Guide to Using International Standards on Auditing in - IFAC
Guide to Using International Standards on Auditing in - IFAC
Guide to Using International Standards on Auditing in - IFAC
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<str<strong>on</strong>g>Guide</str<strong>on</strong>g> <str<strong>on</strong>g>to</str<strong>on</strong>g> <str<strong>on</strong>g>Us<strong>in</strong>g</str<strong>on</strong>g> <str<strong>on</strong>g>Internati<strong>on</strong>al</str<strong>on</strong>g> <str<strong>on</strong>g>Standards</str<strong>on</strong>g> <strong>on</strong> <strong>Audit<strong>in</strong>g</strong> <strong>in</strong> the Audits of Small- and Medium-Sized Entities Volume 1—Core C<strong>on</strong>cepts<br />
Paragraph #<br />
Relevant Extracts from ISAs<br />
700.18 If f<strong>in</strong>ancial statements prepared <strong>in</strong> accordance with the requirements of a fair presentati<strong>on</strong><br />
framework do not achieve fair presentati<strong>on</strong>, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall discuss the matter with<br />
management and, depend<strong>in</strong>g <strong>on</strong> the requirements of the applicable f<strong>in</strong>ancial report<strong>in</strong>g<br />
framework and how the matter is resolved, shall determ<strong>in</strong>e whether it is necessary <str<strong>on</strong>g>to</str<strong>on</strong>g> modify<br />
the op<strong>in</strong>i<strong>on</strong> <strong>in</strong> the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report <strong>in</strong> accordance with ISA 705. (Ref: Para. A11)<br />
700.19 When the f<strong>in</strong>ancial statements are prepared <strong>in</strong> accordance with a compliance framework, the<br />
audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r is not required <str<strong>on</strong>g>to</str<strong>on</strong>g> evaluate whether the f<strong>in</strong>ancial statements achieve fair presentati<strong>on</strong>.<br />
However, if <strong>in</strong> extremely rare circumstances the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r c<strong>on</strong>cludes that such f<strong>in</strong>ancial<br />
statements are mislead<strong>in</strong>g, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall discuss the matter with management and,<br />
depend<strong>in</strong>g <strong>on</strong> how it is resolved, shall determ<strong>in</strong>e whether, and how, <str<strong>on</strong>g>to</str<strong>on</strong>g> communicate it <strong>in</strong> the<br />
audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report. (Ref: Para. A12)<br />
When form<strong>in</strong>g an op<strong>in</strong>i<strong>on</strong>, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r needs <str<strong>on</strong>g>to</str<strong>on</strong>g> ensure that the statements are prepared <strong>in</strong> accordance with<br />
the applicable f<strong>in</strong>ancial report<strong>in</strong>g framework, as shown <strong>in</strong> the exhibit below.<br />
Exhibit 17.3-1<br />
Form<strong>in</strong>g an Audit<br />
Op<strong>in</strong>i<strong>on</strong><br />
C<strong>on</strong>siderati<strong>on</strong>s<br />
Materiality<br />
C<strong>on</strong>clude whether:<br />
• Materiality rema<strong>in</strong>s appropriate <strong>in</strong> the c<strong>on</strong>text of the entity’s actual f<strong>in</strong>ancial results.<br />
• Uncorrected misstatements (<strong>in</strong>clud<strong>in</strong>g uncorrected misstatements related <str<strong>on</strong>g>to</str<strong>on</strong>g><br />
prior periods), either <strong>in</strong>dividually or <strong>in</strong> aggregate, could result <strong>in</strong> a material<br />
misstatement.<br />
Audit Evidence<br />
• Has sufficient appropriate audit evidence been obta<strong>in</strong>ed?<br />
• Are the account<strong>in</strong>g estimates made by management reas<strong>on</strong>able?<br />
• Did the analytical procedures performed at or near the end of the audit<br />
corroborate c<strong>on</strong>clusi<strong>on</strong>s formed dur<strong>in</strong>g the audit?<br />
Account<strong>in</strong>g Policies<br />
• Do the f<strong>in</strong>ancial statements adequately disclose the significant account<strong>in</strong>g<br />
policies selected and applied?<br />
• Are the account<strong>in</strong>g policies c<strong>on</strong>sistent with the f<strong>in</strong>ancial report<strong>in</strong>g framework,<br />
and appropriate <strong>in</strong> the circumstances?