Page 127 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

07 REPORTING

Case Study-- CA. A
Seminar: The auditor attended a seminar on "Audit Conclusions and Reporting-Responsibilities of auditors" in
the context of SA 700 series, organized by the local branch of WIRC of ICAI.
Importance of Audit Report: The seminar highlighted the importance of preparing an audit report in
accordance with Standards on Auditing due to increased regulatory scrutiny. The auditor's opinion, expressed
through the audit report, is of paramount importance. If a modified opinion is warranted, it should be clearly
expressed and explained. In cases of material and pervasive misstatements, auditors should not hesitate to express
an adverse opinion in audit reports.
Going Concern: Auditors should challenge key underlying assumptions rather than accepting them without
question, as they have significant implications for the audit report. Auditors should thoroughly assess the
appropriateness of the "Going concern" assumption in the preparation of financial statements. If the client has
not made its assessment, the auditor should question the management. The use of the going concern basis of
accounting has direct implications for the auditor's report. If inappropriate, an adverse opinion should be
expressed.
EMP: The value of Emphasis of Matter paragraphs in audit reports was discussed. These paragraphs cannot be
used for matters requiring a modification of opinion.
KAM: The communicative value of audit reports can be increased by highlighting key audit matters identified
during the audit, and how they were addressed.

Introduction
Importance of Audit Report: The audit report is the primary deliverable from a statutory auditor,
communicating their expert opinions on the financial statements, and is essential for establishing the credibility
of those statements for stakeholders.
Preparation of Audit Report: After completing the audit field work, the auditor must prepare this report with
great care, attentiveness, and impartiality due to its significant impact.
Compliance of SA’s: The report must adhere to the Standards on Auditing to ensure consistent and compliant
issuance of audit opinions.

SA 700 Series - The Auditor’s Report on Financial Statements
The SA 700 series is purely dedicated to the auditor’s report to be issued by the auditor. There are following SAs
which you need to be aware of.

SA-700 - Forming an Opinion and Reporting on Financial Statements
Opinion: The purpose of SA-700 is to form an opinion on the financial statements.
Report: It dictates the form and content of the auditor’s report.
Unmodified: It deals with the Un-Modified (Clean) opinion of the Auditor

SA-701 - Communicating Key Audit Matters in the Independent Auditor’s Report
Communicative value: SA-701's purpose is to enhance the communicative value of the auditor’s report by
providing greater transparency about the audit that was performed. It aims to assist the user in understanding
those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial
statements of the current period.

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