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Interpretation and Application of International Standards on Auditing by Steven Collings

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ISA 700 (REVISED) FORMING AN OPINION ON THE FINANCIAL STATEMENTS

ISA 700 (revised) deals with the auditor’s responsibilities to form an opinion on the financial statements of an entity as well as dealing with the form and content of the auditor’s report. ISAs 705 and 706 deal specifically with the form and content of the auditor’s report where the auditor expresses a modified opinion or includes an emphasis of matter paragraph.

The overall objective of an audit is to allow an external auditor to form an independent opinion on the financial statements and to conclude whether, or not, they present fairly, in all material respects, the state of the entity’s affairs as at the reporting date. In forming their opinion, the auditor will evaluate the conclusions reached from the audit evidence obtained as well as forming an opinion as to whether the financial statements have been prepared in accordance with the applicable financial reporting framework (for example, under IFRS).

The principal matters which auditors consider in forming an opinion may be expressed in three questions:

  • Have all procedures necessary to meet the International Standards on Auditing (ISAs) to obtain all the information and explanations necessary been completed?
  • Have the financial statements been prepared in accordance with the applicable accounting requirements and under the appropriate financial reporting framework?
  • Do the financial statements, as prepared by management, present fairly, in all material respects, ...

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