Audit Report 2

8/19/2019 Audit Report 2

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The Audit ReportSecond Part


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Modifed Opinions

An auditor may not be able to express an unqualifed opini

1 The auditor concludes that! based on the audit e"idence obtafnancial statements as a whole are #ree #rom material missta

% The auditor is unable to obtain su&cient appropriate audit e"conclude that the fnancial statements as a whole are #ree #romisstatement


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'nability to Obtain Su&cientAppropriate Audit ("idence

An inability to obtain su&cient appropriate e"idence may soccur either as imposed by the entity or as a result o# circubeyond the control o# the auditor


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)ncorrected Material Misstatem

)ncorrected material misstatements may arise due to disabetween the auditor and mana*ement! on matters such as

1 The acceptability o# accountin* policies selected!

% The method o# their application! or

+ The adequacy o# disclosures in the fnancial statement


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,omparati"e 'n#ormation

Corresponding fgures

,omparati"e in#ormatiamounts and other disthe prior period are incinte*ral part o# the curfnancial statements! aintended to be read onto the amounts and oth

disclosures relatin* to period

Comparative fnancialstatements

,omparati"e in#ormatiamounts and other disthe prior period are inccomparison with the fnstatements o# the currei# audited! are re#erred

auditor-s opinion


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,orrespondin* .i*ures

,orrespondin* f*ures are not presented as complete fnanstatements capable o# standin* alone! but are inte*ral parcurrent period fnancial statements intended to be read onrelationship to the current period f*ures


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'# the auditor-s report on the prior period! as pre"iously issa qualifed opinion! a disclaimer o# opinion! or an ad"erse othe matter which *a"e rise to the modifcation is unresol"eshall modi#y the auditor-s opinion on the current period-s fstatements 'n the /asis #or Modifcation para*raph in the areport! the auditor shall either:

a0 Re#er to both the current period-s f*ures and the correspondi

description o# the matter *i"in* rise to the modifcation whenpossible eects o# the matter on the current period-s f*ures a

b0 'n other cases! explain that the audit opinion has been modifthe eects or possible eects o# the matter on the current peand the correspondin* f*ures


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Prior Period Financial Statements Audited by a PredAuditor

'# the fnancial statements o# the prior period were audited by auditor and the auditor is permitted by law or re*ulation to re#predecessor auditor-s report on the correspondin* f*ures and so! the auditor shall state in an Other Matter para*raph in the report:

a0 That the fnancial statements o# the prior period were audited byauditor$

b0 The type o# opinion expressed by the predecessor auditor and! i# modifed! the reasons there#ore$ and

c0 The date o# that report


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Prior Period Financial Statements Not Audited

'# the prior period fnancial statements were not audited! the astate in an Other Matter para*raph in the auditor-s report thatcorrespondin* f*ures are unaudited! such a statement does nrelie"e the auditor o# the requirement to obtain su&cient appre"idence that the openin* balances do not contain misstatemmateriality aect the current period-s fnancial statements


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,omparati"e .inancial Stateme

The comparati"e fnancial statements #or the prior period2considered separate fnancial statements Accordin*ly! thein#ormation included in those comparati"e fnancial statemapproximates that o# the fnancial statements o# the curren

3hen comparati"e fnancial statements are presented! theopinion shall re#er to each period #or which fnancial statempresented and on which an audit opinion is expressed


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Prior Period Financial Statements Audited by a PredAuditor

'# the fnancial statements o# the prior period were audited by auditor! in addition to expressin* an opinion on the current pestatements! the auditor shall state in an Other Matter para*ra

a0 That the fnancial statements o# the prior period were audited byauditor$

b0 The type o# opinion expressed by the predecessor auditor and! i# modifed! the reasons there#ore$ and

c0 The date o# that report!

)nless the predecessor auditor-s report on the prior period-s fnastatements is reissued with the fnancial statements


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Prior Period Financial Statements Not Audited

'# the prior fnancial statements were not audited! the auditor Other Matter para*raph that the comparati"e fnancial statemunaudited Such a statement does not! howe"er! relie"e the arequirement to obtain su&cient appropriate audit e"idence thbalances do not contain misstatements that material aect thperiod-s fnancial statements


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Audits o# 4roup .inancial State

To ob5ecti"es o# the auditor are:

a0 To determine whether to act as the auditor o# the *roup fnan

b0 To communicate clearly with component auditors about the sco# their wor6 on fnancial in#ormation related to components afndin*s$ and

c0 To obtain su&cient appropriate audit e"idence about the fnano# the components and the consolidation process to express awhether the *roup fnancial statements are prepared! in all min accordance with the applicable fnancial reportin* #ramewo


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Acceptance and Continuance and the Eect on the AReport

'n applyin* PSA %%7 2Redra#ted0! the *roup en*a*ement partndetermine whether su&cient appropriate audit e"idence can rexpected to be obtained in relation to the consolidated procesfnancial in#ormation o# the components on which to base the opinion

'# the *roup en*a*ement partner concludes that:a0 't will not be possible #or the *roup en*a*ement tram to obtain s

appropriate audit e"idence due to restrictions imposed by the *roand

b0 the possible eect o# this inability will result in a disclaimer o# opfnancial statements!


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Acceptance and Continuance and the Eect on the AReport cont!"

8the *roup en*a*ement partner shall either:

'n the case o# a new en*a*ement ! not accept the en*a*ement! orcontinuin* en*a*ement! resi*n #rom the en*a*ement$ or

3here law or re*ulation prohibits an auditor #rom declinin* or resien*a*ement! ha"in* per#ormed the audit o# the *roup fnancial sta

extent possible! disclaim an opinion on the *roup fnancial statem


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Screening o# Component Auditors

3hen the *roup en*a*ement team plans to request a componper#orm wor6 on the fnancial in#ormation o# a component! theen*a*ement team shall obtain an understandin* o# the #ollow

a0 3hether the component auditor understands and will comply witrequirements that are rele"ant to the *roup audit and ! in particuindependent$

b0 The component auditor-s pro#essional competence

c0 3hether the *roup en*a*ement team will be able to be in"ol"edcomponent auditor to the extent necessary to obtain su&cient ape"idence$ and

d0 3hether the component auditor operated in a re*ulatory en"irono"ersees auditors


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Evaluating the Su$ciency and Appropriateness o# AEvidence %btained

The *roup en*a*ement team shall e"aluate the component aucommunication The *roup en*a*ement team shall:

a0 9iscuss si*nifcant matters arisin* #rom that e"aluation with the auditor! component mana*ement or *roup mana*ement! as app

b0 9etermine whether it is necessary to re"iew other rele"ant parts

auditor-s audit documentation


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Su$ciency and Appropriateness o# Audit Evidence

The *roup en*a*ement team shall e"aluate whether su&cientaudit e"idence has been obtained #rom the audit procedures pthe consolidation process and the wor6 per#ormed by the *routeam and the component auditors on the fnancial in#ormationcomponents! on which to base the *roup audit opinion

The *roup en*a*ement partner shall e"aluate the eect on th

opinion o# any uncorrected misstatements and any instances wbeen an inability to obtain su&cient appropriate audit e"idenc

Audit Report 2

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