Page 232 - CA Inter Audit PARAM

CA Ravi Taori
What constitutes true and fair view is a matter of auditor’s judgement, but some specific points must be
seen by the auditor to ensure true and fair view.
OR
The auditor R of GR and Co., a firm of Chartered Accountants is conducting audit of B Industries Ltd. State
the specific points must be seen by the auditor to ensure true and fair view.
Answer ➢ Concept of “True and Fair”:
The concept of “true and fair” is a fundamental concept in auditing. The phrase “true and fair” in the
auditor’s report signifies that the auditor is required to express his opinion as to whether the state
of affairs and the results of the entity as ascertained by him in the course of his audit are truly and
fairly represented in the accounts under audit.

➢ To ensure true and fair view, an auditor has to see:
that the assets are neither undervalued or overvalued, according to the applicable accounting
principles,
no material asset is omitted;
the charge, if any, on assets are disclosed;
material liabilities should not be omitted;
the profit and loss account and balance sheet discloses all the matters required to be disclosed;
accounting policies have been followed consistently; and
all unusual, exceptional or non-recurring items have been disclosed separately.

QNO Unqualified Opinion Old Course--(P16M/M18E/M19M/M20M/M21R)
700.07 Bhaskar CNO - SA700.040
The Auditor is fully satisfied with the audit of an entity in respect of its systems and procedures and wants
to issue a report without any hesitation. What type of opinion can be given and give reasoning.

OR
When does an auditor issue unqualified opinion and what does it indicate?

Answer ➢ An unqualified opinion should be expressed when the auditor concludes that the financial

statements give a true and fair view in accordance with the financial reporting framework used for
the preparation and presentation of the financial statements.
➢ An unqualified opinion indicates, implicitly, that any changes in the accounting principles or in the
method of their application, and the effects thereof, have been properly determined and disclosed
in the financial statements.
➢ An unqualified opinion also indicates that:
The financial statements have been prepared using the generally accepted accounting
principles, which have been consistently applied;
the financial statements comply with relevant statutory requirements and regulations; and
there is adequate disclosure of all material matters relevant to the proper presentation of the
financial information, subject to statutory requirements, where applicable.

QNO AR-Basic Elements Old Course -- (P16M)
700.09 Bhaskar CNO - SA700.040 New Course – Relevant, Concept Covered in New Course SM
State the basic elements of the Auditor’s Report.
Answer ➢ Basic Elements of the Auditor’s Report:
As per SA 700 “Forming an Opinion and Reporting on Financial Statements”, the auditor’s report
includes the following basic elements, ordinarily, in the following layout-
Title;
Addressee;
Auditor’s Opinion
Basis of Opinion
Going Concern (If Required)
Key Audit Matter (If applicable)
Responsibility of Management for the FST
Auditor’s Responsibility
Other Reporting Responsibility
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