toán (1) Reference number of an Auditor’s report
1. Reference number of an Auditor’s report
2. Title Ghi rõ “Báo cáo kiểm toán Độc lập” (phân biệt với báo cáo khác) This is the reference number of an Auditor’s report issued by the audit firm.
3. Addressee Ghi rõ người nhận, thường là cổ đông, Ban quản trị hoặc Ban
Giám đốc của đơn vị
(2) Title
4. Introductory paragraph
The title of the report mentions it is “Independent Auditors’ report”.
5. Management’s Responsibility for the FSs à This clearly indicates that the auditor’s report is the report of an independent
(or Responsibility of those charged with governance) auditor and distinguishes this report from report issued by others.
6. Auditor’s responsibility
It should identify the entity whose FS have been audited and should state
that the FS have been audited. It should also:
Ø Identify the title of each of the FS that comprise the complete set of FS.
Ø Identify the page number on which auditor’s report and FS are presented.
Ø Specify the date and period covered by the FS.
Ø State the issuing date of the FS.
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Examples of Introduction paragraph 2.2. STRUCTURE OF AN AUDITOR’S REPORT
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For eg. An unqualified opinion that the FS give a true and fair view or are presented fairly, in Audit Opinion
all material respects, in accordance with applicable financial reporting framework.
v The financial information complies with relevant regulations and statutory requirements.
Tuân thủ quy định
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Example of Unmodified Opinion 2.3.2 Modified opinion
Eg - Circumstances giving rise to a modified opinion
Vinamilk
2.3.2 Modified opinion à Determine the type Modifications affecting the auditor’s opinion
Circumstances giving rise to a modified opinion of opinion expressed:
Choose the
The auditor’s opinion should be modified when:
appropriate audit opinion
Qualified
v The auditor concludes, based on the audit evidence obtained, that the vThe “nature of matter giving rise
financial report is not free from material misstatements, or; Opinion
Adverse to a modified opinion”: whether
v The auditor is unable to obtain sufficient appropriate evidence to Opinion the FSs are materially misstated
conclude that the financial report is free of material misstatements Disclaimer or an inability to obtain sufficient
(ASA/ISA 705.6). of Opinion appropriate audit evidence.
è The auditor should take all reasonable steps to overcome the issues giving vAuditor’s judgment regarding the
rise to the material misstatement (disagreements with management) or the effects of materiality and the
issues causing the auditor to be unable to obtain sufficient appropriate
pervasiveness on FSs.
evidence (limitations on scope).
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What are “Material misstatements”? Sai sót có ảnh hưởng lan toả
ISA 705.A3
VSA 705
v VSA/ISA 450 defines a misstatement as the difference between the Ảnh hưởng lan toả (Textbook 2 – trang 239):
amount, classification, presentation or disclosure of an item reported by
an entity in the financial report and the way that item is required to be Ø là ảnh hưởng mà chúng không chỉ giới hạn ở 1 số yếu tố, 1 số tài khoản hoặc
treated in accordance with the applicable financial reporting framework. khoản mục cụ thể;
v Therefore, a material misstatement in the financial report may arise in Ø hoặc chúng có thể đại diện cho 1 phần quan trọng của BCTC;
relation to: Ø hoặc liên quan đến thuyết minh chủ yếu mà để người sử dụng hiểu được BCTC.
What are “Pervasive misstatements”? The Scope of the Audit Has Been Restricted (Scope Limitation)
Bị giới hạn về phạm vi kiểm toán ISA 705.A8
ISA 705.5
v When the auditor has not accumulated sufficient appropriate evidence to conclude
v Effects are considered to be pervasive if they: whether FSs are stated in accordance with the appropriate financial reporting
Ø Are not confined (limited) to specific elements, accounts or items of the framework, a scope restriction exists.
financial report
v A limitation on the scope of the auditor’s work may arise for one of the following
Ø If so confined, represent or could represent a substantial proportion of
three reasons:
the financial report, or
Ø Circumstances beyond the control of the entity
Ø In relation to disclosures, are fundamental to users’ understanding of Ø Circumstances related to the nature or timing of the auditor’s work, or
the financial report Ø Limitations imposed by the entity.
For all the types of modified opinions, a basis for modification Examples:
• management’s refusal to permit the auditor to confirm material receivables or to physically
paragraph is inserted just before the opinion paragraph. examine inventory,
• the auditor is not appointed until after the client’s year-end, it is impossible to physically observe
inventories,
• accounting documents got destroyed in a fire.
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Choose the appropriate audit opinion An example of QUALIFIED OPINION
(Materially/Pervasively) Eg -
HAGL
group
Auditor’s judgment regarding the effects
of materiality and pervasiveness on FSs.
The nature of matter giving rise
to a modified opinion Misstatements are Misstatements are
material but material and
not pervasive pervasive
The FSs are materially misstated
Qualified opinion Adverse opinion
(disagreements with management)
An inability to obtain sufficient
appropriate audit evidence Qualified opinion Disclaimer of opinion
(scope limitations)
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ØThe auditor is unable to obtain sufficient appropriate evidence on which to à The most common situation in which they are issued is where
base the opinion, but concludes that the possible effects on the FSs the accounts are prepared on a going concern basis and the auditor concludes
could be material but not pervasive. that it is highly improbable that the entity will continue as a going concern.
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Types of Modified opinion 2.4 Form and content of the auditor’s when
(3) DISCLAIMER OPINION the audit opinion is modified (1)
ISA 705.9
1. Basis for modification paragraph
v A disclaimer of opinion, also referred to as an inability to form an opinion, is
expressed when:
v This provides a description of the matter giving rise to the modification.
v The auditor shall place this paragraph immediately before the Opinion
Ø the auditor is unable to obtain sufficient appropriate evidence to form an paragraph in the auditor's report and use the heading
opinion,
"Basis for Qualified opinion", "Basis for Adverse Opinion", or "Basis for
Ø and concludes that the possible effect of undetected misstatements on the
financial report could be both material and pervasive. Disclaimer opinion", as appropriate.
v This may include a description and quantification of the financial effects of the
misstatement, unless impracticable.
If not practicable, the auditor shall also state in the basis for modification
paragraph.
v The auditor shall include in the basis for modification paragraph the reasons
for an inability to obtain sufficient appropriate audit evidence, if any.
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2.4 Form and content of the auditor’s when
the audit opinion is modified (2)
2.5. “Emphasis of matter”
2. Change the title of Opinion paragraph
The auditor shall use the heading "Qualified opinion", "Adverse opinion", or
& “Other matter”
"Disclaimer of opinion", as appropriate, for the opinion paragraph.
3. Amend the description of the auditor's responsibility when a Qualified or
Adverse opinion is issued
To state that the auditor believes that the audit evidence the auditor has obtained
is sufficient and appropriate to provide a basis for that opinion. ISA 706: “Emphasis of Matter Paragraphs and Other
Matter Paragraphs in the Independent Auditor's Report”
4. Amend the introductory paragraph of the Disclaimer of Opinion
To state that the auditor was engaged to audit the FSs. The auditor also amends
the description of the auditor's responsibility and the description of the scope of
the audit. 39
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Emphasis of matter
Example: “Emphasis of Matter’ paragraph
In the auditor’ relating to inherent uncertainties”
judgment, that matter
is of such important
To draw user’s that it is fundamental
attention to a to user’s
matter understanding of the
appropriately FSs
presented or
disclosed
in the FSs The auditor has
obtained sufficient
appropriate audit
evidence that the
matter is not
materially misstated
in the FSs 41 43
45 Patel, CPA 47
(Signed)
No (there is No MM)
Unmodified
Other Information
1. Are there any material misstatements in the FSs?
audit opinion
q Bell is a private corporation.
Yes, there are MMs
q Patel was unable to perform normal accounts receivable confirmation procedures for
accounts that are material, but not pervasive, to the financial statements. Unfortunately, Patel
MMs are NOT pervasive
Qualified was not able to perform alternative procedures to support the existence of the receivables.
2. The pervasiveness of MMs? audit opinion
q Bell Corporation is the devaluation of inventory due to the nature of inventory of fashionable
MMs are pervasive items.
This is a reasonable possibility that Bell’s inventory account may be needed to make a
3. The auditor’s ability to obtain sufficient unable to obtain sufficient
Disclaimer of
provision of 15.000 USD. This amount is higher than overall materiality of 10.000 USD.
appropriate audit evidence Because management does not want to provide any information of this devaluation, the case
appropriate audit evidence? opinion
is not discussed in the financial statements.
Scope limitation
sufficient appropriate AE
Required:
a. Identify and explain any items included in “Other Information” that need not be part of the auditor’s report.
Adverse b. Does the current audit opinion provide a true and fair audit opinion?
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audit opinion 46 If it does not, suggest your recommendation on the more appropriate audit opinion.