Standards for the presentation of the results of audits. International standards for the presentation of the results of audits
5. International standards registration of the results of audits
Guidance to auditors regarding the form and content of the auditor's report is contained in Standard 700 “ Audit report on financial statements ". The standard includes the following sections: introduction, the main elements of the auditor's report, types of auditor's reports, circumstances that may lead to the expression of an opinion other than positive.
An auditor's report is provided based on the results of an audit of the entity's financial statements conducted by an independent auditor. The requirements of the standard can be used in preparing auditor's reports on financial information other than financial statements.
The auditor expresses an opinion on the financial statements based on the study and assessment of the conclusions reached from the audit evidence obtained in the course of the audit. In this case, the auditor must determine the compliance of the financial statements:
Requirements of international financial reporting standards, national standards or rules;
Legislative requirements.
This standard requires the auditor's report to be clearly formulated in writing the auditor's opinion on the financial statements of the entity as a whole.
The standard indicates the need to maintain uniformity in the form and content of the auditor's report, which makes it easier for users to understand it.
The auditor's report includes the following elements:
Name;
Destination;
An introductory paragraph (introduction), which contains a description of the audited financial statements, a provision on the responsibility of the organization's management and the auditor;
A paragraph describing the scope (nature) of the audit, which provides references to ISAs or national standards, a description of the work performed by the auditor;
The paragraph in which the auditor's opinion on the financial statements is expressed;
Date of issue of the auditor's report;
Auditor's address;
Auditor's signature.
In accordance with international practice, it is customary to use the words "independent auditor" in the title of the auditor's report. This allows the auditor's report to be distinguished from other reports, such as those drawn up by company officials or the board of directors.
The addressee of the audit report should be a person identified in accordance with the terms of the audit agreement and local regulations... So, the auditor's report can be addressed to shareholders or the board of directors of the enterprise.
The introduction of the auditor's report should contain a list of the audited financial statements of the entity with an indication of the date and reporting period, as well as a statement on the responsibility of the company's management and the auditor. In accordance with the requirements of ISA, the management of the economic entity is responsible for the financial statements. The preparation of the financial statements requires management of the entity to make significant accounting estimates, principles and methods of maintenance. accounting that are used in the preparation of these statements. The auditor's responsibility is only to express an opinion on the client's financial statements based on the audit performed.
The paragraph describing the scope (nature) of the audit indicates that the audit was conducted in accordance with ISA or national standards. Scope in this case refers to the auditor's ability to perform audit procedures deemed necessary in the circumstances. The user of the auditor's report, having familiarized himself with its content, must be sure that the audit was carried out in accordance with the established standards. The auditor's report indicates that the client's financial statements are free from material misstatement because the audit was properly planned and performed. This paragraph provides the content of the audit:
Testing and analysis of audit evidence supporting the amounts and information in the financial statements;
Determination of the accounting principles used in the preparation of financial statements;
A study of significant accounting estimates made by management in preparing the financial statements;
Evaluating the overall presentation of financial statements.
The description of the scope (nature) of the audit should conclude with the auditor's assertion that the audit provides a reasonable basis for the expression of an opinion.
In the paragraph in which the auditor's opinion is expressed, it is necessary to clearly express his opinion on the reliability and objectivity of the financial statements of the enterprise (organization). You should also indicate that the financial statements have been prepared in accordance with financial reporting frameworks and legal requirements.
The auditor has the right to use the phrases “gives a reliable and objective picture” and “presented objectively in all material aspects”. The use of these phrases emphasizes the fact that the auditor has investigated only those matters that are material to the financial statements.
The auditor may express an opinion on the compliance of the financial statements with other requirements of applicable regulations and laws. If an enterprise (organization) used the accounting principles of a particular country in the preparation of financial statements, this country should be indicated in the auditor's report.
The report is dated by the date the audit was completed. This means that the auditor has taken into account the influence of all facts and events known to him and taking place prior to that date. At the same time, the auditor should not date the report with a date prior to the date of signing or approval of the financial statements by the management of the enterprise.
The auditor's report provides a clear address for the auditor, i.e. the specific location of his office. The auditor's report is signed on behalf of the audit firm or personally on behalf of the auditor. If necessary, both signatures are put on the auditor's report.
There are the following types of audit reports:
Absolutely positive;
Conditionally positive;
Refusal to express an opinion;
Negative.
An unconditionally positive auditor's report is drawn up in cases where the auditor:
Expresses an opinion on the reliability and objectivity of the financial statements in all material aspects;
Confirms the formation of the entity's financial statements in accordance with the established financial reporting framework.
An unquestionably positive opinion indirectly indicates the fact that when preparing the financial statements, the organization has applied and reflected all the principles and methods of accounting.
An example of an unconditionally positive auditor's report in accordance with ISA is given in Appendix No. eight.
The rest of the types of auditor's reports are modified reports.
The auditor's report is considered modified if there are factors that do not or do not influence the auditor's opinion.
If there are factors that do not affect the auditor's opinion, an auditor's report is drawn up with an explanatory paragraph. If there are factors that influence the auditor's opinion, the auditor expresses a conditionally positive opinion, a negative opinion or refuses to express an opinion.
The inclusion of an explanatory paragraph in the auditor's report does not affect the auditor's opinion. The standard recommends that this paragraph be included in the section of the auditor's report after the paragraph containing the auditor's opinion. Usually, in the explanatory paragraph, a reference is made to the fact that such and such a specific factor is not a basis for expressing a conditionally positive opinion.
Factors that do not affect the auditor's opinion, which are specified in the explanatory paragraph, include:
Factor related to going concern assumption;
The presence of significant uncertainty, the elimination of which depends on future actions or events.
Limiting the scope of the auditor's work leads to the expression of a conditionally positive opinion or to a refusal to express an opinion. Disagreements with management regarding accounting policies and the sufficiency of the information may lead to the expression of a conditionally positive or negative opinion. The standard provides examples of circumstances that may lead to the expression of an opinion other than an unconditionally positive one (Table 5.1, see Appendix No. 7)).
A conditional positive opinion is expressed when the auditor is unable to reach an unqualified positive opinion, but the impact of a disagreement with management or a limitation on the scope of the audit is not material and profound enough to express a negative opinion or refuse to express an opinion.
The auditor refuses to express an opinion when there is a material limitation on the scope of the audit and cannot obtain sufficient and relevant audit evidence and, therefore, express an opinion on the entity's financial statements. A negative opinion is expressed when there is material disagreement with the entity's financial reporting management.
At the same time, the financial statements of the enterprise are misleading or incomplete. If the auditor expresses an opinion other than an absolute positive, he should clearly describe all significant reasons for this in the auditor's report. Where possible, quantitative indicators of the impact on the financial statements are provided.
Usually this information is reflected in a separate paragraph preceding the expression of opinion or disclaimer of expression.
Detection risk to an acceptable level. The standard requires the auditor to understand and document accounting and internal control systems. 2. The use of international standards of auditing in the audit of small businesses. 2.1 Internal audit of a small business In accordance with international auditing standards, internal audit is an element ...
The International Federation of Accountants, established in 1977, is at the same level. Within the framework of the International Committee on Auditing Practice, acting as a standing autonomous committee, publishes international standards on auditing, which have a dual purpose: to promote the development of the auditing profession in those countries where the level of professionalism of auditors below the global level, and unify ...
Services. "It applies to all services regulated by the IAASB standards. The purpose of these standards is to establish quality assurance requirements. professional services audit firms. International Standards on Auditing (ISAs 100-999) are intended for use in auditing financial statements (as revised by IASSB - Historical Financial Information). To this group ...
... (combining individual elements into a common indicator). Thus, the financial analysis plays a huge role in auditing, is able to have a significant impact on the further development of an economic entity, its place in market economy... High-quality financial analysis is at the heart of the entire audit process, therefore, it is given the utmost attention as an audit ...
Standard - an official state or regulatory technical document of the industry, enterprise, form, establishing the necessary quality characteristics, the requirements that a given type of product must satisfy.
The standards regulate the professional activities of auditors and are widely recognized all over the world, since they allow achieving the greatest objectivity in expressing an audit opinion on the compliance of financial statements with generally accepted principles of accounting and financial reporting, and also establish uniform qualitative criteria for comparing the results of audit activities. The uniformity of audit activity is a prerequisite for it due to the variety of methods used in audit practice and the complexity of their comparison.
Auditing standards define uniform basic rules for the implementation of audits, uniform requirements to the quality and reliability of the audit. The use of auditing standards provides a certain level of assurance of the reliability of the audit results.
On the basis of auditing standards, programs for the training of auditors are formed, as well as requirements for conducting examinations for the right to engage in auditing activities. Auditing standards are the basis for proving in court the quality of the audit and determining the measure of responsibility of auditors. The standards establish the general approach to auditing, the scope of the audit, the types of auditor reports, the audit methodology, and the basic principles to be followed by all members of the profession, regardless of the context in which the audit is conducted. An auditor who makes deviations from the standard in their practice should be prepared to explain the reason for this.
Standards play an important role in auditing and auditing because they:
- ensure the high quality of the audit;
- help users understand the audit process;
- create a public image of the profession;
- remove state control;
- help the auditor to negotiate with the client;
- provide a link between the individual elements of the audit process.
Auditing standards are the basis for proving in court the quality of the audit and determining the measure of responsibility of auditors. The standards define the general approach to auditing, the scope of the audit, the types of auditor reports, methodological issues, and the basic principles to be followed by all members of the profession, regardless of the context in which the audit is conducted. Russian standards for auditing are developed on the basis of International Standards on Auditing (ISA) issued by the International Federation of Accountants.
The system of standards in a generalized form includes international standards; national standards; in-house standards. Ultimately, the goal of the system of standards is achieved by the formation and application of a package of in-house standards that detail and regulate uniform requirements for performing audits and drawing up audit reports.
The significance of a system of standards is that it:
- ensures the high quality of the audit;
- promote the introduction of new scientific achievements into audit practice;
- helps users understand the audit process;
- provides a link between the individual elements of the audit process;
- creates a public image of the profession.
International auditing standards
At the heart of Russian standards audit are based on international standards (ISA). Development professional requirements at the international level, several organizations are involved, incl. International Federation of Accountants (IFAC), established in 1977. As part of IFAC audit standards handled by the International Auditing Practice Committee (IAPC).
The International Standards on Auditing (IAG) issued by the Committee have a dual purpose:
1) promote the development of the profession in those countries where the level of professionalism is below the global level;
2) to harmonize, as far as possible, the approach to auditing internationally.
The system of international auditing standards has more than 45 standards grouped into several sections. The HKSAs are based on the following fundamental principles:
- an audit can only be carried out by a person who has an auditor's certificate, that is, a professional with sufficient work experience who has successfully passed qualifying exams;
- the auditor must be independent of the client;
- the auditor must comply with the Code of Professional Ethics in his activities;
- the auditor should express an opinion in the auditor's report on the reliability of accounting statements client.
4. Materiality in the audit.
5. Audit evidence.
After examining and evaluating the conclusions reached from the evidence obtained, the auditor determines whether the information is prepared in accordance with an established financial reporting framework and forms an opinion on the financial statements as a whole.
In accordance with ISA 700, Auditor's Report on Financial Statements, the main elements of the auditor's report are:
1. Title.
2. Addressee.
3. Introductory paragraph (introduction).
4. A paragraph describing the scope of the check.
5. The paragraph in which the auditor's opinion on the financial statements is expressed.
6. Date of issue of the auditor's report.
7. Auditor's address.
8. Signature of the auditor.
The addressee is determined in accordance with the terms of the audit agreement and local regulations. As a rule, the opinion is addressed to the shareholders or the board of directors of the audited entity.
The introduction contains a list of audited statements with an indication of the date and reporting period, a mention of the responsibility of management for the financial statements and the assertions contained therein, and the auditor's responsibility only to express his opinion on these statements based on the audit performed.
The paragraph describing the scope of the audit should refer to ISAs or relevant standards and regulations and indicate that the audit was planned and performed to provide reasonable assurance that the financial statements are free from material misstatement. In addition, it is stated that the check included:
Analysis of evidence supporting the amounts and information contained in the statements;
Determination of the applied accounting principles;
Investigation of significant accounting estimates made by management;
An assessment of overall reporting.
The report should also contain the auditor's confirmation that the audit provides a reasonable basis for the opinion.
The paragraph expressing the auditor's opinion indicates whether the financial statements provide a fair and objective presentation in all material respects (the wording “presented objectively” is acceptable) financial situation and the performance of the auditee in accordance with established financial reporting frameworks.
An unconditionally positive opinion is expressed when the auditor believes that the financial statements are presented objectively, in all material respects, in accordance with an established financial reporting framework.
A conclusion is considered modified if it contains an explanatory paragraph or an opinion other than unconditionally positive. The auditor should modify the report by including an additional paragraph if there is a factor indicating that the going concern assumption is inappropriate or a significant uncertainty that could affect the financial statements in the future. These factors do not influence the auditor's opinion, which should be reflected in the report.
The auditor is unable to express an unconditionally positive opinion if one of the following circumstances exists:
1) limiting the scope of the audit;
2) disagreement with management regarding the admissibility of the selected accounting policy, methods of its application or the adequacy of the disclosure of financial information in the reporting.
If the effect of these circumstances is material to the financial statements, the auditor expresses a negative opinion. If the influence of these factors is not so significant and deep, but an unconditionally positive opinion cannot be expressed, then the auditor expresses a conditionally positive opinion.
Where there is a material limitation in scope such that the auditor is unable to obtain sufficient and relevant audit evidence, a disclaimer shall be drafted.
If the conclusion differs from one containing an unconditionally positive opinion, then the auditor should describe all the significant reasons for this and, if possible, give quantification possible impact on the financial statements.
The report is dated at a date corresponding to the date of completion of the audit and not earlier than the date of signature or approval of the financial statements. The auditor's report is usually signed on behalf of the audit firm and personally on behalf of the auditor. The address indicates the city and place where the office of the auditor responsible for the audit is located. The following is an example of an unconditionally positive auditor's report:
Untitled Document
Audit report |
To ABC shareholders |
We have audited the following financial statements of ABC:
The management of ABC is responsible for the financial statements and the statements contained therein. 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. These standards oblige us to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The audit includes:
We believe that our audit provides sufficient information to express our opinion. In our opinion, the financial statements present a true and fair picture of ABC's financial position as at 31 December 20, the results of its operations and cash flows for the year ended on that date, in accordance with International Financial Reporting Standards. |
On behalf of the auditing firm XYZ |
Head of the company (signature) |
Auditor (signature) |
Comparisons are the related amounts and other disclosures for the prior reporting financial period or other periods presented for comparison purposes. ISA 710, Comparisons, provides standards and guidance for the auditor's responsibilities in comparison. Indicators for comparison can be as follows: Relevant indicators are included as part of the financial statements for the current period. Considered only in connection with indicators for this period (for example, the amount of income and expenses for the current and past periods given in the income statement for the reporting period); Comparable financial statements - financial statements for the prior period, presented for purposes of comparison with the financial statements of the current period. The auditor should determine whether the comparisons are consistent with the financial reporting frameworks that are relevant to the audited accounts. With respect to comparisons, the auditor determines: Compliance with the accounting policies of the current and previous periods, the presence of necessary adjustments and disclosure of information; Reconciliation of indicators with amounts and disclosures provided for the previous period. When drawing up an auditor's report, the auditor does not indicate separately the relevant indicators, since he expresses an opinion on the reporting as a whole. The exceptions are the following cases: 1. The previously issued auditor's report for the previous period contains an opinion other than unconditionally positive, and the issue that caused the modification of the report has not been resolved. In this case, the auditor modifies the report on the reporting of the current year in relation to the relevant indicators. 2. The previously issued auditor's report contains an unconditionally positive opinion, but the auditor has learned about material misstatements affecting the reporting for the previous period. In this case, if the reporting has not been revised and the information has not been disclosed properly, then the conclusion on the reporting for the current period is modified in relation to the relevant indicators, and if the relevant indicators are presented in the reporting for the current period properly, then in the conclusion, an explanatory paragraph can be included about corresponding indicators. If the financial statements containing the relevant indicators are audited by a new auditor, then the report should contain either a reference to the fact that the financial statements for the previous period were audited by another auditor, or an indication that the financial statements for the previous period were not audited. If, during the audit, the new auditor discovers that the relevant indicators are misstated, he should require management to revise them and, in case of refusal, to modify the auditor's report. In a report on comparable financial statements, the auditor specifies the comparisons specifically. The opinion applies to each separately presented financial statement, and the auditor, if necessary, can express an opinion other than an unconditionally positive one for certain periods and at the same time issue a separate opinion on the rest of the statements. If the opinion on the reporting for the previous period, formed during the current audit, differs from the previously expressed, the auditor discloses the significant reasons for this difference in the explanatory paragraph. If the statements for the previous period were checked by another auditor, then events may develop according to one of the following options: 1. The previous auditor can re-draw up an auditor's report on the statements he has checked, and the new one draws up an opinion only for the current period. 2. The new auditor draws up an opinion, which contains information that the accounts for the previous period were reviewed by another auditor, and the type and date of the opinion issued by the predecessor. In reviewing the accounts, the new auditor may discover a material misstatement not noticed by the previous auditor that affects the financial statements for the previous period. In this case, the new auditor should discuss the matter with management and, after obtaining consent, contact the predecessor with a proposal to re-write the report from the previous period. If the predecessor agrees to issue an opinion, then the new auditor draws up an opinion for the current period. If the previous auditor refuses to comply with these requirements, then the new auditor may note in his opinion that the previous opinion on the statements was drawn up before its reissue and that the necessary adjustments were made during the reissue. If the accounts for the previous period have not been checked, the new auditor should indicate this fact in the report and check the opening balances of the current period. If the audit reveals that the indicators for the previous period are distorted, the auditor should require management to revise them, and in case of refusal, modify the auditor's report. other information is information of a financial and non-financial nature contained together with financial statements in a published document (for example, data on officials, employment, planned capital expenditures, analytical coefficients and other information). In accordance with ISA 720, “Other Information in Documents Containing Audited Financial Statements,” the auditor is not required to report on this information, but must read it to identify material inconsistencies with the audited financial statements, as such inconsistencies may call into question the conclusions of the auditor's report. ... Other information should be obtained by the auditor prior to the date of the auditor's report. The auditor is not responsible for ascertaining whether the other information is properly presented. If inconsistencies are found, the auditor should determine the need to amend the audited accounts or other information. If it is required to amend the reporting, but the entity does not comply with these requirements, then the auditor must express a conditionally positive or negative opinion. If amendments to other information are required, but the subject refuses to make them, then the auditor includes in the conclusion an explanatory paragraph describing the non-compliance, or takes other measures (refuses to issue an opinion or continue the audit). If the auditor discovers misstatements in the other information that are not related to the content of the audited accounts, he should discuss this matter with the entity's management and, depending on the results of the discussion, ask management to: Consult a competent third party; Eliminate distortion of facts. If management refuses to correct misstatements of fact, the auditor should take steps to notify those responsible for the overall management of the entity of its concerns, obtaining legal advice if necessary. If the auditor has not obtained access to other information before the date of the report, then he should become familiar with it as soon as possible. If inconsistencies or misstatements of facts are found, the auditor should determine the need to revise the audited accounts or other information. If a revision of the accounts is required, the auditor follows the recommendations of ISA 560 "Subsequent Events", and if revision of other information is required, the auditor asks the management to inform its users about the revision. If management refuses, the auditor takes steps to inform those responsible for the general management of the entity about his doubts about other information. IN public sector the auditor may have additional responsibilities to verify other information, in which case the application of the above provisions is inappropriate. 1. What are the main elements of an auditor's report on the financial statements? 2. What information is included in the paragraph describing the scope of the check? 3. What are the types of auditor opinions? 4. What is meant by a modified conclusion? 5. What circumstances may cause a modification to the auditor's report? 6. In what cases is a conditionally positive opinion of the auditor formulated? 7. What could be the reason for the auditor's refusal to express an opinion? 8. What types of comparisons are defined by International Standards on Auditing? 9. What information regarding comparisons should be verified? 10. When, when drawing up a report, the auditor provides an opinion on the comparisons? 11. What are the features of drawing up an opinion on comparable financial statements if the statements for the previous period were checked by another auditor? 12. What is the purpose of the auditor's familiarization with other information included in the financial statements? 13. What actions are taken by the auditor when it finds a discrepancy between other information and the information contained in the financial statements? |
There are three standards for preparing the auditor's report in ISA:
ISA 700 describes the preparation of the auditor's report in cases where the auditor expresses an unconditionally positive opinion and does not modify the report;
ISA 701 provides guidance on the drawing up of modified reports due to the inclusion of an attention-getting paragraph and for the qualified, negative or discouraged opinion;
ISA 800, Auditor's Report on Audit Engagements for Special Purposes, is intended to special cases(see topic 6).
The auditor's report should contain the auditor's clear opinion on the financial statements. The criterion for the correctness and fairness of the presentation of the audited information is the applicable financial reporting framework, as established in ISA 200.
After examining and evaluating the conclusions reached from the evidence obtained, the auditor determines whether the information is prepared in accordance with an established financial reporting framework and forms an opinion on the financial statements as a whole. This definition includes consideration of the following in the context of the applicable financial reporting framework:
compliance of the selection and application of accounting policies with the requirements of the financial reporting framework;
the reasonableness of accounting estimates determined by client management;
the relevance, reliability, comparability and comprehensibility of information in the financial statements, including accounting policies;
the adequacy of the disclosures in the financial statements to enable interested users to gain an understanding of the impact of material transactions and events on the financial statements.
An auditor's report is considered modified if it contains an explanatory paragraph or opinion other than an unqualifiedly positive one.
ISA701 defines two types of aspects that lead to a modification of the conclusion:
that do not affect the opinion of the auditor (the modification is expressed in the form of an additional paragraph);
influencing the auditor's opinion (in this case, a qualified opinion, a negative opinion or a refusal to express an opinion is expressed).
The auditor should modify the report by including an additional paragraph if there are factors indicating:
problems of compliance with the going concern assumption;
significant uncertainty that could affect the financial statements in the future;
inconsistency of other information contained in the audited statements with the indicators presented in these financial statements.
These factors do not affect the auditor's opinion, which should be reflected in the report, and these paragraphs are given in the report after the opinion expressed by the auditor.
The auditor is not able to express an unconditionally positive opinion if one of the following circumstances exists:
limiting the scope of the audit;
disagreement with management regarding the acceptability of the selected accounting policy, how it is applied, or the adequacy of financial disclosure in the financial statements.
If the influence of these circumstances is material and profound for the financial statements, then the auditor expresses a negative opinion.
If the influence of these factors is not so significant and deep, but an unconditionally positive opinion cannot be expressed, then the auditor expresses an opinion with a reservation.
If the limitation of scope is material such that the auditor is unable to obtain sufficient and appropriate audit evidence, then a disclaimer of opinion should be drawn up. At the same time, the conclusion does not include a paragraph on the responsibilities of the auditor, and the description of the scope of the audit is omitted or adjusted.
If the opinion differs from one containing an unconditionally positive opinion, the auditor should describe all the significant reasons for this and, if possible, quantify the possible effect on the financial statements.
Information on the reasons why the auditor considered it necessary to express an opinion other than an unconditionally positive opinion is provided in the auditor's report before the opinion is expressed.
Comparisons are the corresponding amounts and other disclosures for the prior financial reporting period or other periods presented for comparative purposes. ISA 710 provides standards and guidance for the auditor's responsibilities in comparison. Indicators for comparison can be as follows:
Corresponding indicators - included as part of the financial statements for the current period and are considered only in connection with the indicators for this period (for example, the amounts of income and expenses for the current and previous periods shown in the income statement for the reporting period);
comparable financial statements - financial statements for the prior period, presented for purposes of comparison with the financial statements of the current period.
The auditor should determine whether the comparisons are consistent with the financial reporting frameworks that are relevant to the audited accounts. When drawing up the auditor's report, the auditor does not indicate separately the relevant indicators, since he expresses an opinion on the reporting as a whole.
If the statements for the previous period were checked by another auditor, then events may develop according to one of the following options:
the previous auditor can re-draw up an auditor's report on the statements he has checked, and the new one draws up an opinion only for the current period;
the new auditor draws up a report, which contains information that the accounts for the previous period were reviewed by another auditor and the type and date of the report issued by the predecessor.
In reviewing the accounts, the new auditor may discover a material misstatement unnoticed by the previous auditor that affects the financial statements for the previous period.
In this case, the new auditor should discuss this issue with management, and after obtaining consent, contact the predecessor with a proposal to re-draw up the opinion for the previous period on the reissued statements. If the accounts for the previous period have not been checked, the new auditor should indicate this fact in the report and check the opening balances of the current period. If the audit reveals that the indicators for the previous period are distorted, the auditor should require management to revise them, and in case of refusal, modify the auditor's report.
Other information is information of a financial and non-financial nature that is included with the financial statements in a published document. Under ISA 720, the auditor is not required to express an opinion on this information, but must review it to identify material inconsistencies with the audited accounts, as such inconsistencies may call into question the conclusions of the auditor's report. Other information should be obtained by the auditor prior to the date of the auditor's report. The auditor is not responsible for ascertaining whether the other information is properly presented.
If inconsistencies are found, the auditor should determine the need to amend the audited accounts or other information.
If management refuses to correct misstatements of fact, the auditor should take steps to notify those responsible for the overall management of the entity of its concerns, obtaining legal advice if necessary.
If the auditor has not obtained access to the other information before the date of the report, then he should become familiar with it as soon as possible. If inconsistencies or misstatements of fact are found, the auditor should determine the need to revise the audited accounts or other information. If a revision of the accounts is required, the auditor follows the recommendations of ISA 560, and if revision of other information is required, the auditor asks management to inform its users about the revision. If management refuses, the auditor takes steps to inform those responsible for the general management of the entity about his doubts about other information.
Introduction 1
1. Auditor's report on the financial statements 2
2. Report of an independent auditor 6
2.1 An independent auditor's report on a complete set of financial statements general purpose 7
2.2 Modifications to the independent auditor's report 12
3. Comparisons 15
4. Other Information in Documents Containing Audited Financial Statements 21
Conclusion 25
List of used literature: 26
Introduction
Auditing standards are documents that formulate uniform basic requirements, general approaches to conduct an audit. The standards define the regulatory requirements for the quality and reliability of audits, the scope of the audit, shortcomings, methodological issues, basic principles that should guide auditors.
Compliance with auditing standards allows you to provide a certain level of assurance of quality audit results.
After carrying out all the necessary verification procedures, the auditors will have to assess the completeness and quality of implementation of all items of the general plan and audit program. In addition, they must conduct a systematization and analytical review of the audit results in order to draw up an objective audit opinion.
An auditor's report is an official document intended for users of the financial (accounting) statements of audited entities, drawn up in accordance with the rules (standards) of auditing. An auditor's report is a legally binding document containing the auditor's opinion expressed in the prescribed form on the reliability of the reporting and the compliance of the accounting procedure.
The basis for the expression of an opinion on the financial statements is the review and assessment of the conclusions from the audit evidence.
The audit report should contain the auditor's clear written opinion on the financial statements as a whole. The auditor's report should be based on ISA 700, "Auditor's Report on Financial Statements." The objective of ISA 700 is to set standards and provide guidance on the form and content of the auditor's report (report).
1. Auditor's report on financial statements
The procedure for drawing up and the content of the auditor's report issued as a result of an audit of the financial statements of an entity is regulated by International Auditing Standard No. 700 "Auditor's Report on Financial Statements".
The auditor should examine and evaluate the conclusions reached from the audit evidence obtained as a basis for expressing an opinion on the financial statements.
The auditor's report should contain a clearly expressed, written opinion on the financial statements as a whole.
Mandatory elements of the auditor's report are:
1) name;
2) the addressee in accordance with the circumstances of the audit agreement and local regulations. The opinion is usually addressed to the shareholders or the board of directors of the entity whose financial statements are being audited;
3) an introductory paragraph or introduction, consisting of:
The list of audited financial statements of the entity, indicating the date and reporting period; and
Provisions on the responsibility of the entity's management and the responsibility of the auditor. The responsibility for the financial statements lies with the management of the entity. The auditor's responsibility is only to express his opinion on the financial statements based on his audit;
4) a paragraph describing the scope (nature of the audit), which includes references to ISAs or relevant national standards or practices, a description of the work performed by the auditor
The auditor's report must contain:
An indication that the audit was planned and performed to provide reasonable assurance about whether the financial statements are free from material misstatement;
Indication that the audit included:
a) a test analysis of the evidence supporting the amounts and disclosures in the financial statements;
b) determination of the accounting principles used in the preparation of financial statements;
c) a study of significant accounting estimates made by management in preparing the financial statements;
d) assessment of the general view of the financial statements;
The auditor's confirmation that the audit provides a reasonable basis for the opinion;
5) the paragraph in which the auditor's opinion on the financial statements is expressed. It should clearly state the auditor's opinion on the reliability and objectivity of the financial statements in accordance with the financial reporting framework, as well as on the compliance of the financial statements with legal requirements;
6) the date of issue of the auditor's report, i.e. the auditor must date the conclusion with the date when the audit was completed. The auditor does not need to date the report before the date the financial statements are signed or approved by management;
7) the auditor's address (specific location);
8) signature of the auditor - the auditor's report must be signed by the audit firm, auditor, or, if necessary, contain both signatures.
There are the following types of auditor's report.
1. An auditor's report containing an unconditionally positive opinion. An unconditionally positive opinion should be expressed when the auditor concludes that the financial statements present a fair and objective picture in accordance with the established financial reporting framework.
2. Modified conclusions.
The auditor's report is considered modified in the following situations:
1) if there are factors that do not affect the auditor's opinion.
The auditor should modify the auditor's report by including a paragraph identifying a material factor relevant to the going concern assumption.
The auditor should consider modifying the auditor's report by including a paragraph in the event of a significant uncertainty, the elimination of which depends on future events and that may affect the financial statements. Uncertainty is a factor whose consequences depend on future events, which are not under the direct control of the entity, but which may affect the financial statements.
The inclusion of an explanatory paragraph does not affect the auditor's opinion. This paragraph is usually inserted after the paragraph containing the auditor's opinion; it refers to the fact that a factor affecting the financial statements is not a basis for expressing a conditionally positive opinion;
2) if there are factors influencing the auditor's opinion. These include:
a) limiting the scope of the auditor's work;
b) disagreement with management regarding the appropriateness of the selected accounting policy, the method of its application, or the adequacy of the information disclosed in the financial statements.
The circumstances described in paragraph (a) may lead to the expression of a conditionally positive opinion or refusal to express an opinion. The circumstances described in paragraph (b) may lead to the expression of a conditionally positive opinion or negative opinion.
A conditional positive opinion is expressed when the auditor concludes that it is not possible to express an unconditionally positive opinion, but the degree of disagreement with management or the volume limitation is not material and deep enough to express a negative opinion or refuse to express an opinion.
An opinion disclaimer occurs when the scope limitation is so significant and profound that the auditor is unable to obtain sufficient and relevant audit evidence and, therefore, to express an opinion on the financial statements.
A negative opinion is expressed when the effect of any disagreement with management is so material and profound on the financial statements that, in the auditor's opinion, it is insufficient to modify the report to disclose the misleading or incomplete nature of the financial statements.
If the auditor expresses an opinion other than an absolute positive, he should clearly describe all the significant reasons for this in the report and, if possible, give a quantitative description of the possible effect on the financial statements.
ISA No. 700 in the system of Russian auditing standards corresponds to the Federal rule (standard) of auditing activity No. 6 "Auditor's report on financial (accounting) statements", which is a complete analogue of the international standard.
It should be noted that ISA 700 "The Auditor's Report on Financial Statements" was valid until December 31, 2006. After that date, the issues of preparing the auditor's report are regulated by ISA 700R "Opinion of the Independent Auditor on a Complete Set of General Purpose Financial Statements" and ISA 701 "Modifications to the Report of the Independent Auditor ".
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