Section example 2: ‘emphasis of matter’ - concur - ASA 701 - Modifications to the Auditor’s Report - April 2006 - example 2: ‘emphasis of matter’ - concurrence with ‘additional disclosures’ | Zoe
We have audited the accompanying financial report of [name of entity], which comprises the balance sheet as at 30 June 20XX, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration.
Directors’ Responsibility for the Financial Report
The directors of the [company/registered scheme/disclosing entity] are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. [In Note XX, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.]
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of [name of entity] on [date], would be in the same terms if provided to the directors as at the date of this auditor’s report.
Auditor’s Opinion
In our opinion the financial report of [name of entity] is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the [company/registered scheme/disclosing entity]’s financial position as at 30 June 20XX and of its performance for the year ended on that date; and
(b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.
OR
[In our opinion:
(a) the financial report of [name of entity] is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the [company/registered scheme/disclosing entity]’s financial position as at 30 June 20XX and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note XX.[†]]
Application of Australian Accounting Standard AASB 10XX
Without qualification to the opinion expressed above, attention is drawn to the following matter. As required by the Corporations Act 2001, the [company/registered scheme/disclosing entity] has, in the preparation of its balance sheet and income statement, applied the ABC method of accounting for (item) in accordance with Accounting Standard AASB 10XX.
The directors are of the opinion, however, that application of the ABC method has not resulted in the financial report giving a true and fair view as required by the Corporations Act 2001 and is so misleading that it conflicts with the objectives of the AASB framework for the preparation and presentation of financial statements. The directors have therefore provided the additional disclosures in Note X which indicate that had the LMN method of accounting for (item) been adopted, the financial report would, in the directors’ opinion, have given a true and fair view and would meet the objectives of the AASB framework for the preparation and presentation of financial statements . The effect of adopting the LMN method rather than the ABC method is disclosed in Note X.
Because of [state the auditor's reasons in full], it is our opinion that:
(a) application of the ABC method in accordance with Accounting Standard AASB 10XX has, in this instance, resulted in the treatment of (item) leading to the balance sheet, income statement and statement of changes in equity being potentially misleading;
(b) the additional disclosures provided by the directors in Note X are necessary to give the true and fair view required by the Corporations Act 2001 and ensure the financial report as a whole is not misleading; and
(c) the information in Note X, including application of the LMN method as the most appropriate alternative method, is relevant and reliable.
Report on Other Legal and Regulatory Requirements
[Form and content of this section of the auditor’s report will vary depending on the nature of the auditor’s other reporting responsibilities.]