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INTOSAI Standards are issued by the International
Organisation of Supreme Audit Institutions, INTOSAI, as part of
the INTOSAI Framework of Professional Pronouncements.
For more information visit www.issai.org
ISSAI
INTOSAI
200
Financial Audit Principles
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INTOSAI
INTOSAI, 20191) EndorsedasBasicPrinciplesinGovernmentAuditingin20012) RevisedandrenamedFundamentalPrinciplesofPublic-SectorAuditingin 20133) With the establishment of the Intosai Framework of Professional Pronouncements(IFPP),editorialchangesweremadein2019
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TABLE OF CONTENTS
1. INTRODUCTION 5
2. AUTHORITY OF ISSAI 200 7
3. FRAMEWORK FOR FINANCIAL AUDITING 8
Definition and objectives of financial auditing 8
Preconditions for an audit of financial statements in accordance with the ISSAIs 9
Financial reporting framework 9
Assessing the financial reporting framework 10
4. ELEMENTS OF FINANCIAL AUDITING 12
Three parties in financial auditing 12
Subject matter for financial auditing 13
Criteria used in financial auditing 13
Reasonable assurance engagement 13
5. PRINCIPLES OF FINANCIAL AUDITING 14
Agreeing the terms of the engagement 14
Planning 15
Materiality 15
Understanding the audited entity 16
Risk identification and assessment 16
Response to assessed risks 17
Considerations relating to fraud 17
Going concern considerations 18
Considerations relating to laws and regulations in an audit of financial statements 18
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Audit evidence 19
Evaluating misstatements 19
Forming an opinion and reporting on the financial statements 19
Modifications to the opinion in the auditor’s report 20
Emphasis of Matter paragraphs and Other Matters paragraphs in the auditor’s report 21
Consideration of subsequent events 21
Comparative information - corresponding figures and comparative financial statements 22
The auditor’s responsibilities in relation to other information in documents containing audited financial statements 22
Considerations relevant to audits of consolidated financial statements 23
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INTRODUCTION
1) Thepublicsectorfinancialauditorworksinthepublicinterestbyprovidingfinancial audit services. This involves giving assurance on the financialinformationpreparedby public sector authorities or entities on their useandmanagementofpublicfundsandassets.Theresult-intheformofauditopinions and/or reports – can be used as a basis to hold those responsible toaccount.Assuch,financialauditconstitutesanimportantelementofthepublicfinanceaccountabilityprocess.
2) Professionalstandardsandguidelinesdrivethequalityandprofessionalismof public sector auditing and thereby underpin the credibility of theprofession and its work. The International Standards of Supreme AuditInstitutions (ISSAIs), developed by the International Organisation ofSupreme Audit Institutions (INTOSAI), aim to promote independent andeffectiveauditingandserveasabasisforINTOSAImemberstodeveloptheirown tailored professional approaches in accordance with their mandates andnationallawsandregulations.Theprinciplesinthesestandardsdonotoverridenationallaws,regulationsormandates.
3) ISSAI 100 - Fundamental Principles of Public-Sector Auditing establishes the fundamental principles which are applicable to all public sector audit engagements. ISSAI200complements the fundamentalprinciplesof ISSAI100 with the specific context of audits of financial statements. Togetherthey constitute the basis for INTOSAI’s complete set of professionalpronouncementsinthisarea,andshouldbothbecompliedwith.
4) The main purpose of the ISSAIs on financial audit is to provide INTOSAImembers with a comprehensive set of principles and standards for the audit
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of financial statements (or other forms of financial information) of public-sectorentities.AccordinglytheprinciplessetoutinISSAI200formthebasisfor more specific audit standards on financial audit (ISSAIs 2000-2899) aswellasGuidelinesonhowtoapply them(GUID2900-2999). ISSAIscontain[application material]issuedbyINTOSAItoprovideguidanceontheapplicationoftherelevantInternationalStandardsonAuditing(ISAs)developedbytheInternationalAuditingandAssuranceStandardsBoard(IAASB).SupremeAuditInstitutions(SAIs)maysometimescombinefinancialauditswithelementsofcompliance and/or performance audit, in which case the related principles applytothespecificaudittypesasapplicable.
5) ISSAI200providesthekeyprinciplesfortheauditofindividualorconsolidatedfinancialstatements,orspecificelementsthereof.Itcoversthe:
• authorityofISSAI200;
• frameworkforfinancialauditing;
• elementsoffinancialauditing;and
• financialauditprinciples.
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AUTHORITY OF ISSAI 200
6) ISSAI 200 provides the principles for an audit of financial statements
or other forms of presentation of financial information. The principles
establish the minimum requirements for public auditing standards set
at national level, or standards applied by a SAI which it has developed
itself, or by others. The authority of the ISSAIs is covered by ISSAI 100.
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FRAMEWORK FOR FINANCIAL AUDITING
Definition and objectives of financial auditing
7) Financial audit involves determining, through the collection of auditevidence, whether an entity’s financial information is presented in itsfinancialstatementsinaccordancewiththefinancialreportingandregulatoryframework applicable. In the case of fair presentation frameworks, theauditorassesseswhethertheinformationisfairlypresented.Inthecaseofcomplianceframeworkstheauditorassessestheextenttowhichcomplianceisachieved.
8) The objective of financial audit is, through the collection of sufficientappropriate evidence, to provide reasonable assurance to the users, in the formofanauditopinionand/orreport,astowhetherthefinancialstatementsorotherformsofpresentationoffinancial informationarefairlyand/orinallmaterialrespectspresentedinaccordancewiththeapplicablefinancialreportingandregulatoryframework.
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Preconditions for an audit of financial statements in accordance with the ISSAIs
9) Beforecommencingafinancialauditengagementtheauditorshould:• assesstheacceptabilityofthefinancialreportingframeworkofthe
auditedentity;and• ensurethatthemanagementoftheentityacknowledgesand
understandsitsresponsibilityfor: →preparingthefinancialstatementsinaccordancewiththeapplicablefinancialreportingframework; →internalcontrolthatmanagementdeemsnecessaryforthepreparationoffinancialstatementsthatarefreefrommaterialmisstatementwhetherduetofraudorerror;and →providingtheauditorwithaccesstoallinformationandpersonsnecessarytocompletetheaudit.
financial reporting framework
10) Financialreportingframeworksareeither:• generalpurpose:designedtomeettheinformationneedsofawiderange
ofusers;or• specialpurpose:designedtomeettheneedsofaspecificuserorgroup
ofusers(forexamplethefinancialreportingprovisionsestablishedbyaninternationalfundingorganisation,agoverningbody,thelegislatureorbyacontract).
11) TheprinciplesofISSAI200arerelevantforauditsofdifferenttypesoffinancialstatements,suchasthosepreparedinaccordancewithbothgeneralpurpose(eg, IPSAS, IFRS or national financial reporting frameworks) and specialpurposeframeworks.
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12)Inaddition,financialreportingframeworkscanbeeither:• compliance-based:settingouttherulesandrequirementstobefollowed
strictlyinallcases;or• fair presentation-based: recognizing that, in order to achieve a fair
presentationoftheentity’sfinancialstatements,itmaybenecessaryforthepreparers todepart fromtherequirementsof the framework,or togiveadditionaldisclosures.
13) TheprinciplesofISSAI200arealsoapplicabletoauditsofpublic-sectorentitiesthatpreparefinancial information, (including singlefinancial statementsorspecificelements,accountsoritemsofafinancialstatement),forotherpartiessuchasgoverningbodies,the legislatureorotherpartieswithanoversightfunction.
14) Whentheauditorisrequiredtoundertakeauditsofbudgetaryexecutionthiscanincludetheexaminationoftheregularityofbudgetarytransactionsandcomparisonbetweenactual andbudget. Thismayoften involve specificorindividualfinancialreportingframeworks.Forthistypeofauditengagement,thepreconditionsestablishedbytheISSAIsonfinancialauditmaynotbeinplace,buttheprinciplestheycontainshouldbeappliedtotheextentpossible.
Assessing the financial reporting framework
15) Thefinancialreportingframeworkshouldbeapplicabletothecircumstancesof the audited entity, notably in terms of giving a fair presentation of thefinancial results and position when appropriate. The financial reportingframeworkappliedisnormallyprescribedbylaw,regulationorotherrelevantauthority.Ifnot,itisatthediscretionofmanagement.
16) Theauditorshouldassesstheacceptabilityofthefinancialreportingframeworkused.Atpresent,thereisnoobjectiveandauthoritativebasisthathasbeengenerallyrecognisedgloballyforjudgingtheacceptabilityofgeneralpurposeframeworks. In the absence of such a basis, financial reporting standardsestablishedbyorganisationsthatareauthorisedorrecognisedtopromulgatestandards(eg,IPSAS,IFRS)tobeusedbycertaintypesofentitiesarepresumed
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tobeacceptableforgeneralpurposefinancialstatementspreparedbysuchentities, provided the organisations follow an established and transparentprocessinvolvingdeliberationandconsiderationoftheviewsofawiderangeof stakeholders. To be acceptable, a financial reporting framework has toensurethattheinformationprovidedinthefinancialstatementsisofvalueto the intended users, namely: relevant, complete, reliable, objective andunderstandable.
17) If the framework is not considered acceptable, the auditor should assess the effectonthefinancialstatementsintermsofmissinginformationoritsimpactonthefinancialresultsorposition:• when the choice of the reporting framework is at the discretion of
management,theauditorshouldsuggesttheframeworkbechanged;or• whenachangeintheframeworkisnotpossible,suchaswhenprescribed
bylaworregulation,theauditorshouldinformtheauditeeofadditionaldisclosures needed in the financial statements to avoid them beingmisleading.
18) Theauditorshould,takingaccountoftheauditee’sresponse,determinetheimpact on the audit opinionor consider an emphasis ofmatter explainingthe impactof thefinancial reporting frameworkon the results, assets andliabilitiesorotheraspects.TheauditormayalsoconsiderotheractionssuchasinformingthelegislatureorwithdrawingfromtheauditengagementiftheSAIisabletodoso.
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ELEMENTS OF FINANCIAL AUDITING
19)Inapublicsectorfinancialaudit,theelementsdefinedinISSAI100(auditor,responsibleparty,intendedusers,subjectmatterandcriteria)mayvaryfromoneauditeetoanother.Auditorsshouldexplicitlyidentifytheseelementsforeachaudit,andanalysetheimplications.
Three parties in financial auditing
20) Theresponsibilityoftheauditoristoplanandperformtheauditinaccordancewiththeapplicableauditingstandardsandmandate,andcommunicatetheresults.
21) The responsible party is responsible for the subject matter information(financial statements) and underlying subject matter (accounting data).The responsible party is normally the executive branch of governmentand/oritsunderlyinghierarchyofpublic-sectorentitiesresponsibleforthemanagement of public funds. These bodies manage resources, exerciseauthorityinaccordancewiththedecisionsofthelegislatureandpreparethefinancialstatements.
22) The‘intendeduser’offinancialstatementsinthepublicsectorisprimarilythelegislature,whichrepresentscitizens(theultimateusers).Thelegislatureholdsgovernmenttoaccountfortheuseofpublicfunds,largelybasedonthe informationprovidedbygovernment. Theassuranceon the reliabilityof this information through financial audit is therefore a key part of thisprocess.Otherintendedusersmayincludeministriesinthecaseoffinancialstatementsofpublicsectorentitiesworkingontheirbehalf.
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Subject matter for financial auditing
23) Thesubjectmatterofafinancialauditistheaccountingandrelateddataofanentity,normallypresentedintheformoffinancialstatements(thelatterknownasthesubjectmatterinformation).
Criteria used in financial auditing
24) Criteriaarethebenchmarks,measuresorattributesagainstwhichthesubjectmatterismeasuredagainsttocometoaconclusionontheauditobjectives.Thecriteriausedintheauditoffinancialstatementswouldgenerallybebasedonthefinancialreportingframeworkusedbytheresponsiblepartyintheirpreparation.
reasonable assurance engagement
25) Audits of financial statements conducted in accordance with the ISSAIsare attestation engagements which aim to provide reasonable assurance.Reasonable assurance is a high but not absolute level of assurance,whichmeans it is not a guarantee that theauditwill detect all casesofmaterialmisstatement.
26) Ingeneral,reasonableassuranceauditsaredesignedtoresultinaconclusionexpressedinapositiveform,suchas“inouropinionthefinancialstatementspresent fairly, in allmaterial respects (or give a true and fair view of) thefinancialpositionof…anditsfinancialperformanceandcashflows…”or,inthecaseofacomplianceframework,“inouropinionthefinancialstatementsareprepared,inallmaterialrespects,inaccordancewith…”.
27) Limitedassuranceengagements,suchassomereviewengagements,arenotcoveredbythecurrentISSAIsonfinancialaudit.
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28) ThegeneralprinciplesofpublicsectorauditingaresetoutinISSAI1001 , and instandardsonethics,qualitycontrol,andonoverallresponsibilitiesofanauditorinanauditoffinancialstatements.Theycover:• ethicsandindependence;• professionaljudgment,duecareandscepticism;• qualitycontrol;• auditteammanagementandskills;• auditrisk;• materiality;• documentation;• reportingandfollowup,and• communication.
29) The following paragraphs set out the specific principles related to publicsectorfinancialaudit.
Agreeing the terms of the engagement
30) The terms of an audit engagement in the public sector are normallymandatedbylegislation.Thepublicsectorauditorshouldreachacommonunderstandingwithmanagementorthosechargedwithgovernanceabouttherespectiverolesandresponsibilitiesforeachauditengagement,preferablyinwriting.Whenanengagementarisesfromarequestfrommanagement,those chargedwith governance or the legislature, then all parties shouldagreeonthetermsofthatengagement.
____________________ 1 ISSAI100paragraphs34to43.
PRINCIPLES OF FINANCIAL AUDITING
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Planning
31) Theauditorshouldplantheaudittoensurethatitisconductedinaneffectiveandefficientmanner,bydeterminingthescope,timingandapproachandthepracticalstepstobetaken.
32) Detailedplanningiskeytoauditingefficientlyandeffectively.Thenatureandextentoftheplanningneededwilldependonwhetheritisthefirstauditoftheentityor,arecurrenttask,thesizeandcomplexityoftheentity,andtheteammembers’previousexperiencewiththeentity.Planningshouldbeupdatedastheengagementprogressesinordertotakeaccountofunexpectedissuesoreventsaffectingtheriskassessmentorimplementationoftheaudit.
Materiality
33) Theauditorshouldapplytheconceptofmateriality,bothinquantitative(byamount)andwhenrelevantinqualitative(bynature)terms,whenplanningandperformingtheaudit,evaluatingthefindingsandreportingontheresults.
34) Whenplanning theaudit, theauditor shoulddetermineanoverall levelofmateriality for the financial statements as a whole, taking account of thelevel ofmisstatement which could influence the decisions of the users ofthose statements. Theauditor should then reduce that levelofmaterialitywhenestablishingtheauditworktobeundertaken,inordertoreducetoanacceptable leveltheriskthattheaggregateofundetectedanduncorrectedmisstatementsdonotexceedoverallmateriality.
35) This lowermateriality level (sometimesknownasperformancemateriality)should be used to help determine the nature, timing and extent of auditprocedures, and to assess the results of those procedures. The extent ofuncorrectedmisstatementsinthefinancialstatementsshouldbecomparedtooverallmateriality,takingintoaccounttheirquantitativeeffectandnature,whenformingtheopinionintheauditor’sreport.Thematerialityappliedtoreportingmayneedtoberevisedcomparedwiththatestablishedforplanning,dependingontheentity’sfinalresultsorotherfactors.
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Understanding the audited entity
36) The auditor should obtain a sufficient understanding of the audited entityandtheenvironmentinwhichitoperates,theapplicablefinancialreportingframework and the entity’s systemof internal control, in order to identifyandassesstherisksofmaterialmisstatement.Anentity’ssystemofinternalcontrolcomprisesfivecomponents:thecontrolenvironment,theentity’sriskassessmentprocess, theentity’sprocess tomonitor the systemof internalcontrol,theentity’sinformationsystemandthecontrolactivities(includingITcontrols).
Risk identification and assessment
37) Theauditor’sidentificationandassessmentoftheriskofmaterialmisstatementtakes into account both inherent risk (the risk that a particular accountheadingorclassoftransactionswillbesubjecttoerrorormisstatement)andcontrol risk (the risk that internal controls do not prevent or detect and correct particularerrorsormisstatements).
38) Theauditoridentifiesandassessesinherentriskwithouttakingintoaccounttheeffectofanyrelatedcontrols,anddetermineswhetheranyoftheinherentrisks are significant.The auditor should evaluate the design of the controlsrelevant to the audit (notably in relation to significant inherent risks), andconsiderwhethertheyarelikelytobeimplementedinpractice.
39) Theauditorshouldidentifyandassesstheriskofmaterialmisstatementinthefinancialstatementsasawhole,andatassertionlevel,inordertodeterminethemostappropriateauditprocedurestoaddressthoserisks.
40) Riskassessmentprocedureshelpidentifythenatureandextentoftheauditwork which should take place, but do not themselves provide sufficientappropriateauditevidenceonwhichtobaseanauditopinion.
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Response to assessed risks
41) The auditor should obtain sufficient appropriate audit evidence regardingtheassessedrisksofmaterialmisstatement,bydesigningandimplementingappropriateresponsestothoserisks..Thehighertherisk,themoreextensivemaybe the audit procedures required, and themorepersuasive the auditevidenceneeded.
42) Theauditorshoulddesignand implementoverall responsestoaddresstherisksofmaterialmisstatementat thefinancial statement level,and furtherauditprocedureswhosenature,timingandextenttakeaccountoftherisksofmaterialmisstatementattheassertionlevel.Suchauditproceduresusuallyinclude tests of control and substantive procedures (analytical proceduresand/ortestsofdetail).
43) If controlsare likely tobeeffective, theauditorcanconsider testing them.If testing shows that controls areoperatingeffectively, this can reduce theamountofsubstantivetestingneededtoaddresstheidentifiedrisk.Controlsshouldbetestedincircumstanceswhensubstantiveproceduresalonearenotsufficient.
Considerations relating to fraud
44) As part of the identification and assessment of the risks of materialmisstatement, the auditor should consider whether material misstatements couldariseduetofraud,andundertakeappropriateresponsestothoserisks.
45) The primary responsibility for the prevention and detection of fraud restswithanentity’smanagementorthosechargedwithgovernance.Theauditoris responsible for providing reasonable assurance on the extent to whichthe financial statements are free from material misstatement. Materialmisstatements canarise fromerroror fraud.However, thenatureof fraudmakes it verydifficult for theauditor to identify,and therefore there isnoguaranteethatallmaterialmisstatementscausedbyfraudwillbedetected.Assuch, the auditor should consider what audit procedures should be undertaken
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asappropriatewhentheriskoffraudismaterial.Theauditorshouldconsiderbringinganycasesoffraudorsuspectedfraudidentifiedduringtheaudittotheattentionoftherelevantauthorities.
Going concern considerations
46) The auditor should consider and conclude whether there are events or conditions that representamaterialuncertaintyabout theauditedentity’sintentionandabilitytocontinueasagoingconcern.
47) The going concernof an audited entity is a fundamental principlewith animpact on the financial statements, as it affects the accounting basis thatshouldbeused,notablythecarryingvalueofassetsandliabilities.
48) Theauditorshouldobtainsufficientappropriateauditevidencetoconcludeonthemanagement’suseofthegoingconcernassumptionwhenpreparingthefinancialstatements,andreportasnecessary.
Considerations relating to laws and regulations in an audit of financial statements
49) Theauditor should identify the risksofmaterialmisstatementdue tonon-compliancewithlawsandregulations,andrespondappropriately.
50) The auditor should obtain sufficient appropriate audit evidence regardingcompliancewiththeprovisionsofthoselawsandregulationshavingadirecteffect on the determination of material amounts and disclosures in thefinancialstatements.Theauditorshouldalsoperformauditprocedurestohelpidentifyinstancesofnon-compliancewiththoseother lawsandregulationsthatindirectlymayhaveamaterialeffectonthefinancialstatements.
51) Inthepublicsector,theremaybeadditionalauditresponsibilitieswithrespecttotheconsiderationofanylawsandregulationswhichrelatetotheauditoffinancialstatementsorotheraspectsoftheentity’soperations.Insuchcases,theauditorshoulddistinguishbetweenthescopeofworkperformedtoverifycompliancewiththelawsandregulationsfortheneedsofissuingtheopinionon thefinancial statements, and theauditworkperformed to verifyothercomplianceissuesfortheneedsofissuingacomplianceauditopinionand/orreport.
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52) The auditor should obtain an adequate understanding of the legal andregulatory framework applicable to the specific environment in which theauditedentityoperates,includinghowitcomplieswiththeframework.
53) Theprovisionsofsomelawsorregulationshaveadirecteffectonthefinancialstatements in that they determine the reported amounts and disclosurestherein.Other lawsorregulationsaretobecompliedwithbytheentityorsettheprovisionsunderwhichtheentityoperates,butonlyhaveanindirecteffectonitsfinancialstatements.
Audit evidence
54) Theauditorshoulddesignandperformauditproceduresinordertoobtainsufficient appropriate audit evidence (in terms of quantity and quality) onwhichtobasetheauditconclusionsandopinion.
55) Thequantityofauditevidenceneededtosupportaconclusiondependsontheauditor’sassessmentoftherisksofmisstatementandalsobythequalityof that evidence. The quality of audit evidence refers to its relevance andreliability.Thereliabilityofevidence is influencedby itssource,natureandthecircumstancesunderwhichitisobtained.
Evaluating misstatements
56) Theauditor should recordmisstatements identifiedduring theaudit, bringthem to the attention ofmanagement or those chargedwith governance.The auditor should assess if the misstatements mean further audit work is requiredandtheirimpactonthefinancialstatements,ifuncorrected.
57) The auditor should assess whether uncorrected misstatements are material, individuallyorinaggregate,todeterminewhateffecttheymayhaveontheauditopinion.
Forming an opinion and reporting on the financial statements
58) Based on the audit evidence, the auditor should form an opinion as towhetherthefinancialstatementshavebeenpreparedinaccordancewiththeapplicablefinancialreportingframework,andiftheyarefreefrommaterialmisstatement.
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59) Inordertoformanopinion,theauditorshouldfirstconcludewhethertheyhavereasonableassuranceonwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement.
60) Theauditorshouldexpressanunmodifiedopinioniftheauditevidenceshowsthatthefinancialstatementshavebeenprepared,inallmaterialrespects,inaccordancewiththeapplicablefinancialframework.
61) If the auditor concludes that, based on the audit evidence obtained, the financialstatementsasawholecontainmaterialmisstatement,ortheauditorisunabletoobtainsufficientappropriateauditevidencetoconcludethatthefinancial statements as a whole are free frommaterial misstatement, theauditorshouldmodifytheopinionintheauditor’sreportinaccordancewiththesectionon“Modificationstotheopinionintheauditor’sreport”.
62) Inaddition to theopinionon thefinancial statements, theauditormayberequiredbylaworregulationtoreportobservationsandfindingswhichhavenotaffectedtheopinion,andanyrecommendationsmadeasaresultthereof.Theseelementsshouldbeclearlydistinguishedfromtheopinion.
Modifications to the opinion in the auditor’s report
63) The auditor should modify the opinion in the auditor's report when theauditorconcludes,basedontheauditevidenceobtained,thatthefinancialstatements as a whole contain material misstatement, or if the auditor was unabletoobtainsufficientappropriateauditevidencetoconclude.
64) Auditorsmayissuethreetypesofmodifiedopinion:• aqualifiedopinion–whentheauditorconcludesthat,orisunabletoobtain
sufficientandappropriateauditevidenceabout,misstatements,whetherindividuallyorinaggregateare,orcouldbe,materialbutnotpervasive;
• an adverse opinion –when the auditor, having obtained sufficient andappropriate audit evidence, concludes that misstatements, whether individuallyorinaggregate,arebothmaterialandpervasive;or
• adisclaimerofopinion–whentheauditorisunabletoobtainsufficientandappropriateauditevidenceduetoanuncertaintyorscopelimitationwhichisbothmaterialandpervasive.
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65) Thedecisionregardingwhichtypeofmodifiedopinionisappropriatedependsuponthe:• natureofthemattergivingrisetothemodification-thatis,whetherthe
financialstatementsaremateriallymisstatedor,intheeventthatitwasnotpossibletoobtainsufficientappropriateauditevidence,maybemateriallymisstated;and
• auditor’s judgment about the pervasiveness of the effects or possibleeffectsofthematteronthefinancialstatements.
Emphasis of Matter paragraphs and Other Matters paragraphs in the auditor’s report
66) If the auditor considers it necessary to draw users’ attention to a matterpresentedordisclosedinthefinancialstatementsthatisofsuchimportancethat it is fundamental to their understanding of the financial statements,andthereissufficientappropriateevidencethatthematterisnotmateriallymisstatedinthefinancialstatements,theauditorshouldincludeanemphasisofmatterparagraphintheauditor’sreport.
67) If the auditor considers it necessary to communicate amatter other thanthosethatarepresentedordisclosed inthefinancialstatements,which, inthe auditor’s judgement, is relevant to users’ understanding of the audit,theauditor’sresponsibilitiesortheauditor’sreport,andprovidedthisisnotprohibitedbylaworregulation,thisshouldbedoneinaparagraphwiththeheading’OtherMatters’oranotherappropriateheading.
Consideration of subsequent events
68) Theauditorshouldobtainsufficientappropriateauditevidencethatalleventsoccurringbetweenthedateofthefinancialstatementsandthedateoftheauditor’sreportthatrequireanadjustmentto,ordisclosurein,thefinancialstatementshavebeenidentifiedandappropriatelyreflectedinthefinancialstatements.
69) Theauditorshouldalsorespondappropriatelytofactsthatbecameknownafterthedateoftheauditor’sreportandwhich,hadtheybeenknownatthatdate,mayhavecausedtheauditortoamendtheauditor’sreport.
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Comparative information - corresponding figures and comparative financial statements
70) Theauditorshouldobtainsufficientappropriateauditevidenceaboutwhetheranycomparative information included in thefinancial statementshasbeenpresented,inallmaterialrespects,inaccordancewiththerequirementsforcomparativeinformationintheapplicablefinancialreportingframeworkandreportinaccordancewiththeauditor’sreportingresponsibilities.
71) Comparative informationreferstoamountsanddisclosures included inthefinancialstatementsinrespectofoneormorepriorperiods.Correspondingfiguresareamountsandotherdisclosuresforthepriorperiodincludedasanintegralpartofthecurrentperiodfinancialstatements.Comparativefinancialstatements are where amounts and other disclosures for the prior period are includedforcomparisonwiththefinancialstatementsofthecurrentperiodwiththesamelevelofinformationasthecurrentperiod.
72) Theauditorshouldevaluatewhetherthecomparativeinformationmatchesthe amounts and other disclosures presented in the prior period or, when appropriate, they have been restated. The auditor should also evaluatewhether the accounting policies reflected in the comparative informationare consistent with those applied in the current period or, if there have been changes inaccountingpolicies,whether thosechangeshavebeenproperlyaccountedforandadequatelypresentedanddisclosed.
73) Forcorrespondingfigures,theauditor’sopiniononthefinancialstatementsreferstothecurrentperiodonly.Forcomparativefinancialstatements,theauditor’s opinion refers to each period for which financial statements arepresented.
The auditor’s responsibilities in relation to other information in documents containing audited financial statements
74) The auditor should read all other information in an entity’s annual reportand consider whether there are any material inconsistencies or materialmisstatement of fact with the audited financial statements, or with theauditor’s knowledge obtained during the audit. If, when considering the
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otherinformation,theauditoridentifiesamaterialinconsistencyormaterialmisstatement of fact, the auditor should determine whether the audited financialstatementsortheotherinformationneedstoberevised.
75) Other information refers to financial or non-financial information (otherthanfinancial statements and the auditor’s report thereon) included in anentity’sannualreport.Thisusuallyrepresentsadocument,orcombinationofdocuments,preparedtypicallyonanannualbasisbymanagementorthosechargedwithgovernanceinaccordancewithlaw,regulationorcustom,thepurposeofwhichistoprovidestakeholderswithinformationontheentity’soperationsandtheentity’sfinancialresultsandfinancialpositionassetoutinthefinancialstatements.
76) In case of material inconsistency, the action the auditor should take mayinclude modifying the auditor's opinion, withholding the auditor's report,withdrawingfromtheengagement(intherarecaseswherethisispossibleinthepublicsector),notifyingthosechargedwithgovernance,orincludinganOtherMatterparagraphintheauditor'sreport.
77) Iftheauditoridentifiesamaterialinconsistencythatthemanagementoftheauditedentityrefusestocorrect,theauditorshouldnotifythosechargedwithgovernance.Auditorsmayalsoberequiredordecidetonotifyotherparties,suchasthelegislature,inadditiontothosechargedwithgovernance.
Considerations relevant to audits of consolidated financial statements
78) Auditors engaged to audit consolidated financial statements should obtainsufficient appropriate audit evidence on the reliability of the financialinformation of the components and the consolidation process to expressanopinionas towhether the consolidatedfinancial statementshavebeenprepared,inallmaterialrespects,inaccordancewiththeapplicablefinancialreportingframework.
79) These principles apply to all public sector audits of consolidated financialstatements.Insituationswheretheauditorisengagedtoauditconsolidatedfinancial statements specific requirements and considerations may apply,includingensuringthequalityoftheworkofthecomponentauditors.
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