Audit Report

TOPIC TODAY Four Types of Audit Report by

Independent Auditors

The Steps to be Done by the Auditors Before They Receive New

Engagement With Clients

The Contents Emphasis in the Audit

Engagement

TOPIC TODAY Four Types of Audit Report by

Independent Auditors

The Steps to be Done by the Auditors Before They Receive New

Engagement With Clients

The Contents Emphasis in the Audit

Engagement

NAME : RAFIDAH BINTI YUSUFNO.MATRIC : 38441

INTRODUCTION

True and Fair ViewTrue means an accounts must be prepared in accordance with fact and reality.

Fair means accounts must not be bias, it should be just and equitable.

Accounts will not be true and fair unless the quality and quantity of information is sufficient to satisfy reasonable expectations of the readers to whom they are addressed

(stakeholders,banker and etc) .

Four Types of Audit Report by

Independent Auditors

Standard Unqualified Audit Report (SUAR)

This report only being issued when :

All statements are included in the FS

No circumstances requiringthe addition of explanatoryparagraph or modification

of wording

ISAs have been followedIn all respects on the

engagement

Sufficient evidencehas been accumulated

FS are presented in accordance with approved

accounting standards.Adequate disclosure have

been included

#International Standard Auditing(ISAs)#International Standard Auditing(ISAs)

Basic Elements In The SUAR Report

1.)Title. The title used is “auditors report to the shareholders”

2.)Address. The report is addressed to the company,its stakeholder or board of director

3.)Introductory . Indicating the date and the period covered in examining the financial statements by the auditor

4.)Scope paragraph. What the auditor did in the entire audit process

Basic Elements In The SUAR Report

5.)Opinion paragraph.States the auditor’s conclusion/opinion on the results of audit examination.

6.)Auditor’s name

7.)Auditor’s address

8.)Date of the report

Unqualified Audit Report With Explanatory Paragraph or Modified

Wording

5 reason 5 reason why auditor’s issuance this report……why auditor’s issuance this report……

1.)Lack of consistent application of approved accounting standards1.)Lack of consistent application of approved accounting standards

2.)Substantial doubt about going concern2.)Substantial doubt about going concern

3.)Auditor agree with a departure from promulgated accounting 3.)Auditor agree with a departure from promulgated accounting principles(auditor bersetuju dgn pengumuman dari perubhn prinsip perakaunan)principles(auditor bersetuju dgn pengumuman dari perubhn prinsip perakaunan)

4.)Emphasis of a matter4.)Emphasis of a matter

5.)Reports involving other auditors5.)Reports involving other auditors

The Factor Causes Uncertainty in Going Concern Disclosure

1.)The significant recurring operating losses or working capital 1.)The significant recurring operating losses or working capital deficienciesdeficiencies

2.)Inability of the company to pay its obligations as they come due2.)Inability of the company to pay its obligations as they come due

3.)Loss of major customers,the occurrence of uninsured catastrophes 3.)Loss of major customers,the occurrence of uninsured catastrophes such as an earthquake or flood or unusual labor difficultiessuch as an earthquake or flood or unusual labor difficulties

4.)Legal proceedings,legislation or similar matters that have occurred 4.)Legal proceedings,legislation or similar matters that have occurred that might jeoperdize the entity’s ability to operatethat might jeoperdize the entity’s ability to operate

Unqualified Audit Report With Explanatory Paragraph or Modified

Wording

Why we prepare this report ?Why we prepare this report ?

A complete audit took place with satisfactory results and A complete audit took place with satisfactory results and financial statements present a true and fair view, but the financial statements present a true and fair view, but the auditor believes that it is important or auditor believes that it is important or required to required to provide additional information and explanatory provide additional information and explanatory paragraph to recover the weakness that exists in auditing paragraph to recover the weakness that exists in auditing report .report .

Condition to Required a Departure From an Unqualified Audit Report

Inherent Uncertainty(ketidakpastian yg wujud)

Are situations which might affect the fs and which by their nature rather than by limitations in the scope of the audit, mean that their outcome cannot be objectively or reasonable determined .

Eg:Doubts on outcome of a contracts, going concern

Condition to Required a Departure From an Unqualified Audit Report

Limitation on the Scope of the Audit

Arises when the auditor is not able to obtain for any reason, all the information and explanations which he considers necessary for the audit.

Two categories of limitation that is caused by restrictions imposed by the client(sekatan yg dikenakan oleh pelanggan) and those caused by circumstances beyond either the client’s or auditor’s control

Condition to Required a Departure From an Unqualified Audit Report

Disagreement(ketidaksetujuan) Arises in a situations where the auditor is able to form an opinion but

the opinion differs from the view expressed by the management in the fs.

Circumstances giving rise to disagreement would include:

Non compliance with the provisions of the companies act 1965

Non conformity with approved accounting standards

Disagreement with the facts or amounts included in the fs

Inadequate disclosure of facts or amounts included in the fs

Qualified Audit Report

Can arise due to limitations on scope of work or failure to follow approved

accounting standards. A qualified report can be used only when the auditor concludes that the overall financial

statement s give a true and fair view. In the report, the auditor must use “ except

for”

Adverse or Disclaimer Audit Report

ADVERSE OPINION

Only used when the overall fs are so materially misstated or misleading that they do not present a true and fair view. Normally in the absence of conformity

DISCLAIMER OF OPINION

Where the auditor has been unable to satisfy himself or herself that the overall fs are fairly presented . Severe limitation on audit scope

#conformity=behavior that follows the usual standards which are expected by a group and society

The Steps Should be Done by the Auditors

Before They Receive New Engagement With Clients

The Preliminary Steps Should Be The Preliminary Steps Should Be Done By Auditors Before Engage With Done By Auditors Before Engage With

Clients Clients 1.) Perform procedures regarding the continuance of the client relationship and the specific audit engagement.

2.) Ensure compliance with independence and ethics requirements, and (Note:   The determination of compliance with independence and ethics requirements is not limited to preliminary engagement activities and should be reevaluated with changes in circumstances).

3.) Establish an understanding of the terms of the audit engagement with the audit committee in accordance with Auditing Standard No. 16, Communications with Audit Committees.

The Steps Consideration That Auditor Emphasis Before Engagement With Client is as Illustrated below :

3 Main Why Auditors Should Plan Properly 3 Main Why Auditors Should Plan Properly Plan Engagement with ClientPlan Engagement with Client

1.)To enable auditor to obtain sufficient competent evidence for the circumstances(to minimise legal liability and maintain a good reputation in the business community)

2.)To help audit cost reasonable(helps the firm audit reputation remain competitive)

3.)To aviod misunderstanding with the clients(to have good relation with clients and for faciliate high-work quality at reasonable cost)

The Contents Emphasis in the

Audit Engagement

THE ENDTHE END