Form and Content of the Auditor’s ReportForm and Content of the Auditor’s Report When the Opinion Is Modified

Form and Content of the Auditor’s Report When the Opinion Is Modified

Basis for Modification Paragraph

1. When the auditor modifies the opinion on the financial report, the auditor shall, in addition to the specific elements required by ASA 700, include a paragraph in the auditor’s report that provides a description of the matter giving rise to the modification. The auditor shall place this paragraph immediately before the opinion paragraph in the auditor’s report and use the heading “Basis for Qualified Opinion,” “Basis for Adverse Opinion,” or “Basis for Disclaimer of Opinion,” as appropriate. (Ref: Para. A17)
2. If there is a material misstatement of the financial report that relates to specific amounts in the financial report (including quantitative disclosures), the auditor shall include in the basis for modification paragraph a description and quantification of the financial effects of the misstatement, unless impracticable. If it is not practicable to quantify the financial effects, the auditor shall so state in the basis for modification paragraph. (Ref: Para. A18)
3. If there is a material misstatement of the financial report that relates to narrative disclosures, the auditor shall include in the basis for modification paragraph an explanation of how the disclosures are misstated.
4. If there is a material misstatement of the financial report that relates to the non-disclosure of information required to be disclosed, the auditor shall:
   1. Discuss the non-disclosure with those charged with governance;

Aus 19.1 Request management and/or those charged with governance to correct the non-disclosure in the financial report;
(Ref: Para. Aus A19.1)

1. Describe in the basis for modification paragraph the nature of the omitted information; and
2. Unless prohibited by law or regulation, include the omitted disclosures, provided it is practicable to do so and the auditor has obtained sufficient appropriate audit evidence about the omitted information. (Ref: Para. A19)

Aus 19.2 Where, under paragraph 19(c) of this Auditing Standard, the omitted disclosures are not included in the basis of modification paragraph, the auditor shall include the reasons for the omission from the basis of modification paragraph.

1. If the modification results from an inability to obtain sufficient appropriate audit evidence, the auditor shall include in the basis for modification paragraph the reasons for that inability.
2. Even if the auditor has expressed an adverse opinion or disclaimed an opinion on the financial report, the auditor shall describe in the basis for modification paragraph the reasons for any other matters of which the auditor is aware that would have required a modification to the opinion, and the effects thereof. (Ref: Para. A20)