The Auditors Report on Financial Statements

(Basic Elements, Revisions, and Auditors Report with Unqualified Opinion)

Basic Elements

OLD AUDITORS REPORT

1. Title
2. Addressee
3. Introductory Paragraph
4. Management Responsibility
5. Auditors Responsibility
6. Auditors Opinion
7. Other Reporting Responsibilities
8. Auditors Signature
9. Date of Report
10. Auditors Address

NEW AUDITORS REPORT

1. Title - Indicates that the report is the report of an independent auditor in order to:
Emphasize independence; and
Distinguish the auditors report from reports that might be issued by others

2. Addressee
Indicates those parties for whom the report is prepared (such as: shareholders, BOD or a
third party requesting the audit)

Report should not be addressed to members of the management who are responsible for
the financial statements audited
SEC requires report to indicate the complete mailing address of the client if to be filed
with regulatory agencies

3. Introductory Paragraph
Identifies the name of the entity whose FS has been audited
States that the FS has been audited
Identifies the title of each of the FS audited including date and period covered by the FS
Refers to summary of significant accounting policies and explanatory notes

4. Auditors Opinion
 This section should state whether the financial statements are presented fairly in all
material respects in accordance with applicable financial reporting framework

5. Basis for Opinion
Affirmative statement about the auditors independence
Fulfilment of relevant ethical responsibilities, with disclosure of the jurisdiction of the
origin of those requirements

6. Emphasis on Matter Paragraph
This section is an additional paragraph included in the report to give emphasis on
important matters affecting the FS or the auditors report
Inclusion does not negate auditors unmodified opinion
This is not a modification to the opinion or a substitute for the modified opinion
Limited only to matters presented or disclosed in the financial statements.

7. Key Audit Matters

This are matters that, in the auditors professional judgement, were of most significance
in the audit of the FS in the current period

8. Management Responsibility
This section describes managements responsibility for:
FS preparation and fair presentation
Design, implementation, and maintenance of internal controls relevant to preparation
and fair presentation of FS

9. Auditors Responsibility
This section states:

That the responsibility of the auditor is to express an opinion on the FS based on the audit
That the audit was conducted in accordance with PSAs
The general description of an audit
That the auditor believes that audit evidences obtained is sufficient and appropriate

10. Other Reporting Responsibilities

Report on the Financial Statements or Report on Other Legal Regulatory
Requirements
Contains auditors additional responsibilities to report on other matter that are to the
auditors responsibilities under PSA to report o the FS
11. Name of Engagement Partner only disclosed for listed entities
12. Auditors Signature
13. Auditors Address - location in the jurisdiction where the auditor maintains his office
14. Date of Report - theoretically, it is the completion of all essential audit procedures

Types of Opinion

1. Unqualified/ Unmodified Opinion

2. Qualified Opinion
 3. Adverse Opinion
4. Disclaimer of Opinion

Auditors Report with Unqualified Opinion

Unqualified Opinion

When is an unqualified opinion issued?

When auditor concludes, based on audit evidence obtained, that the FS are presented fairly, in all
material respects in accordance with the applicable financial reporting framework.

This type of opinion is contained in the most common type of audit report: Unmodified or
Unqualified Report

Unmodified or Unqualified Report

PSA requires uniformity in the wording of the auditors report or standardized report to:

enhance credibility (Intl perspective); and

Promote readers understanding

Circumstances where Emphasis on Matter Paragraph may be Necessary

1. Uncertainties
Matters whose outcome depend on future actions or events not directly controlled by the
entity that may affect FS
Significant Uncertainties that are adequately accounted for and disclosed

2. Going Concern Uncertainty

3.
are material uncertainties about the entitys ability to continue as a going concern that
need to be disclosed in the financial statements
4. Early Application of New Accounting Standard
5.
include emphasis of matter paragraph if this new standard has a pervasive effect on the
financial statement
6. Major Catastrophe
7.
subsequent discovery of facts that affect the auditors opinion financial statements
prepared using a special purpose
Example of Unmodified Auditors Report