Example Auditor's Report: General Purpose Financial Report–Qualified Opinion

The group engagement team is not ale to otain sufficient appropriate audit e!idence
on "hich to ase the group audit opinion
Illustration 1:
Circumstances include the following:
• Audit of a general purpose financial report prepared by management of the
entity–the financial statements are prepared in accordance with Australian
Accounting Standards.
• The financial report is not prepared under the Corporations Act 2001.
• In this example the group engagement team is unable to obtain sufficient
appropriate audit e!idence relating to a significant component accounted for by
the e"uity method #recognised at $1% million in the balance sheet which reflects
total assets of $&' million( because the group engagement team did not ha!e
access to the accounting records management or auditor of the component.
• The group engagement team has read the audited financial report of the
component as of )' *une +',1 including the auditor-s report thereon and
considered related financial information .ept by group management in relation to
the component.
• In the group engagement partner-s /udgement the effect on the group financial
report of this inability to obtain sufficient appropriate audit e!idence is material but
not per!asi!e.
I012320120T A41IT56-S 62356T
7Appropriate Addressee8
Report on the Financial Report
1

9e ha!e audited the accompanying financial report of A:C 2ntity which comprises the
statements of financial position as at )' *une +',1 the statements of comprehensi!e
income the statements of changes in e"uity and the statements of cash flows for the year
then ended notes comprising a summary of significant accounting policies and other
explanatory information and management-s assertion statement;
+
of the entity and the
consolidated entity comprising the entity and the entities it controlled at the year-s end or from
time to time during the financial year.
Management's
3
Responsibility for the Financial Report
<anagement is responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards and 7rele!ant reporting framewor.8
=
and for
such internal control as management determines is necessary to enable the preparation of
the financial report that is free from material misstatement whether due to fraud or error.
Auditor's Responsibility
5ur responsibility is to express an opinion on the financial report based on our audit. 9e
conducted our audit in accordance with Australian Auditing Standards. Those standards
re"uire that we comply with rele!ant ethical re"uirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance about whether the financial report
is free from material misstatement.
An audit in!ol!es performing procedures to obtain audit e!idence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor-s
/udgement including the assessment of the ris.s of material misstatement of the financial
report whether due to fraud or error. In ma.ing those ris. assessments the auditor considers
internal control rele!ant to the entity-s preparation and fair presentation
%
of the financial report
in order to design audit procedures that are appropriate in the circumstances but not for the
purpose of expressing an opinion on the effecti!eness of the entity-s internal control.
&
An audit
also includes e!aluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management as well as e!aluating the
o!erall presentation of the financial report.
9e belie!e that the audit e!idence we ha!e obtained is sufficient and appropriate to pro!ide a
basis for our "ualified audit opinion.
Basis for ualified !pinion
A:C 2ntity-s in!estment in ,>? 2ntity a foreign associate ac"uired during the year and
accounted for by the e"uity method is carried at $1% million on the consolidated statement of
financial position as at )' *une +',1 and A:C-s share of ,>?-s profit of $1 million is included
in the consolidated statement of comprehensi!e income for the year then ended. 9e were
unable to obtain sufficient appropriate audit e!idence about the carrying amount of A:C-s
in!estment in ,>? as at )' *une +',1 and A:C-s share of ,>?-s profit for the year because
we were denied access to the financial information management and the auditors of ,>?.
Conse"uently we were unable to determine whether any ad/ustments to these amounts were
necessary.
ualified !pinion
In our opinion except for the possible effects of the matter described in the :asis for @ualified
5pinion paragraph the financial report presents fairly in all material respects #or Agi"es a
true and fair "ie# ofA( the financial position of A:C 2ntity and its subsidiaries as at )' *une
+',1 and #of( their financial performance and cash flows for the year then ended in
accordance with Australian Accounting Standards and 7rele!ant reporting framewor.8.
Report on Other #egal and Regulator$ Re%uirements
7Borm and content of this section of the auditor-s report will !ary depending on the nature of
the auditor-s other reporting responsibilities.8
7Auditor-s signature8
C

71ate of the auditor-s report8
D

7Auditor-s address8
If in the group engagement partner-s /udgement the effect on the group financial report of the
inability to obtain sufficient appropriate audit e!idence is material and per!asi!e the group
engagement partner would disclaim an opinion in accordance with ASA C'%.
1 The subEtitle A6eport on the Binancial 6eportA is unnecessary in circumstances when the second subE
title A6eport on 5ther Fegal and 6egulatory 6e"uirementsA or other appropriate subEtitle is not
applicable.
+ 5r other appropriate term.
) 5r other term that is appropriate in the context of the legal framewor. in the particular /urisdiction.
= 9here management-s responsibility is to prepare a financial report that gi!es a true and fair !iew this
may read: A<anagement is responsible for the preparation and presentation of the financial report that
gi!es a true and fair !iew in accordance with Australian Accounting Standards and for suchGA
% In the case of footnote +C this may read: AIn ma.ing those ris. assessments the auditor considers
internal control rele!ant to the entity-s preparation of the financial report that gi!es a true and fair !iew in
order to design audit procedures that are appropriate in the circumstances but not for the purpose of
expressing an opinion on the effecti!eness of the entity-s internal control.A
& In circumstances when the auditor also has responsibility to express an opinion on the effecti!eness of
internal control in con/unction with the audit of the financial report this sentence would be worded as
follows: AIn ma.ing those ris. assessments the auditor considers internal control rele!ant to the
entity-7618s preparation and fair presentation of the financial report in order to design audit procedures
that are appropriate in the circumstances.A In the case of footnote +C this may read: AIn ma.ing those
ris. assessments the auditor considers internal control rele!ant to the entity-76+8s preparation of the
financial report that gi!es a true and fair !iew in order to design audit procedures that are appropriate in
the circumstances.A
C The auditor-s report needs to be signed in one or more of the following ways: name of the audit firm
the name of the audit company or the personal name of the auditor as appropriate.
D The date of the auditor-s report is the date the auditor signs the report.