The Auditor’s Report on a Financial RepoThe Auditor’s Report on a Financial Report

The Auditor’s Report on a Financial Report

6 The auditor’s report shall contain a clear expression of the auditor’s opinion on the financial report.

7 As stated in ASA 200 Objective and General Principles Governing an Audit of a Financial Report, the objective of an audit of a financial report is to enable the auditor to express an opinion whether the financial report is prepared, in all material respects, in accordance with an applicable financial reporting framework. In Australia, the applicable financial reporting framework for a general purpose financial report is:

(a) the Accounting Standards promulgated by the Australian Accounting Standards Board (“Australian Accounting Standards”); [2] and

(b) when appropriate, other relevant statutory[3] or other requirements.

8 Unless required by law or regulation to use different wording, the auditor’s opinion on a general purpose financial report prepared in accordance with a financial reporting framework that is designed to achieve fair presentation shall state whether the financial report “gives a true and fair view” or “presents fairly, in all material respects,” in accordance with the applicable financial reporting framework.

9 As explained in ASA 200, the financial reporting framework determines what constitutes a general purpose financial report. A general purpose financial report under Australian Accounting Standards comprises a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, a summary of significant accounting policies and other explanatory notes.

10 For the purposes of this Auditing Standard, the phrases “gives a true and fair view” and “presents fairly, in all material respects,” are equivalent. Which of these phrases is used may be determined by the law or regulations governing the audit of the financial report. For example, the auditor’s opinion on a financial report prepared in accordance with the Corporations Act 2001 is required by that Act to use the phrase “true and fair view”. In all other cases, the auditor’s opinion on a general purpose financial report ordinarily uses the phrase “presents fairly, in all material respects.”

11 In some cases, law or regulation governing the audit of a financial report may prescribe wording for the auditor’s opinion that is different from the phrases described in paragraph 8. Although the auditor may be obliged to use the prescribed wording, the auditor’s responsibilities as described in this Auditing Standard for forming the opinion remain the same.

12 When wording prescribed by law or regulation differs significantly from the phrases in paragraph 8, there may be a risk that users misunderstand the assurance obtained in an audit of a financial report. For example, the wording may convey to readers that the auditor is attesting to the accuracy of the financial report amounts rather than expressing an opinion on whether the financial report gives a true and fair view or presents fairly, in all material respects. In such circumstances, the auditor ordinarily considers whether the risk of misunderstanding can be mitigated through appropriate explanation in the auditor’s report.