CHAPTER 11: THE AUDITORS
● Need ni auditor to communicate the KAM of
REPORT ON THE FINANCIAL
STATEMENT
Piecemeal Opinion
● is an unmodified opinion on one or more
components of the financial statements
while expressing an adverse or disclaimer
opinion.
● Is not allowed by the PSA because of its
contradicting idea.
Going Concern
● The auditor should consider the
appropriateness of management use of
going concern.
● Evaluate whether there's a material
uncertainty of using going concern.
● Need to be disclosed in the FS.
Going concern is appropriate and no material
uncertainty
1. Check if disclose properly
2. If yes; issue - unmodified opinion
3. Separate section/report for going concern
stated that there’s no material uncertainties.
Going concern is appropriate and material
uncertainty exists (depend on the disclosure)
1. If adequately disclosed on the FS -
unmodified opinion with separate section
“material uncertainty related to going
concern”.
2. If not adequately disclosed - qualified or
adverse opinion located @ basis for
qualified or adverse opinion section of the
audit report.
Going concern is inappropriate
1. Alternative applicable financial reporting
frameworks must be used.
2. Still using going concern as a basis - issue
adverse opinion.
Multiple uncertainties affecting the FS
1. issue disclaimer of opinion.
2. No “emphasis of matter paragraph.
Key Audit Matter - for the auditor, this is a matter
where they think the most significant in the audit of
FS in the current period.
PSA 701
listed entities.
● To assist and help the readers to
understand the most significance in the
audit that required professional judgement.
● To be reported with those charged with the
governance.
Identifying KAM
1. Matters were communicated to those
charged with governance.
2. Require significant audit attentions
3. Most significant matters.
NOTE:
● The greater the no. of KAM the useless it is.
● Limited only to the most significant matters.
● Located @ Basis for qualified or adverse
opinion or in the Going concern section.
● Disclaimer opinion - KAM is not necessary.
Emphasis of Matter
● Included in the auditor's report.
● Limited only to the matters included or
disclosed in the notes of FS.
Circumstances where “emphasis of matter” is
included.
1. Significant uncertainties.
2. Major catastrophe
3. Early application of new acctg. Standard
4. FS using special purpose acctg
5. Subsequent discovery of facts.
If adequately disclosed - issue unmodified opinion
with emphasis of matter paragraph.
Other matter paragraph
● Matters not disclosed in the notes of FS.
Circumstances where “other matter” is included:
1. Reporting on comparative info
● Comparative financial statement -
amounts and disclosure in prior period is
included for comparison with the FS for
current period but do not form part of the
audited FS.
- Should be expressed individually.
- Report on comparative FS can be illustrated
by the ff:
1. Prior Period FS audited by
continuing auditor
● Cover current and prior FS
 ● Update his report
● Different from previously reported -
issue “other matter” paragraph.
2. Prior period FS audited by another
auditor
● 2 reporting alternative
1. Reissue the report on the prior
FS.
- If the predecessor decides to
reissue his report - same date and
same wording.
- If the predecessor does not want to
reissue his report - the successor
auditor should include the “other
matter” paragraph.
2. Reference to the predecessor
auditor's report
3. Prior period FS not audited

● Corresponding figures - amounts and

disclosure in prior period is included as
part of the current period FS.
2. FS using 1 or more
framewor/////////////////////////////////////ks
3. Limiting the use of auditors report
4. Subsequent discovery of facts