ISA 705 (Revised and Redrafted), Modifications to the Opinion in the Independent Auditor's Report
Proposed revised and redrafted International Standard on Auditing issued for comment by the International Auditing and Assurance Standards Board of the International Federation of Accountants
Comments from ACCA
November 2007
Executive Summary
ACCA welcomes the opportunity to comment on the proposed International Standard on Auditing ISA 705 (Revised and Redrafted) Modifications to the Opinion in the Independent Auditor's Report (proposed ISA 705) issued for comment by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants.
Our comments are restricted to the changes proposed as a result of applying the Clarity project drafting conventions to the close off document of ISA 705 (Revised) that reflects IAASB decisions made after an earlier consultation.
While we are generally in agreement with the content of proposed ISA 705, we suggest some enhancements to the proposals that we believe will provide users with a better understanding of the respective scopes of those ISAs dealing with the auditor's report.
Application of the Clarity Drafting Conventions
Objective
The objective is acceptable.
Introduction
We suggest that the ‘sign-posting' material in the close off version of ISA 705 be reinstated so that the attention of users is directed to the role of ISA 706 Emphasis of Matter Paragraphs and Other Matter(s) Paragraphs in the Independent Auditor's Report . Proposed ISA 700 The Independent Auditor's Report on a Complete Set of General Purpose Financial Statements properly refers to ISA 705 and ISA 706 and this reference ought to be mirrored in those ISAs.
Definitions
We agree with the inclusion of the definition of the term ‘pervasive'.
We believe that users would benefit from easier access to definitions of ‘fair presentation framework' and ‘compliance framework'. This might be done by expanding guidance in the area of paragraph A5, or footnoting the Introduction to provide a cross reference.
Other Matters
The Explanatory Memorandum forming part of the Exposure Draft invites comments on the following other matters:
- Special considerations in the audit of small entities
- Special considerations in the audit of public sector entities
- Developing nations
- Translations
- Undue costs
We have no significant comments on these matters.