審計學英文教學課件：Chapter 20 Audit report

1、Chapter 20Audit report1Lecturer 陳丹Audit Report2272507Independent audit report 2013 for listed companies in ChinaModified Opinion3Independent audit report 2013 for listed companies in ChinaQuestionsWhat are the four types of opinion implying?How would the auditor decide which type of opinion to expre

2、ss? 4As the auditor, you may ask yourself three questions to make a decision on the type of audit opinion.5Q1:Are (undetected) misstatements material?Benchmarks in the calculation of materiality for the F/S as a wholeValue%Revenue0.5 1Gross profit0.5 1Total assets1 2Net assets2 5Profit before tax5Pr

3、ofit after tax5 - 106 Case 1: The following issue has arisen during the course of the audit of Minnie Co. PBT is $10m.Depreciation has been calculated on the total of land and buildings. In previous years it has only been charged on buildings. Total depreciation is $25m and the element charged to la

4、nd only is $01m.7Q1:Are (undetected) misstatements material?Q1:Are (undetected) misstatements material?Unqualified opinionNoUnqualified opinionArises when the auditor, having obtained sufficient appropriate audit evidence, concludes that F/Ss do give a true and fair view.8 Case 2: The following issu

5、e has arisen during the course of the audit of Minnie Co. PBT is $10m.Depreciation has been calculated on the total of land and buildings. In previous years it has only been charged on buildings. Total depreciation is $25m and the element charged to land only is $07m.9Q1:Are (undetected) misstatemen

6、ts material?10Q1:Are (undetected) misstatements material?Unqualified opinionQualified opinion/disclaimer of opinion/adverse opinionYesNo11Q1:Are (undetected) misstatements material?Unqualified opinionQ2:Are (undetected) material misstatements pervasive?YesNoPervasiveness:(Undetected) misstatements t

7、hat are not confined to specific elements, accounts or items in the F/Ss(Undetected) misstatements that are confined to specific elements, accounts or items in the F/Ss and represent a substantial portion of the F/Ss(Undetected) misstatements that relate to disclosures which are fundamental to users

8、 understanding of the F/Ss1213Alert! Material Misstatements are not confined to specific elements, accounts or items in the F/S.Pervasiveness:14Pervasiveness:15 Case 2: The following issue has arisen during the course of the audit of Minnie Co. PBT is $10m.Depreciation has been calculated on the tot

9、al of land and buildings. In previous years it has only been charged on buildings. Total depreciation is $25m and the element charged to land only is $07m.16Q2:Are (undetected) material misstatements pervasive?17Q1:Are (undetected) misstatements material?Unqualified opinionQ2:Are (undetected) materi

10、al misstatements pervasive?YesNoNoQualified opinionQualified opinionArises when (undetected) misstatements are material BUT NOT pervasive18Q1:Are (undetected) misstatements material?Unqualified opinionQ2:Are (undetected) material misstatements pervasive?YesNoNoQualified opinionYesDisclaimer of opini

11、on/adverse opinion19Q1:Are (undetected) misstatements material?Unqualified opinionQ2:Are (undetected) material misstatements pervasive?YesNoNoQualified opinionYesQ3:Is there limitation on the scope of the audit ?Limitation on the scope of the auditCircumstances beyond the entitys controlCircumstance

12、s relating to the nature or timing of the auditors workLimitations imposed by the management20Case 3: A house building company has included all the houses it has constructed in the year as non-current assets rather than inventory. The value of these houses constitutes 60% of the total asset value on

13、 the SOFP.21Q3:Is there limitation on the scope of the audit ?22Q1:Are (undetected) misstatements material?Unqualified opinionQ2:Are (undetected) material misstatements pervasive?YesNoNoQualified opinionYesQ3:Is there limitation on the scope of the audit ?Noadverse opinionAdverse opinionArises when

14、the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements areBOTH material and pervasive to the financial statements.23Case 5: Wilson was hired as the auditor of Blake Co. after Dec. 31, 2013 and thus did not observe the counting of physical inventories at the

15、end of the year. The value of the inventories constitutes 90% of the total asset Value on the SOFP. He is unable to satisfy himself by alternative means concerning the inventory quantities held at Dec. 31, 2013. 24Q3:Is there limitation on the scope of the audit ?25Q1:Are (undetected) misstatements

16、material?Unqualified opinionQ2:Are (undetected) material misstatements pervasive?YesNoNoQualified opinionYesQ3:Is there limitation on the scope of the audit ?NoYesadverse opinionDisclaimer of opinionDisclaimer of opinionArises when the auditor is unable to obtain sufficient appropriate audit evidenc

17、e on which to base theopinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements couldbe BOTH material and pervasive.2627Q1:Are (undetected) misstatements material?Unqualified opinionQ2:Are (undetected) material misstatements pervasive?YesNoN

18、oQualified opinionYesQ3:Is there limitation on the scope of the audit ?NoYesAdverse opinionDisclaimer of opinionTrue or falseUnqualified opinion is equal to unmodified report.28Auditors reportformatopinionUnmodified reportUnqualified opinion without emphasis of matter paragraphUnmodified opinionModi

19、fied reportUnqualified opinion with emphasis of matter paragraphQualified opinionModified opinionDisclaimer of opinionAdverse opinion29Emphasis of matter paragraphCase 6: The following issue has arisen during the course of the audit of Minnie Co. PBT is $10m.Minnie Cos main competitor has filed a la

20、wsuit for $5m against them alleging a breach of copyright; this case is ongoing and will not be resolved prior to the audit report being signed. The matter is correctly disclosed as a contingent liability.30Emphasis of matter paragraphUsed to draw readers attention to a matter already presented or d

21、isclosed in the F/S. The matter is fundamental to users understanding and is not materially misstated. Immediately after the opinion paragraph.3132The opinion is not modified in respect of the matter emphasised.Emphasis of matter paragraphAudit Report33842450Independent audit report 2013 for listed

22、companies in China 34Independent audit report 2013 for listed companies in ChinaBasic elements of the auditors report35Summary36Describe and analyse the format and content of unmodified audit reportsDescribe and analyse the format and content of modified audit opinionsDescribe and analyse the format

23、 and content of emphasis of matter paragraphsAn auditor will issue an adverse opinion if The scope of the audit is limited by the client.The exception to the fairness of presentation is so material that an “except for” opinion is not justified.The auditor did not perform sufficient procedures to for

24、m an opinion on the F/S taken as a whole.Major uncertainties exit concerning the clients future.37B2. An auditor will most likely disclaim an opinion because ofThe clients failure to present other information required by IASB.Inadequate disclosure of material information.A client-imposed scope limit

25、ation.Omission of a statement of cash flows.38C3. The opinion paragraph states: “In our opinion, except for the effects of not capitalizing certain lease obligations, as discussed in the preceding paragraph, the F/S present fairly in all material respects”. This paragraph expressed a(n)Unqualified opinionUnqualified opinion with explanatory p