Ch12 Ed3

Slide 12.
Audit Reports and

Communication
Principles of Auditing: An Introduction to
International Standards on Auditing - - Ch. 12
Rick Stephan Hayes,

Philip Wallage, and Hans
Gortemaker
[Hayes, Dassen, Schilder and Wallage, Principles of Auditing An Introduction to ISAs, edition 2.1] Pearson Education Limited 2007
Slide 12.2
Management Responsibility for Audit Report - SOx

Sox Requires that the principal executive officer or officers and the
principal financial officer or officers, certify in each report filed
with the SEC the following:
the signing officer has reviewed the report;

the report does not contain any untrue
statement of a material fact or omit to state a
material fact;
the financial statements, and other financial
information, fairly present in all material
respects the financial condition of the company;
the signing officers
are responsible for establishing and maintaining
internal controls;
have evaluated the effectiveness of the companys
internal controls; and
have presented in the report their conclusions about
the effectiveness of their internal controls based on
their evaluation;
Slide 12.3
Corporate Responsibility for Audit Report under

SOx (cont.)
Requires that the principal executive officer or officers and the
principal financial officer or officers, certify in each report
filed with the SEC the following:
the signing officers have disclosed to the

companys auditors and the audit committee
of the board of directors
all significant deficiencies in the design or
operation of internal controls which could
adversely affect the companys ability to record,
process, summarize, and report financial data and
have identified for the companys auditors any
material weaknesses in internal controls; and
any fraud, whether or not material, that involves
management or other employees who have a
significant role in the companys internal controls;
Slide 12.4
Old Style Audit Report (3 paragraph)
Slide 12.5
Contents of the PCAOB Combined Financial

Statement and Internal Control Auditor's Report
title,
Addressee (not required PCAOB AS 5)
opening or introductory paragraph
scope paragraph (describing the nature of an
audit)
Definition paragraph
Limitations paragraph
opinion paragraph containing an expression
of opinion on the financial statements,
the date of the report, the auditor's address, and
auditors signature
US Classes
Slide 12.6
Example PCAOB sample combined financial statement

and internal control audit report from Audit Standard
No. 5 NEXT SLIDES U.S. Classes
Slide 12.7
ReportofIndependentRegisteredPublicAccountingFirm
[Introductoryparagraph]
WehaveauditedtheaccompanyingbalancesheetsofWCompanyasof
December31,20X8and20X7,andtherelatedstatementsofincome,
stockholders'equityandcomprehensiveincome,andcashflowsforeachofthe
yearsinthethreeyearperiodendedDecember31,20X8.Wealsohaveaudited
management'sassessment,includedintheaccompanying[titleofmanagements
report],thatWCompanymaintainedeffectiveinternalcontroloverfinancial
reportingasofDecember31,20X8,basedon[Identifycontrolcriteria,for
example,"criteriaestablishedinInternalControlIntegratedFramework
issuedbytheCommitteeofSponsoringOrganizationsoftheTreadway
Commission(COSO)."].WCompany'smanagementisresponsibleforthese
financialstatements,formaintainingeffectiveinternalcontroloverfinancial
reporting,andforitsassessmentoftheeffectivenessofinternalcontrolover
financialreporting.Ourresponsibilityistoexpressanopiniononthesefinancial
statementsandanopiniononthecompany'sinternalcontroloverfinancial
reportingbasedonouraudits.
Slide 12.8
[Scopeparagraph]
WeconductedourauditsinaccordancewiththestandardsofthePublic
CompanyAccountingOversightBoard(UnitedStates).Thosestandards
requirethatweplanandperformtheauditstoobtainreasonableassurance
aboutwhetherthefinancialstatementsarefreeofmaterialmisstatementand
whethereffectiveinternalcontroloverfinancialreportingwasmaintainedin
allmaterialrespects.Ourauditsofthefinancialstatementsincluded
examining,onatestbasis,evidencesupportingtheamountsanddisclosures
inthefinancialstatements,assessingtheaccountingprinciplesusedand
significantestimatesmadebymanagement,andevaluatingtheoverall
financialstatementpresentation.Ourauditofinternalcontroloverfinancial
reportingincludedobtaininganunderstandingofinternalcontrolover
financialreporting,assessingtheriskthatamaterialweaknessexists,testing
andevaluatingthedesignandoperatingeffectivenessofinternalcontrol
basedontheassessedrisk,andperformingsuchotherproceduresaswe
considerednecessaryinthecircumstances.Webelievethatouraudits
provideareasonablebasisforouropinions.
USClasses
Slide 12.9
[Definitionparagraph]
Acompany'sinternalcontroloverfinancialreportingisaprocessdesigned
toprovidereasonableassuranceregardingthereliabilityoffinancial
reportingandthepreparationoffinancialstatementsforexternalpurposes
inaccordancewithgenerallyacceptedaccountingprinciples.Acompany's
internalcontroloverfinancialreportingincludesthosepoliciesand
proceduresthat(1)pertaintothemaintenanceofrecordsthat,in
reasonabledetail,accuratelyandfairlyreflectthetransactionsand
dispositionsoftheassetsofthecompany;(2)providereasonableassurance
thattransactionsarerecordedasnecessarytopermitpreparationof
financialstatementsinaccordancewithgenerallyacceptedaccounting
principles,andthatreceiptsandexpendituresofthecompanyarebeing
madeonlyinaccordancewithauthorizationsofmanagementanddirectors
ofthecompany;and(3)providereasonableassuranceregarding
preventionortimelydetectionofunauthorizedacquisition,use,or
dispositionofthecompany'sassetsthatcouldhaveamaterialeffectonthe
financialstatements.
USClasses
Slide 12.10
[Inherentlimitationsparagraph]
Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynot
preventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenessto
futureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseof
changesinconditions,orthatthedegreeofcompliancewiththepoliciesorprocedures
maydeteriorate.
[Opinionparagraph]
Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterial
respects,thefinancialpositionofWCompanyasofDecember31,20X8and20X7,and
theresultsofitsoperationsanditscashflowsforeachoftheyearsinthethreeyear
periodendedDecember31,20X8inconformitywithaccountingprinciplesgenerally
acceptedintheUnitedStatesofAmerica.Alsoinouropinion,WCompanymaintained,
inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember
31,20X8,basedon[Identifycontrolcriteria,forexample,"criteriaestablishedin
InternalControlIntegratedFrameworkissuedbytheCommitteeofSponsoring
OrganizationsoftheTreadwayCommission(COSO)."].
[Signature]
[CityandStateorCountry]
[Date]
USClasses
Slide 12.11
ISA 700 Auditors Opinion on F/S
Title: Independent Auditors Report

[Appropriate Addressee]
Introductory Paragraph (Report on Financial Statements)
Managements Responsibility for the Financial Statements
Auditors Responsibility
Opinion
Report on Other Legal and Regulatory Requirements [Form
and content of this section of the auditors report will vary
depending on the nature of the auditors other reporting
responsibilities.]
[Auditors signature]
[Date of the auditors report]
[Auditors address]
Slide 12.12
ISA 700 Sample Financial Statement Audit

Report
Independent Auditors Report
[Appropriate Addressee]
Report on the Financial Statements
We have audited the accompanying financial
statements of ABC Company, which comprise the
statement of financial position as at December
31, 20X1, and the statement of comprehensive
income, statement of changes in equity and
statement of cash flows for the year then ended,
and a summary of significant accounting policies
and other explanatory information.
Slide 12.13
Included in the Audit Report
A title, e.g. Independent Auditors Report

An addressee, as required by the circumstances
of the engagement, e.g.Shareholders of ABC
company
An introductory paragraph that identifies the
financial statements audited
Slide 12.14
Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair
presentation of these financial statements in accordance
with International Financial Reporting Standards, and for
such internal control as management determines is
necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our
audit in accordance with International Standards on
auditing. Those standards require that we comply with
ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free from material misstatement.
Slide 12.15
The Audit Report Management

Responsibility and Auditor Responsibility
A description of the responsibility of

management for the preparation of the financial
statements.
A description of the auditors responsibility to
express an opinion on the financial statements
and the scope of the audit, that includes:
A reference to International Standards on
Auditing and the law or regulation; and
A description of an audit in accordance with
those standards.
Slide 12.16
An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers
internal control relevant to the entitys preparation and fair
presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Slide 12.17
Opinion
In our opinion, the financial statements present fairly, in all
material respects, (or give a true and fair view of) the financial
position of ABC Company as at December 31, 20X1, and (of)
its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting
Standards.
Report on Other Legal and Regulatory Requirements
[Form and content of this section of the auditors report will
vary depending on the nature of the auditors other reporting
responsibilities.]
[Auditors signature]
[Date of the auditors report]
[Auditors address]
Slide 12.18
Included in the Audit Report Opinion and Signatures
An opinion paragraph containing an expression of

opinion on the financial statements and a reference
to the applicable financial reporting framework
used to prepare the financial statements (including
identifying the jurisdiction of origin of the
financial reporting framework that is not
International Financial Reporting Standards or
International Public Sector Accounting Standards,
The auditors signature;
The date of the auditors report; and
The auditors address.
Slide 12.19
The objectives of the auditor

are:
To form an opinion on the
financial statements based
on an evaluation of the
conclusions drawn from the
audit evidence obtained and
To express clearly that
opinion through a written
report that also describes
the basis for that opinion.
Slide 12.20
The report must be dated.

The auditor shall date the report no earlier than
the date on which the auditor has obtained
sufficient appropriate audit evidence on which to
base the auditors opinion on the financial
statements including evidence that: (a) all the
statements that comprise the financial
statements, including the related notes, have
been prepared; and (b) those with recognized
authority have asserted that they have taken
responsibility for those financial statements.
Slide 12.21
The opinion expressed in the auditor's report

may be one of four types:
Unmodified
(unqualified),
Three Modified Opinions:
qualified,
adverse, or
disclaimer of
opinion
Slide 12.22
Unqualified Audit Opinion Also called

Unmodified Opinion
Unmodified (unqualified) opinionThe opinion
expressed by the auditor when the auditor concludes
that the financial statements are prepared, in all
material respects, in accordance with the applicable
financial reporting framework.
Most common type of audit report
Called clean opinion
Used for more than 90 per cent of all audit reports
Other audit reports are referred to as modified
opinion. (adverse opinion, disclaimer of opinion, and
qualified opinion).
Slide 12.23
An Unmodified (Unqualified)
Audit Opinion should be expressed
when the auditor concludes that
the financial statements are
prepared, in all material respects, in
accordance with the applicable
financial reporting framework.
Slide 12.24
Evaluation of the compliance to the reporting framework

include consideration of these qualitative aspects
whether the financial statements adequately disclose the
significant accounting policies selected and they are consistent
and appropriate;
accounting estimates made by management are reasonable;
information presented in the financial statements is relevant,
reliable, comparable, and understandable;
disclosures to enable the intended users to understand the effect
of material transactions and events on the information conveyed
in the financial statements; and
terminology used in the financial statements, including the title
of each financial statement, is appropriate.
whether the financial statements achieve fair presentation. If they
are prepared in accordance with a fair presentation framework,
Slide 12.25
at least two circumstances where the auditor may not

be able to express an unmodified opinion:
1. A limitation in scope;
2. The auditors judgment about the pervasiveness
of the effects or possible effects of the matter on
the financial statements.
The circumstances described in 1 scope limitation
could lead to a modified opinion or a
disclaimer of opinion. The circumstances
described in 2 disagreement with management
could lead to a modified opinion or an adverse
opinion.
Slide 12.26
The objective of the auditor is to express

clearly an appropriately modified opinion on
the financial statements that is necessary when
a) The auditor concludes, based on the audit
evidence obtained, that the financial
statements as a whole are not free from
material misstatement; or
b) The auditor is unable to obtain sufficient
appropriate audit evidence to conclude that the
financial statements as a whole are free from
material misstatement.
Slide 12.27
Auditors Qualified Opinion

Express a qualified opinion when:
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; or
The auditor is unable to obtain sufficient
appropriate audit evidence on which to
base the opinion, but the auditor
concludes that the possible effects on the
financial statements of undetected
misstatements, if any, could be material
but not pervasive.
Slide 12.28
AuditorsResponsibilityWebelievethattheauditevidencewehaveobtained
issufficientandappropriatetoprovideabasisforourqualifiedauditopinion.
BasisforQualifiedOpinion
ABCCompanysinvestmentinXYZCompany,aforeignassociateacquired
duringtheyearandaccountedforbytheequitymethod,iscarriedatxxxonthe
statementoffinancialpositionasatDecember31,20X1,andABCsshareof
XYZsnetincomeofxxxisincludedinABCsincomefortheyearthenended.
Wewereunabletoobtainsufficientappropriateauditevidenceaboutthe
carryingamountofABCsinvestmentinXYZasatDecember31,20X1and
ABCsshareofXYZsnetincomefortheyearbecauseweweredeniedaccess
tothefinancialinformation,management,andtheauditorsofXYZ.
Consequently,wewereunabletodeterminewhetheranyadjustmentstothese
amountswerenecessary.
QualifiedOpinion
Inouropinion,exceptforthepossibleeffectsofthematterdescribedinthe
BasisforQualifiedOpinionparagraph,thefinancialstatementspresentfairly,in
allmaterialrespects,(orgiveatrueandfairviewof)thefinancialpositionof
ABCCompanyasatDecember31,20X1,and(of)itsfinancialperformanceand
itscashflowsfortheyearthenendedinaccordancewithInternationalFinancial
ReportingStandards.
Slide 12.29
Auditors Adverse Opinion ( ISA 705)

The auditor shall express an
adverse opinion when the auditor,
having obtained sufficient
appropriate audit evidence,
concludes that misstatements,
individually or in the aggregate, are
both material and pervasive to the
financial statements.
Slide 12.30
Auditors Disclaimer of Opinion (ISA 705)
The auditor shall disclaim an opinion when

the auditor is unable to obtain sufficient
appropriate audit evidence on which to base
the opinion, and the auditor concludes that
the possible effects on the financial
statements of undetected misstatements, if
any, could be both material and pervasive.
or interaction of
multiple
uncertainties on F/S
Slide 12.31
ISA 705 Appendix Types of Modified

Opinions
Auditors Judgment about the Pervasiveness of the
Effects or Possible Effects on the Financial
Statements
Nature of Matter Giving
Rise to the Modification
Material but Not

Pervasive
Material and Pervasive
Financial statements are

materially misstated
Qualified opinion
Adverse opinion
Inability to obtain
sufficient appropriate
audit
evidence
Qualified opinion
Disclaimer of opinion
Slide 12.32
Basis for Modification Paragraph
When the auditor modifies the opinion on the

financial statements, the auditor shall, in
addition to the specific elements required by
ISA 700, include a paragraph in the auditors
report that provides a description of the
matter giving rise to the modification. The
auditor shall place this paragraph
immediately before the opinion paragraph in
the auditors report and use the heading
Basis for Qualified Opinion, Basis for
Adverse Opinion, or Basis for Disclaimer of
Opinion, as appropriate.
Slide 12.33
An Emphasis of a Matter Paragraph with an

Unmodified (Unqualified) Opinion
An auditors unqualified
report is sometimes
expanded upon to explain
matters that do not affect
the auditors opinion, but
should be emphasized to
the financial statement
user.
Slide 12.34
ISA 706 Emphasis of Matter Paragraphs and Other Matters

Paragraphs in the Independent Auditors Report
The auditors report should emphasize a matter

when it is necessary to:
(a) EofM: Draw users attention to matters
presented or disclosed in the financial
statements that are of such importance that
they are fundamental to users understanding
of the financial statements; or
(b) Other Matter: Draw users attention to any
matters other than those presented or
disclosed in the financial statements that are
relevant to users understanding of the audit,
the auditors responsibilities or the auditors
report.
Slide 12.35
Report of Independent Registered Public Accounting Firm

[Standard Introductory Paragraph]
[Management Responsibility Paragraph]
[Auditor Responsibility Paragraphs]
[Opinion Paragraph]
Required Emphasis Paragraph[s]
[Emphasize those matters that are important in understanding the financial statement
presentation, including significant management judgments and estimates and areas with
significant measurement uncertainty. Discuss the audit procedures performed on these
significant matters. This discussion should not include matters that the company has not
disclosed in the financial statements and should make reference to the notes in the
financial statements that disclose each matter.]
Without qualifying our opinion we draw attention to Note X to the financial

statements. The Company is the defendant in a lawsuit alleging infringement of
certain patent rights and claiming royalties and punitive damages. The
Company has filed a counter action, and preliminary hearings and discovery
proceedings on both actions are in progress. The ultimate outcome of the
matter cannot presently be determined, and no provision for any liability that
may result has been made in the financial statements.
[Signature]
[City and State or Country]
[Date]
Slide 12.36
When the auditor includes an Emphasis of Matter

paragraph in the auditors report, the auditor shall:
(a) Include it immediately after the Opinion

paragraph in the auditors report;
(b) Use the heading Emphasis of Matter,
(c) Include in the paragraph a clear reference to
the matter being emphasized and to where
relevant disclosures that fully describe the
matter can be found in the financial statements;
and
(d) Indicate that the auditors opinion is not
modified in respect of the matter emphasized
Slide 12.37
An auditor might write an Emphasis of a Matter

paragraph:
If there is a significant uncertainty which may affect
the financial statements, the resolution of which is
dependent upon future events
Examples of uncertainties that might be emphasized
include
the existence of related party transactions,
important accounting matters occurring
subsequent to the balance sheet date
matters affecting the comparability of financial
statements with those of previous years (e.g.
change in accounting methods)
Litigation, long-term contracts, recoverability of
asset values, losses on discontinued operations
To highlight a material matter regarding a going
concern problem.
Slide 12.38
Going Concern
Slide 12.39
In a going concern judgment, the objectives
of the auditor are:

(a) To obtain sufficient appropriate audit evidence about
the appropriateness of managements use of the going
concern assumption in the preparation and
presentation of the financial statements;
(b) To conclude, based on the audit evidence obtained,
whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the
entitys ability to continue as a going concern; and
(c) To determine the implications for the auditors report.
Slide 12.40
The Going Concern

disclosure should:
describe the principal conditions that raise doubt;
state that there are doubts about going concern,
therefore the entity may be unable to realize its
assets and discharge its liabilities in the normal
course of business;
state that the financial statements do not include
any adjustments relating to the recoverability and
classification of recorded asset amounts or to
amounts and classification of liabilities that may
be necessary should the entity be unable to
continue as a going concern.
Slide 12.41
Lack of Consistency
Lack of consistency in the application of
accounting principles in the current period in
relation to the preceding period may require a
modification to an unmodified opinion based on
standards in many countries.
Slide 12.42
Reports involving other auditors and experts

ISA 620 suggests that when expressing
an unmodified (unqualified) opinion
the auditor should not refer to the
work of an expert in her report as
such a reference might be
misunderstood to be a qualification of
the auditor's opinion or a division of
responsibility. If the auditor
references the work of an expert in
the auditors report because it is
relevant to a modification to the
auditors opinion, the auditor shall
indicate this does not reduce the
auditors responsibility for that
opinion.
Slide 12.43
Communications With Those Charged

With Governance
The objective of the auditor is to provide those
charged with governance with timely observations
arising from the audit that are significant and relevant
to their responsibility to oversee the financial reporting
process including:
Qualitative aspects of the entitys accounting practices
Significant difficulties encountered during the audit
Significant matters arising from the audit that were
discussed with management
Other matters arising from the audit that are significant
to the oversight of the financial reporting process
Slide 12.44
Governance Structures
The structures of governance vary
from country to country reflecting
cultural and legal backgrounds.
In some countries, the supervision
function, and the management
function are legally separated into
different bodies, such as a supervisory
(wholly or mainly non-executive) board
and a management (executive) board.
In other countries, like the U.S., both
functions are the legal responsibility of
a single, unitary board.
Slide 12.45
Auditor Communications to Governance Entity

Audit matters of governance interest to be
communicated by the auditor to the board or audit
committee ordinarily include:
Material deficiencies in internal control;

Non-compliance with laws and regulations.
Fraud involving management
Questions regarding management integrity;
The general approach and overall scope of the audit;
The selection of, or changes in, significant
accounting policies and practices that have a
material effect on the financial statements;
Slide 12.46
Auditor Communications to Governance Entity (cont)
Audit matters of governance interest to be

communicated by the auditor to the board or audit
committee ordinarily include:
The potential effect on the financial statements of
any significant risks and exposures, such as
pending litigation, that requires disclosure in the
financial statements;
Significant audit adjustments to the accounting
records;
Material uncertainties related to the entitys ability to
continue as a going concern;
Disagreements with management about matters
that could be significant to the entitys financial
statement.
Expected modifications to the auditors report
Slide 12.47
Reporting Fraud and Error

If the auditor has identified a fraud or
has obtained information that
indicates that a fraud may exist, the
auditor shall communicate these
matters on a timely basis to the
appropriate level of management
The auditor shall determine whether
there is a responsibility to report the
occurrence or suspicion to a party
outside the entity. The auditors legal
responsibilities may override the duty
of confidentiality in some
circumstances.
Slide 12.48
Reporting of Non-compliance with Laws
If non compliance is suspected, the auditor

should communicate to those charged with
governance.
If the auditor concludes that the noncompliance
has a material effect on the financial statements,
and has not been properly reflected in the
financial statements, the auditor should express a
qualified or an adverse opinion.
The auditor shall determine whether the auditor
has responsibility to report the identified or
suspected non-compliance to parties outside the
entity.
Slide 12.49
Long-Form Audit Report

In many countries it is customary for the auditor
to prepare a long-form report to the Audit
Committee of an entitys board of directors in
addition to the publicly published short-form
report discussed in this chapter.
A long- form report ordinarily includes:
Overview of the Audit Engagement

Analysis of Financial Statements
Risk Management and Internal Control
Optional Topics
Auditor independence and quality control
Fees
Slide 12.50
Management Letter
The management letter identifies issues not
required to be disclosed in the Annual Financial
Report but represent the auditors concerns and
suggestions noted during the audit. An
evaluation is made of the present system,
pointing out problem areas. Recommendations
for improvement are cited. Also included is a
discussion of any problem which may require
immediate action to correct.
Slide 12.51
Thank You for Your Attention
Any Questions?
Slide 12.52
In order to form an opinion, the auditor shall

conclude as to whether the auditor has obtained
reasonable assurance about whether the
financial statements as a whole are free from
material misstatement, whether due to fraud or
error.
The auditors conclusion shall take into
account:
a) Whether sufficient appropriate audit evidence has
been obtained;
b) Whether uncorrected misstatements are material,
individually or in aggregate; and next slide
Slide 12.53
The auditors conclusion shall also take into account

whether the financial statements :
Are prepared, in all material respects, in

accordance with the requirements of the
applicable financial reporting framework
Disclose significant accounting policies
Use estimates made by management that are
reasonable
Use information that is relevant, reliable,
comparable, and understandable
Provide adequate disclosures and uses
appropriate terminology
Slide 12.54
XBRL is a freely licensed, open technology standard that makes

it possible to store and/or transfer data along with the
complex hierarchies, data-processing rules and descriptions.
Permits the automatic exchange and reliable extraction of
financial information across all software formats and
technologies, including the Internet
Reduces the need to enter financial information more than
one time, reducing the risk of data entry error and eliminating
the need to manually key information for various formats
Slide 12.55
Continuous Reporting and Auditing

Continuous reporting is the real-time disclosure of
transaction data.
Embedded audit modules (EAM) are database
software routines that are placed at predetermined
points to gather information about transactions or
events within the system that auditors deem to be
material. EAMs allow auditors to proactively monitor
auditable conditions.

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Slide 12.

Audit Reports and

Rick Stephan Hayes,

Management Responsibility for Audit Report - SOx

the signing officer has reviewed the report;

Corporate Responsibility for Audit Report under

the signing officers have disclosed to the

Old Style Audit Report (3 paragraph)

Contents of the PCAOB Combined Financial

Example PCAOB sample combined financial statement

ISA 700 Auditors Opinion on F/S

Title: Independent Auditors Report

ISA 700 Sample Financial Statement Audit

Included in the Audit Report

A title, e.g. Independent Auditors Report

Managements Responsibility for the Financial Statements

The Audit Report Management

A description of the responsibility of

An audit involves performing procedures to obtain audit

Included in the Audit Report Opinion and Signatures

An opinion paragraph containing an expression of

The objectives of the auditor

The report must be dated.

The opinion expressed in the auditor's report

Unqualified Audit Opinion Also called

Evaluation of the compliance to the reporting framework

at least two circumstances where the auditor may not

The objective of the auditor is to express

Auditors Qualified Opinion

Auditors Adverse Opinion ( ISA 705)

Auditors Disclaimer of Opinion (ISA 705)

The auditor shall disclaim an opinion when

ISA 705 Appendix Types of Modified

Material but Not

Material and Pervasive

Financial statements are

Basis for Modification Paragraph

When the auditor modifies the opinion on the

An Emphasis of a Matter Paragraph with an

ISA 706 Emphasis of Matter Paragraphs and Other Matters

The auditors report should emphasize a matter

Report of Independent Registered Public Accounting Firm

Without qualifying our opinion we draw attention to Note X to the financial

When the auditor includes an Emphasis of Matter

(a) Include it immediately after the Opinion

An auditor might write an Emphasis of a Matter

In a going concern judgment, the objectives

of the auditor are:

The Going Concern

Reports involving other auditors and experts

Communications With Those Charged

Auditor Communications to Governance Entity

Material deficiencies in internal control;

Auditor Communications to Governance Entity (cont)

Audit matters of governance interest to be

Reporting Fraud and Error

Reporting of Non-compliance with Laws

If non compliance is suspected, the auditor

Long-Form Audit Report

Overview of the Audit Engagement

Thank You for Your Attention

In order to form an opinion, the auditor shall

The auditors conclusion shall also take into account