AUDITING

Audit Report
ISA 700 – Forming an Opinion and Reporting on Financial
Statements
Form Opinion based on evaluation of conclusions drawn from audit evidence
Financial Statements are prepared in all material respects according
Express opinion through
to the written audit
applicable reportreporting
financial that also describes
frameworkbasis of opinion

Conclude that F/S are free from material misstatements

ISA 330 The auditors response to assessed risks

ISA 450 Evaluation of misstatements identified during audit

ISA 700 – Forming an Opinion and Reporting on Financial
Statements
Title clearly indicating
independent auditor’s report

Introductory Para 1) Identify entity 2) State that F/S have been audited
3) Identify each title of F/S 4) Refer to summary of accounting policies
5) Specify date or period covered of each F/S

Management’s responsibility
ISA 700 – Forming an Opinion and Reporting on Financial
Statements
Auditor’s responsibility Responsibility of auditor is to express an opinion
Audit was conducted according to ISA’s
Auditor comply with Ethical Requirements
Report should describe the audit Performing procedures to obtain evidence
Procedures selected depend on auditor’s judgment
During Risk Assessment, internal controls are considered,
but not for purposes of expressing an opinion

Audit includes evaluation of accounting policies and

reasonableness of accounting estimates
ISA 700 – Forming an Opinion and Reporting on Financial
Statements

Auditor’s responsibility
The F/S present fairly The F/S give a true and fair view
ISA 700 – Forming an Opinion and Reporting on Financial
Statements
Audit Report when using Compliance Framework
 Registered under Other Organizations
Companies Ordinance ’84 (not registered under
(Companies, Guarantee CO1984)
Limited, NPO)

Audit Report Format Audit Report Format

FORM 35-A ISA 700

 AUDIT OPINION (CO1984)
• Whether or not Auditor has obtained all the information and
explanations which were necessary for purposes of the audit;
• Whether or not in their opinion proper books of accounts as
required by CO1984 have been kept;
• Whether or not in their opinion the B-S and P&L account have
been drawn up in conformity with CO1984 and are in agreement
with the books of accounts;
• Whether or not in their opinion and to the best of their
information and according to the explanations given to them, the
said accounts give the information required by this Ordinance in
the manner so required and give a true and fair view
 AUDIT OPINION (CO1984)
Whether or not in Auditor’s opinion-
• the expenditure incurred during the year was for the purpose of
the company’s business; and
• the business conducted, investments made and expenditure
incurred during the year were in accordance with the objects of
the company
• Zakat deductible at source under the Zakat and Usher
Ordinance, 1980, was deducted by the company and deposited
in the Central Zakat Fund
Form 35 A (Audit Report)
Form 35 A (Audit Report)
ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report
Qualified Opinion
Adverse Opinion

Disclaimer of Opinion

Pervasive: A term used in context of misstatements, to describe the effects on

the financial statements of misstatements, that are undetected due to the
inability to obtain sufficient appropriate audit evidence. Pervasive effects are
1) Those that are not confined to specific elements, accounts or items
2) Those, if confined, that represent substantial proportion of F/S
3) In relation to disclosures, are fundamental to users understanding of F/S
ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report
Material but not pervasive

Material and Pervasive

ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report
Unable to obtain audit evidence

It is not possible to form an opinion due to multiple uncertainties

ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report
Able to obtain Unable to obtain Able to obtain Unable to obtain
evidence audit evidence evidence audit evidence

Misstatements are Material but

Misstatement Misstatement
not Pervasive
Material and Material and
Pervasive Pervasive

Qualified Opinion

Adverse Disclaimer of
Opinion Opinion
ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report
Paragraph immediate before opinion para

Description & Quantification of misstatements (unless impracticable)

Explanation of the missing disclosures

ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report

Unable to obtain audit evidence

Material but not pervasive

Material and Pervasive effect
effect - qualify

Withdrawal not
Withdraw from
possible – Disclaimer
engagement
of opinion
ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report
Qualified Opinion due to material misstatement
ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report
Adverse Opinion due to material misstatement
ISA 705 – Modifications to the opinion in the Independent
Auditor’s Report
Qualified Opinion due to inability to obtain audit evidence
 ISA 700 (REVISED)
Forming an Opinion and reporting on
Financial Statements
(Applicable from 15 December 2016)
ISA 700 – Forming an Opinion and Reporting on Financial
Statements

Financial Statements are prepared in all material respects according

to the applicable financial reporting framework

Conclude that F/S are free from material misstatements

ISA 330 The auditors response to assessed risks

ISA 450 Evaluation of misstatements identified during audit

ISA 700 – Forming an Opinion and Reporting on Financial
Title clearly indicating
Statements independent auditor’s report
Addressee

Opinion on top
1) Identify entity 2) State that F/S have been audited
3) Identify each title of F/S 4) Refer to notes including
summary of accounting policies
5) Specify date or period covered of each F/S
ISA 700 – Forming an Opinion and Reporting on Financial
Statements
Basis for Opinion
Audit was conducted in accordance with ISA
Refer to the section – Auditor’s responsibility

Auditor is independent and comply with Ethical Requirements

Sufficient appropriate audit evidence has been obtained

Where applicable, report on going concern

Key audit matters according to ISA 701

ISA 700 – Forming an Opinion and Reporting on Financial
Statements

Managements' responsibility

Preparation of F/S according to framework

For internal controls

Assessing Going Concern

Identifying who is responsible (BOD)

ISA 700 – Forming an Opinion and Reporting on Financial
Statements
Auditor’s responsibility

Objective – obtain reasonable assurance Objective – issue audit report

Provide definition of materiality

ISA 700 – Forming an Opinion and Reporting on Financial
Statements
ISA 701 – Communicating Key Audit Matters in the
Independent Auditor’s Report