ASA 710 - Comparative Information - Corresponding Figures and Comparative Financial Reports - October 2009
Qualified OpinionQualified Opinion
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We have audited the financial report of ABC Entity (the Entity), which comprises the statement of financial position as at 30 June 20X1, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the declaration by those charged with governance.[*]
In our opinion, except for the possible effects on the corresponding figures of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial report presents fairly, in all material respects, (or gives a true and fair view of) the financial position of the Entity as at 30 June 20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with Australian Accounting Standards.
Basis for Qualified Opinion
Because we were appointed auditors of the Entity during 20X0, we were not able to observe the counting of the physical inventories at the beginning of that period or satisfy ourselves concerning those inventory quantities by alternative means. Since opening inventories affect the determination of the results of operations, we were unable to determine whether adjustments to the results of operations and opening retained earnings might be necessary for 20X0. Our audit opinion on the financial report for the period ended 30 June 20X0 was modified accordingly. Our opinion on the current period’s financial report is also modified because of the possible effect of this matter on the comparability of the current period’s figures and the corresponding figures.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Entity in accordance with the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Responsibilities of Management and Those Charged with Governance for the Financial Report
[Reporting in accordance with ASA 700 – see Illustration 3 in the Appendix of ASA 700.]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see Illustration 3 in the Appendix of ASA 700.]
Example Auditor’s Report
General Purpose Financial Report
Corresponding Figures
Qualified opinion on prior year, which affects the comparability of the current year financial report—Corporations Act 2001 (Fair Presentation Framework)
For purposes of this illustrative auditor’s report, the following circumstances are assumed:
Audit of the financial report of a single listed company. The audit is not a group audit (i.e., ASA 600[21] does not apply).
The financial report is prepared by the directors of the company in accordance with Australian Accounting Standards (a general purpose framework) and under the Corporations Act 2001.
The terms of the audit engagement reflect the description of the directors’ responsibility for the financial report in ASA 210.[22]
The auditor’s report on the prior period, as previously issued, included a qualified opinion.
The matter giving rise to the modification is unresolved.
The effects or possible effects of the matter on the current period’s figures are immaterial but require a modification to the auditor’s opinion because of the effects or possible effects of the unresolved matter on the comparability of the current period’s figures and the corresponding figures.
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards).
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern in accordance with ASA 570.[23]
Key audit matters have been communicated in accordance with ASA 701.[24]
The auditor has obtained all of the other information prior to the date of the auditor’s report and has not identified a material misstatement of the other information.
In addition to the audit of the financial report, the auditor has other reporting responsibilities required under section 308(C) of the Corporations Act 2001.
INDEPENDENT AUDITOR’S REPORT
To the Members of ABC Company [or Other Appropriate Addressee]
We have audited the financial report of ABC Company Ltd. (the Company), which comprises the statement of financial position as at 30 June 20X1, statement of comprehensive income, statement of changes in equity, statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the directors’ declaration.
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial report of ABC Company Ltd., is in accordance with the Corporations Act 2001, including:
giving a true and fair view of the company’s financial position as at 30 June 20X1, and of its financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Qualified Opinion
Because we were appointed auditors of ABC Company Ltd., during 20X0, we were not able to observe the counting of the physical inventories at the beginning of that period or satisfy ourselves concerning those inventory quantities by alternative means. Since opening inventories affect the determination of the results of operations, we were unable to determine whether adjustments to the results of operations and opening retained earnings might be necessary for 20X0. Our audit opinion on the financial report for the period ended 30 June 20X0 was modified accordingly. Our opinion on the current period’s financial report is also modified because of the possible effect of this matter on the comparability of the current period’s figures and the corresponding figures.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.[#]
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
[Reporting in accordance with ASA 700 – see [Aus] Illustration 2A in the Appendix of ASA 700.]
Other Information [or another title if appropriate such as “Information Other than the Financial Report and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ASA 720 – see [Aus] Illustration 1A in Appendix 3 of ASA 720.]
Responsibilities of the Directors for the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in the Appendix of ASA 700.]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in the Appendix of ASA 700.]
Report on the Remuneration Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in the Appendix of ASA 700.]
For purposes of this illustrative auditor’s report the following circumstances are assumed:
Audit of the financial report of an entity other than a listed entity. The audit is not a group audit (i.e., ASA 600 does not apply).
The financial report is prepared by management of the entity in accordance with Australian Accounting Standards (a general purpose framework). The financial report is not prepared under the Corporations Act 2001.
The terms of the audit engagement reflect the description of management’s responsibility for the financial report in ASA 210.
The auditor has concluded an unmodified (i.e., “clean”) opinion is appropriate based on the audit evidence obtained.
The prior period’s financial report was audited by a predecessor auditor.
The auditor is not prohibited by law or regulation from referring to the predecessor auditor’s report on the corresponding figures and decides to do so.
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards).
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ASA 570.
The auditor is not required, and has otherwise not decided, to communicate key audit matters in accordance with ASA 701.
The auditor has obtained no other information prior to the date of the auditor’s report.
Those responsible for oversight of the financial report differ from those responsible for the preparation of the financial report.
The auditor has no other reporting responsibilities required under local law.
INDEPENDENT AUDITOR’S REPORT
To the Members of ABC Entity [or Other Appropriate Addressee]
We have audited the financial report of ABC Entity (the Entity), which comprises the statement of financial position as at 30 June 20X1, the statement of comprehensive income, statement of changes in equity, statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the declaration by those charged with governance.[*]
In our opinion, the accompanying financial report presents fairly, in all material respects, (or gives a true and fair view of) the financial position of the Entity as at 30 June 20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with Australian Accounting Standards.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Entity in accordance with the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Other Information [or another title if appropriate such as “Information Other than the Financial Report and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ASA 720 – see [Aus] Illustration 1A in Appendix 3 of ASA 720.]
Other Matter
The financial report of the Entity for the year ended 30 June 20X0 was audited by another auditor who expressed an unmodified opinion on that financial report on 31 August 20X0.
Responsibilities of Management and Those Charged with Governance for the Financial Report
[Reporting in accordance with ASA 700 – see Illustration 3 in the Appendix of ASA 700.]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see Illustration 3 in the Appendix of ASA 700.]
For purposes of this illustrative auditor’s report, the following circumstances are assumed:
Audit of the financial report of an entity other than a listed entity. The audit is not a group audit (i.e., ASA 600 does not apply).
The financial report is prepared by management of the entity in accordance with Australian Accounting Standards (a general purpose framework). The financial report is not prepared under the Corporations Act 2001.
The terms of the audit engagement reflect the description of management’s responsibility for the financial report in ASA 210.
The auditor is required to report on both the current period financial report and the prior period financial report in connection with the current year’s audit.
The auditor’s report on the prior period, as previously issued, included a qualified opinion.
The matter giving rise to the modification is unresolved.
The effects or possible effects of the matter on the current period’s figures are material to both the current period financial report and prior period financial reports, and require a modification to the auditor’s opinion.
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards).
The auditor is not required, and has otherwise not decided, to communicate key audit matters in accordance with ASA 701.
The auditor has not obtained any other information prior to the date of the auditor’s report.
Those responsible for oversight of the financial report differ from those responsible for the preparation of the financial report.
The auditor has no other reporting responsibilities required under local law.
INDEPENDENT AUDITOR’S REPORT
To the Members of ABC Entity [or other Appropriate Addressee]
We have audited the financial report of ABC Entity (the Entity), which comprises the statement of financial position as at 30 June 20X1 and 20X0, statement of comprehensive income, statement of changes in equity, statement of cash flows for the years then ended, and notes to the financial statements, including material accounting policy information, and the declaration by those charged with governance.[*]
In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial report presents fairly, in all material respects, (or gives a true and fair view of) the financial position of the Entity as at 30 June 20X1 and 20X0 and (of) its financial performance and its cash flows for the year then ended in accordance with Australian Accounting Standards.
Basis for Qualified Opinion
As discussed in Note X to the financial report, no depreciation has been provided in the financial report which constitutes a departure from Australian Accounting Standards. Based on the straight‑line method of depreciation and annual rates of 5% for the building and 20% for the equipment, the loss for the year should be increased by $xxx in 20X1 and $xxx in 20X0, property, plant and equipment should be reduced by accumulated depreciation of $xxx in 20X1 and $xxx in 20X0, and the accumulated loss should be increased by $xxx in 20X1 and $xxx in 20X0.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Entity in accordance with the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our qualified audit opinion.
Responsibilities of Management and Those Charged with Governance for the Financial Report
[Reporting in accordance with ASA 700 – see Illustration 3 in the Appendix of ASA 700.]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see Illustration 3 in the Appendix of ASA 700.]