Kế toán, kiểm toán - Chapter 13: The auditor’s reporting obligations

CHAPTER 13THE AUDITOR’S REPORTING OBLIGATIONS1Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettTHE OBLIGATION TO REPORTReporting requirements for the auditorarise as a result of:Professional obligationsLegislative obligations2Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettPROFESSIONAL REPORTINGOBLIGATIONSArise from membership of professional accounting bodiesRequire auditor to meet requirements of AUSs and form a conclusion that financial reports have been prepared in accordance with an identified financial reporting framework3Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettLEGISLATIVE REPORTING OBLIGATIONSAre contained in statutes that govern the auditReporting requirements for Corporations Act 2001 audits are contained in ss 307-313 of the Corporations Act 2001.4Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettWHO THE AUDITOR IS OBLIGED TO REPORT TOThe governing body and membersManagement and the board of directorsAustralian Securities and Investments Commission (ASIC)5Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettTRUE AND FAIR VIEW ANDPRESENTS FAIRLYDifferences in terminology for:AUS 702 (ISA 700) — whether financial report presents fairly in accordance with applicable accounting standards and other mandatory professional reporting requirementsCorporations Act 2001 audits — whether the accounts are drawn up so as to give a true and fair view6Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettINTERPRETATIONS OF TRUE AND FAIRTechnical interpretationLiteral interpretation7Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettTECHNICAL INTERPRETATIONFinancial report will constitute a true and fair view when prepared in accordance with generally accepted accounting principles (GAAP)Thus, where an accounting standard has not been complied with, financial reports will not present a true and fair view8Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettLITERAL INTERPRETATIONView presented by financial information is consistent with auditor’s knowledge of the entityAllows for non-compliance with GAAP where compliance would result in view presented by financial report inconsistent with auditor’s knowledge of the entity9Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettSTRUCTURE OF AUDIT REPORTTitleAddresseeScope paragraphQualification paragraph, where requiredOpinion paragraphEmphasis of matter section, where requiredAuditor’s signatureAddressDate of audit report10Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettAUDIT OPINION 11Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettQUALITATIVE CHARACTERISTICSOF AUDIT REPORTRelevanceReliabilityExplanatory information is materialTimelinessComparability (standard form reports encouraged)Understandability12Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettTYPES OF AUDIT OPINIONSUnqualifiedAn unqualified opinionAn unqualified opinion with an emphasis of matterUnmodifiedModifiedQualifiedAn ‘except for’ opinionAn adverse opinionAn inability to form an opinionModifiedModifiedModified13Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettUNQUALIFIED AUDIT OPINIONExpressed when auditor is satisfied in allmaterial respects that financial report ispresented fairly in accordance with: Applicable accounting standards and UIG Consensus Views; andRelevant statutory and other requirements.Most audit opinions given are unqualified(97% of listed companies in 2001).14Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger Simnett‘EXCEPT FOR’ OPINIONIssued when auditor has reservation about a specific matter or matters, but apart from these specific matters the remainder of financial report can be relied uponCommunicates that users can rely on majority of financial report but need to adjust financial information for matter(s) highlighted by auditorMajor type of qualification in practice15Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettEXAMPLE OF QUALIFIED OPINION PARAGRAPH FOR AN ‘EXCEPT FOR’ OPINION16Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettADVERSE OPINIONExpressed when auditor’s reservations are of such magnitude or are so pervasive that they believe financial report, taken as a whole, is misleading and of little use to usersCommunicates that no reliance should be placed on financial reportExtremely rare in practice17Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettEXAMPLE OF QUALIFICATION AND QUALIFIED OPINION PARAGRAPH FOR ADVERSE OPINION18Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettINABILITY TO FORM AN OPINIONExpressed when auditor is unable to obtain adequate evidence to form an opinion on issues, the possible effects of which are material or pervasive to financial report taken as a wholeCommunicates that the auditor is unsure whether financial report as a whole is reliableVery rare in practice19Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettEXAMPLE OF QUALIFIED AUDIT OPINION PARAGRAPH FOR A STATEMENT OF INABILITY TO FORM AN OPINION20Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettEMPHASIS OF MATTERIncluded at end of audit report to draw attention to certain matters that are considered relevant but do not affect type of audit opinion issued Is not a qualification, but used to draw reader’s attention to matters (usually contained in a note to the accounts) that are relevant to the reader’s decision-making process21Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettCIRCUMSTANCES GIVING RISE TOEMPHASIS OF MATTER SECTIONAdditional disclosures with which auditor concursInherent uncertainty (including going concern) that is adequately disclosedMaterial inconsistency between information contained in documents attached to financial report and the financial reportInappropriateness of going concern as a result of new conditions occurring after balance dateNotice that financial report is a revised financial report22Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettEMPHASIS OF MATTER PARAGRAPH RELATING TO INHERENT UNCERTAINTIES23Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettCIRCUMSTANCES GIVING RISE TOA QUALIFICATIONDisagreement with management regarding financial report (e.g. over applicability of accounting standards or over asset valuations)Conflict between applicable financial reporting frameworks (e.g. very rare in practice, but difference between specific legislative requirements and accounting standards)Limitation on scope of audit (e.g. evidence auditor believes should exist but cannot get access to)24Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettCIRCUMSTANCES THAT RESULT IN A MODIFIED AUDIT REPORT25Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettTHE AUDIT OF COMPARATIVEAMOUNTSAuditor should obtain sufficient, appropriate audit evidence that comparative financial information is not materially misstated.For continuing audits, audit procedures are minimal.For new engagements, auditor may consider work of previous auditor or perform extensive procedures.26Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettAUDITOR’S RESPONSIBILITIES FOR OTHER INFORMATION IN AN ANNUAL REPORTExamples of other information include summaries of 5-10 years operating results, highlights of key figures, financial information in the chairperson’s or directors’ reports.Auditor does not usually have any specific responsibility to substantiate other information included in documents containing audited financial report.Auditor should review such information to ensure it does not contain material inconsistencies or misstatements of fact.If identified, and client doesn’t change, will usually result in an unqualified opinion with an emphasis of matter.27Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettCOMMUNICATIONS WITHSHAREHOLDERSPrincipal means of communication with shareholders is auditor’s opinion on financial report included in the annual report.Secondary means of communication is through attendance at annual general meetings.Shareholders have opportunity at AGM to ask auditor questions relevant to the conduct of the audit.28Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettCOMMUNICATIONS WITHEXECUTIVE MANAGEMENTAuditor has a responsibility to report significant matters identified as a result of audit procedures to management on a timely basis.Principal written form of communication between management and auditor is the management letter in which auditor lists the strategy and internal control weaknesses identified and recommendations for improvement.29Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettCOMMUNICATING WITH THE AUDITCOMMITTEE OR BOARD OF DIRECTORSAuditor will usually meet with audit committee at or near completion of audit to discuss results of audit.Auditor should ensure that the audit committee or board of directors are aware of contents of management letter.Matters that cannot be satisfactorily resolved with executive management must be discussed with the audit committee or the full board.30Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettCOMMUNICATING THROUGH ELECTRONIC PRESENTATION OF FINANCIAL REPORTSMany companies publish their audited financialreport on their websites.Auditor must consider whether audit report might be construed as providing assurance of other information on the website that was unaudited.Auditor should review website to ensure audit report cannot be construed as providing assurance of unaudited information.31Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger SimnettPOTENTIAL CHANGES TO THE AUDIT REPORTSome audit firms are considering changes to the standard form audit report to improve its communicative effectiveness.Some innovations include:The audit opinion paragraph at start of reportMore detail on procedures undertakenAn independence paragraphExample: PWC 2002 audit report (Exhibit 13.8, pp. 612-613).32Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & SimnettSlides prepared by Roger Simnett