Facelift for auditors

Which of the following auditing standards have NOT been revised as a result of the changes to the auditor report which is effective for audits of financial statements for periods ending on or after 15 December 2016

ISA 450 Evaluation of Misstatements Identified During the Audit

ISA 700 Forming an Opinion and Reporting on Financial Statements

ISA 701 Communicating Key Audit Matters in the Independent Auditor Report

ISA 570 Going Concern

What is one of the most notable change in terms of the presentation of the auditor report according to the requirements of the revised ISA 700?

The concept of Emphasis of Matter and Other Matter paragraphs have been removed and have now been included in the Auditors Responsibility section of the report

A section of Key Audit Matters for audit reports of all audits of financial statements

A new heading or title for the auditor report

The Opinion section will be presented first in the report followed by the Basis of Opinion paragraph

Which of the following is the NEW addition to the Basis of Opinion paragraph in the auditor report resulting from the changes to ISA 700?

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion

We are independent of the Company in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant

In our opinion, the accompanying financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of the Company as at 31 December 20XY, and (of) its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards and provisions of the Companies Act 19XY

We conducted our audit in accordance with International Standards on Auditing (ISAs)

Which of the following is NOT distinct new and enhanced representations are to be made in the Auditors Responsibilities for the Audit of the Financial Statements section of the report -

Enhanced representations relating to misstatements that can arise from fraud or error

Appropriateness of the use by the auditor of the going concern basis of accounting

Exercise of professional judgment and professional scepticism throughout the audit

Communication with those charged with governance regarding the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls

A statement that the auditor has complied with relevant ethical requirements regarding independence to be included in the Auditors Responsibilities for the Audit of the Financial Statements section of the report is required for what type of audits?

For audits of financial statements of all types of entities

For audits of financial statements of listed entities

For special audits of listed entities

For audits of financial statements and special audits all types of entities

As a starting point in determining Key Audit Matters as required by ISA 701 Communicating Key Audit Matters in the Independent Auditor Report, the auditor should determine -

Specific requirements of those charged with governance (TCWG) in respect of key audit areas to be included as part of the audit approach

Matters that required significant auditor attention based on communication with those charged with governance (TCWG)

Specific requirements of those charged with governance (TCWG) and matters of compliance determined by regulators in respect of key audit areas to be included as part of the audit approach

The scope of the auditors responsibility and the responsibility of the management in relation to the audit of financial statements

The following situation or circumstance is usually NOT considered as a Key Audit Matter that is reported in the auditors report -

A change in human resource policy introduced by the management of the company

A material matter that is of concern to users of the users of the financial statements

Complex or subjective selection of an appropriate accounting policy by management compared to other entities within its industry

Nature and materiality of corrected and accumulated uncorrected misstatements due to fraud or error related to the matte

What are the factors that may affect the number of Key Audit Matters that will be communicated in the auditor report?

The quantum of the audit fees charged

The size and complexity of the entity, the nature of its business and environment, and the facts and circumstance of the audit engagement

The make-up, composition and experience of the management team and those charged with governance of the reporting entity and the competency and experience of the audit engagement team

The make-up, composition and experience of the management team and those charged with governance of the reporting entity

One of the key changes to ISA 570 Going concern is in relation to report on close call situations. Which of the following BEST describes such situations?

Events or conditions were identified that may cast significant doubt on the ability of the entity to continue as a going concern but, after considering management plans to deal with these events or conditions, management and the auditor is unable to agree on whether a material uncertainty exists, which results with the auditor issuing a disclaimer opinion and subsequently withdrawing from the engagement

Events or conditions were identified that may cast significant doubt on the ability of the entity to continue as a going concern but, after considering management plans to deal with these events or conditions, management and the auditor conclude that no material uncertainty exists

Events or conditions were identified that may cast significant doubt on the ability of the entity to continue as a going concern but, after considering management plans to deal with these events or conditions, management and the auditor conclude that a material uncertainty exists

Events or conditions were identified that has not effect on the ability of the entity to continue as a going concern and after considering management plans to deal with these events or conditions, management and the auditor conclude that no material uncertainty exists

The following statements are included in the Auditors Responsibilities for the Audit of the Financial Statements section of the audit report relating to going concern, EXCEPT -

If we conclude that a material uncertainty exists, we are required to draw attention in our auditor report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion

In preparing the financial statements, management is responsible for assessing the ability of the company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so

Our conclusions are based on the audit evidence obtained up to the date of our auditor report. However, future events or conditions may cause the Company to cease to continue as a going concern…

We also conclude on the appropriateness of management use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the company to continue as a going concern