QQ 2

[Sravanthi Y C]

Hi all,

This is discussion of "types of opinions" provided by statutory auditor.

Let’s see the scenario:

Heights Ltd is a well established real estate company. Richa is an external auditor of Heights Ltd. During the course of audit, the applications of accounting and quality standards are reasonably changed causing a significant effect on the final accounts. Richa discussed the matter with the management of Heights. However, the management was not ready to change the accounts as per the suggestions of Richa.

Richa put the note in her report disclosing the fact that ‘the current year’s SOFP lack consistency in respect to adoption of regular reporting framework’.

What this note represents? What are the different types of opinions provided in statutory audit?

[Hamdy Hafez]

Q-Q 2

Ok, firstly we need to spot the light on the responsibilities of the auditors & directors regarding the published F.S
But we'll just refer to two important things:

1) The F.S preparation;
* The directors:
There is a legal responsibility to prepare the F.S in accordance with the IAS & IFRS.

** The auditors;
-to give opinion on the truth & fairness of accounts
-To carry out audit according to the ISA.
-To ensure whether the accounts prepared in accordance with the legislation

2) F.S disclosure
* The directors:
Required to disclose all information required by law & IAS.

** The auditors;
Review whether the disclosure rules are followed & adequate.

Now after this introduce, I'll put my answer on the next post.

:eek:

[Hamdy Hafez]

My answer to Q.Q 2

I think that is all what I can collect from my material (till now)
- The auditors should to produce audit reports which set out his opinion on the truth & fairness of the F.S.

- So the F.S users can know that F.S are according to the IAS & IFRS

- & the audit process according to recognized standards.

***The different type of opinions:
An unqualified opinion: which may be expressed only when the auditor is able to conclude that the F.S give a true & fair view in accordance with the identified financial reporting framework.

- A qualified audit report is not usually associated with good performance and the firm may therefore be reluctant to issue one where appropriate.

- A qualified opinion, ‘except for’, on the basis of a limitation in the scope of the audit may be needed for the companies as the amounts involved are material.

-Disclaimer of opinion: where a multiple material uncertainty (& there is not adequate disclosure)

- Adverse opinion: as example when the management prepares the F.S as refer going concern situation but on the other hand the auditors' judgment is not going concern.

Modified audit reports arise when auditors don't believe that can state without reservation that the accounts give a true & fair view.

[Hamdy Hafez]

really this area confusing me so we need a help:eek:

[Dazy]

Hi Hamdy,

You have written a good answer, but I would like to give you some suggestions for your answer:

1) You have started your answer well, but you need not give such a long introduction. Your first post for the answer is not directly related to the main part of answer. so make it brief.

2) The question is quite clear that you have to discuss the types of different opinions in the statutory reports. your second post is the main answer that is expected by the examiner.

3) For the main part of answer, you have covered all the points, but again in examination you have to elaborate them more.

For the details, please refer to page nos. A2.8 and A2.9 in GTG F8 study text.

Please refer to GTG F8 Question bank, it will provide you the proper guidence about the systematic and appropriate writing of the answer.

I appreciate your active participation in the QQ. Continue it. it will definitely help you.

Thanks and Regards.

[Hamdy Hafez]

thanks a lot dear Dazy , I'll carefully read your advices , & please to continue follow up us, please.

[juliana-ap]

Hi all,

This is discussion of "types of opinions" provided by statutory auditor.

Let’s see the scenario:

Heights Ltd is a well established real estate company. Richa is an external auditor of Heights Ltd. During the course of audit, the applications of accounting and quality standards are reasonably changed causing a significant effect on the final accounts. Richa discussed the matter with the management of Heights. However, the management was not ready to change the accounts as per the suggestions of Richa.

Richa put the note in her report disclosing the fact that ‘the current year’s SOFP lack consistency in respect to adoption of regular reporting framework’.

What this note represents? What are the different types of opinions provided in statutory audit?
hi everybody! sorry for my late submission..
QQ2

Richas note represents a matter paragraph to hightlight a matter affecting the financial statements which is not included in a note to the financial statements ( assuming there was no note from directors in the financial statements)that explains the more extensively discusses the matter.The addition of such paragraph does not affect the auditor's opnion it is mainly to inform the users enabling better usage of information provided in the finanacial statements

Different types of reports

A Qualified opinion
Is the opinion expressed by the auditor stating that the financial statements give a true and fair view and have been prepared in accordance to the regulatory framework and regulatory accounting bodies.

A qualified audit report
Is the opinion expressed by the auditor stating that the financial statements does not give a true and fair view and have not been prepared in accordance to the regulatory framework and regulatory accounting bodies.

Adverse opinion
Is an opinion reached which is in adverse to the report given by the management.

Modified audit reports
Is the opinion reached when auditor's can not conclude without reasonable doubt that the financial statements give a true & fair view.

With exception
Is the opinion expressed by the auditor stating that the financial statements give a true and fair view and have been prepared in accordance to the regulatory framework and regulatory accounting bodies. "except for" the limitation that the auditor might have had limitations in reaching a decisive opinion.

Disclaimer of opinion
The auditor has various uncertainties which could be linked to limitations of scope or detection of fraudulent activities or mistatements on material items which has not been concluded as lack of evidence or disclosure.

[Hamdy Hafez]

hi everybody! sorry for my late submission..
QQ2

Richas note represents a matter paragraph to hightlight a matter affecting the financial statements which is not included in a note to the financial statements ( assuming there was no note from directors in the financial statements)that explains the more extensively discusses the matter.The addition of such paragraph does not affect the auditor's opnion it is mainly to inform the users enabling better usage of information provided in the finanacial statements



Welcome to the new fighter,
really I didn't read your answer, but I think it's the perfect one, I'll carefully read it

every body here I'm so sorry , I still very busy this days regarding some private issues with my family (you know Acid , what is happen on the first days of Ramadan)

see you soon every body & thanks for Assad (for following up this thread)

[Dazy]

Good answer juliana.

Keep is up.

Thanks and regards

[Pixiefeet]

Richa’s note represents an Emphasis of Matter
Emphasis of matter
If adequate discloser is made in the financial statements, the auditor should express an unqualified opinion but modify the auditor’s report by adding an emphasis of matter paragraph to highlights any material uncertainties that may question the entity’s ability to continue as a going concern.

Types of Opinions
Disclaimer of Opinion
This occurs when here are multiple uncertainties. If adequate discloser is not made in the financial statements, the auditor should express a qualified or adverse opinion. The report should include specific reference to the fact that there is a material uncertainty which may give significant doubt about the company’s ability to continue as a going concern.

Adverse Opinion
This occurs when the auditors believe that the entity will not be able to continue as a going concern and was prepared on a going concern basis.

Unqualified Opinion
The may be expressed only when the auditor is able to conclude that the financial statements give a true and fair view in accordance with the identified financial reporting framework.

(I was not certain if the following is considered an opinion but I have noted them anyway)

Modified Report
This occurs when the auditors do not believe that they can state without doubts that the accounts give a true and fair view.

Limitation on Scope
The auditor modifies the auditor’s report as a result of the limitation on the scope when the management is unwilling to make or extend the necessary changes.

[Dazy]

Hi Pixiefeet,

Good answer.

The active participation of members is really appreciable.

Well done.

Keep it up.

[Hamdy Hafez]

Richa’s note represents an Emphasis of Matter
Emphasis of matter
If adequate discloser is made in the financial statements, the auditor should express an unqualified opinion but modify the auditor’s report by adding an emphasis of matter paragraph to highlights any material uncertainties that may question the entity’s ability to continue as a going concern.
.................................................. ...............etc
.

Hey man , what a brilliant answer
I think now we've a lot of fighters to move on together (especially VeVeni, Kelly,Juliana , ASH123,& our new strong fighter Pixiefeet)
so please keep in touch with the hard work :arghh::eek: