Exam 7: The Auditors Report

What will the auditor do to ensure that the directors' declaration complies with the requirements of the Corporation Act? What are those requirements? ii. Does the auditor conduct additional audit procedures to arrive at this opinion? If so what procedures are conducted? If not, why not?

Section 302.of the Corporations Act prescribes that disclosing entities must:

i. How are the disclosure and presentation requirements of general-purpose financial reports determined? ii. What does it mean that the auditor's opinion refers to the financial statements as a whole? iii. What does an unmodified auditor's report say about the financial statements?

The auditor's opinion is expressed in reference to the financial statements as a whole. This means that the auditor must:

Outline the reporting standards provided in ASA 700 Forming an Opinion and Reporting on a Financial Report

When the audit is an initial engagement, the auditor needs to ensure that:

Which statement would not be found in a directors' declaration?

When the auditor issues a disclaimer of opinion on a set of financial statements, the audit report should:

The addition of an emphasis of matter paragraph in an audit report

Which of these would not be considered a scope limitation?

If a material misstatement is discovered in previous periods financial statements on which the auditor previously expressed an unqualified opinion and the previous statements are not revised, but the comparatives have been properly accounted for and disclosed in accordance with an identified financial reporting framework in the current years statements, then the auditor should express what sort of opinion?

When the previous period's audit opinion has been qualified, the auditor's report for this period will be qualified:

Imaginary Services Co Pty. Ltd started trading last year, and has undergone a recent surge of growth due to increased demand for their Imaginary Service. Your firm was appointed auditor for Imaginary Services Co Pty. Ltd in August 2010. As a result of this timing, you did not get the opportunity to observe the physical inventory count as of 30 June 2010 as it was done prior to your appointment. Owing to the nature of the company's records, you have not been able to satisfy yourself as to inventory quantities. The inventory balance is material, however, you have found that controls over inventory are good, and that there is a low risk of misstatement for this asset. What type of audit report would you issue, and why? If the company was Imaginary Consumables Co Pty Ltd, and the controls over inventory were not so good, would this affect the audit report, and why?

Circumstances where the auditor is justified in qualifying the audit report because of an inability to obtain sufficient appropriate audit evidence would not include which of the following?

i. When the auditor decides to issue a modified audit report, what factor decides whether they will issue a qualified opinion, or an adverse opinion? ii. Outline the basic characteristics of a qualified opinion.

If a review of half-year financial statements is to be undertaken, the Corporations Act requires: