The document discusses types of audit reports including unmodified, qualified, and modified reports. It describes the components of a standard unmodified audit report including the report title, address, introductory paragraph, scope paragraph, opinion paragraph, auditor information, and date. It also discusses conditions that result in qualified reports including scope limitations and disagreements with management. Qualified opinions can be qualified, disclaimer, or adverse depending on if issues are material or pervasive.

1. TOPIC 12 : AUDIT REPORT
REFERENCE: CHAPTER 12 &13
AUD390 2011

2.  Types of audit report
 Components of an unmodified audit report
 Departures from an unmodified audit report
AUD390 2011

3.  Audit Report
 the final stage in the entire audit process
 A written communication of audit findings to the
shareholders
 Types of audit report
1. Standard unqualified / Unmodified audit report
2. Unqualified / Unmodified audit report with
Emphasis of Matter Paragraph
3. Qualified – Qualified opinion
4. Qualified Report - Disclaimer opinion
5. Qualified Report - Adverse opinion
AUD390 AUDITING DIA

4. 1. STANDARD UNQUALIFIED /
UNMODIFIED AUDIT REPORT
AUD390 AUDITING DIA
CONDITION
TO ISSUE
STANDARD
UNQUALIFIED
AUDIT REPORT
All statements are
included in the FS
No circumstances requiring
the addition of explanatory
paragraph or modification
of wording
ISAs have been followed
In all respects on the
engagement
Sufficient evidence
has been accumulated
FS are presented in
accordance with approved
accounting standards.
Adequate disclosure have
been included

5.  SUAR consist:
1. Report Titles
2. Audit Report Address
3. Introductory Paragraph
4. Scope Paragraph
5. Opinion Paragraph
6. Name of CA firm & signature of auditor
7. Auditor’s address
8. Audit report date
AUD390 AUDITING DIA

6.  All audit report are required to be title
 The title must include the word independent
 For e.g.
 Independent auditor’s report
 Report of independent auditor
 Report of the Auditor to the Members of
Sintok Hardware Sdn Bhd
AUD390 AUDITING DIA

7.  Normally report is addressed to the company,
stakeholders, the Board of Directors
 For e.g.
 Report of the Auditor to the Members of
Sintok Hardware Sdn Bhd
AUD390 AUDITING DIA

8.  Consist of
1. Simple statement that the CA firm has done
an audit
 E.g. we have audited the financial
statements of Sintok Hardware Sdn Bhd
set out on page __ to __
2. Lists of FS that were audited
 E.g. …comprising of the balance sheet of
the company and notes to the account as
at 31st December 2005 and of the profit
and loss account and the cash flow
statement…
AUD390 AUDITING DIA

9. 3. Statement of the responsibility of
management & auditor’s responsibility
 E.g. The preparation of the financial
statements is the responsibility of the
company’s directors. Our responsibility is
to express an opinion on the financial
statements based on our audit.
AUD390 AUDITING DIA

10.  A factual statement about what the auditor did
in the audit
 Consist of:
1. Statement that the auditor followed
Malaysian Approved Standards of Auditing
 We conducted our audit in accordance
with approved standards on auditing
AUD390 AUDITING DIA

11. 2. Statement that the audit is designed,
planned and performed to obtain reasonable
assurance about whether the statements are
free of material misstatements
 …to provide us with sufficient evidence
to give reasonable assurance that the
financial statements are free of material
misstatement
AUD390 AUDITING DIA

12. 3. Highlight the audit evidence accumulated and
statement that the auditor believes that the
evidence accumulated was appropriate to
express the opinion presented
 E.g. Our audit includes examining, on a test
basis, evidence relevant to the amounts and
disclosures in the financial statements. Our
audit includes assessment of accounting
principles used and significant estimates
made by the directors as well as evaluation
of the adequacy of the presentation of
information in the financial statements. We
believe our audit provides a reasonable basis
for our audit.
AUD390 AUDITING DIA

13.  States the auditor’s conclusions based on the
results of the audit
 It is a statement of opinion rather a statement
of absolute fact or a guarantee, due:
 Conclusions are based on professional
judgment
 There may be some information risk
associated with the financial statements,
even though the statements have been
audited
AUD390 AUDITING DIA

14.  E.g. In our opinion….
AUD390 AUDITING DIA

15.  Identifies the CA firm and the auditor who
performed the audit
 E.g.
Bakar & Anthony
Firm No: XXXX
Chartered Accountants
Alor Setar
AUD390 AUDITING DIA

16.  The location of the audit firm
AUD390 AUDITING DIA

17.  Refer to the completion date of the audit
assignment
 Indicates the last day of the auditor’s
responsibility for the review of significant
events that occurred after the date of the
financial statements
AUD390 AUDITING DIA

18.  Reasons for the issuance of this report:
1. Emphasis of matter (pp. 4)
2. Substantial doubt about going concern (pp. 16)
AUD390 AUDITING DIA
2. UNQUALIFIED /
UNMODIFIED AUDIT REPORT
WITH EMPHASIS OF MATTER PARAGRAPH

19. AUD390 AUDITING DIA
QUALIFIED
AUDIT
REPORT
Qualified
Opinion
Adverse Opinion
Disclaimer
Opinion

20.  Conditions results in issuing modified opinion
report:
1. The scope of the audit has been restricted
(Scope Limitation)
2. Disagreement
AUD390 AUDITING DIA

21.  Arises when the auditor has not accumulated
sufficient evidence to conclude whether FS are
stated in accordance with CA Act 1965
AUD390 AUDITING DIA
SCOPE
LIMITATION
RESTRICTION IMPOSED BY
THE CLIENT
E.g. Management refuse to
permit the auditor to perform
stock count or to confirm
account receivable with
debtors
RESTRICTION CAUSED BY
CIRCUMSTANCES BEYOND
EITHER THE CLIENT’S OR
AUDITOR CONTROL
E.g. To perform stock count of
inventories after client’s year
end

22.  Arises where the auditor is able to express an
opinion but his opinion differs from the view
expressed by the management in the FS
AUD390 AUDITING DIA
Examples….
Non-conformity with the provisions of the CA Act 1965 &
other legislation
Non-compliance with approved accounting standards
Disagreements with facts or amounts included in the
financial statements
Inadequate disclosure of facts or amounts included in
the FS

23. AUD390 AUDITING DIA
CONDITIONS FINDING –
MATERIAL &
NOT PERVASIVE
FINDING –
MATERIAL & PERVASIVE
LIMITATION ON SCOPE
OF AUDIT
QUALIFIED OPINION DISCLAIMER OF OPINION
DISAGREEMENT WITH
MANAGEMENT
QUALIFIED OPINION ADVERSE OPINION
TYPES OF QUALIFIED AUDIT REPORT TO PRODUCE
Material:the omission, non disclosure, misstatement of
an item would influence the decision of users of FS
Pervasive:one matter which is so significant as to
undermine the FS as a whole

24. AUD390 AUDITING DIA
Effect of Materiality Type of Audit Report
IMMATERIAL
MATERIAL
MATERIAL &
PERVASIVE
Unqualified/ Unmodified Unqualified with
Emphasis of
Matter Reports
DisagreementLimitation on Scope
Qualified
Limitation on Scope
Disclaimer
Qualified
Disagreement
Adverse