Guide to Using International Standards on Auditing in - IFAC

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<strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts
Component
Audi<strong>to</strong>r’s
Responsibility
Audi<strong>to</strong>r’s Opinion
Other Reporting
Responsibilities
Comments
States that the responsibility of the audi<strong>to</strong>r is <strong>to</strong> express an opinion on the financial
statements based on the audit. This includes:
• Stating that the audit was conducted in accordance with <strong>International</strong>
<strong>Standards</strong> on Auditing. The audi<strong>to</strong>r’s report should also explain that those
standards require that the audi<strong>to</strong>r comply with ethical requirements, and that
the audi<strong>to</strong>r plan and perform the audit <strong>to</strong> obtain reasonable assurance about
whether the financial statements are free from material misstatement.
• Describing an audit by stating:
− An audit involves performing procedures <strong>to</strong> obtain audit evidence about
the amounts and disclosures in the financial statements,
− The procedures selected depend on the audi<strong>to</strong>r’s judgment, including
the assessment of the risks of material misstatement of the financial
statements, whether due <strong>to</strong> fraud or error. In making those risk
assessments, the audi<strong>to</strong>r considers internal control relevant <strong>to</strong> the
entity’s preparation of the financial statements in order <strong>to</strong> design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s
internal control, and
− An audit also includes evaluating the appropriateness of the accounting
policies used, the reasonableness of accounting estimates made by
management, as well as the overall presentation of the financial statements.
• Stating that the audi<strong>to</strong>r believes that the audit evidence the audi<strong>to</strong>r has obtained
is sufficient and appropriate <strong>to</strong> provide a basis for the audi<strong>to</strong>r’s opinion.
• Where financial statements are prepared in accordance with a fair presentation
framework, the description of the audit shall refer <strong>to</strong> “the entity’s preparation and
fair presentation of the financial statements” or “the entity’s preparation of financial
statements that give a true and fair view,” as appropriate in the circumstances.
Fair Presentation Frameworks
States whether the financial statements present fairly, in all material respects, (or
give a true and fair view of) in accordance with the applicable financial reporting
framework, or such similar wording as required by law or regulation.
Compliance Frameworks
States whether the financial statements are prepared in all material respects in
accordance with the applicable financial reporting framework.
When <strong>International</strong> Financial Reporting <strong>Standards</strong> are not used as the financial
reporting framework, the wording of the opinion should identify the jurisdiction or
country of origin of the financial reporting framework (e.g., … in accordance with
accounting principles generally accepted in country X …).
Certain standards, laws, or generally accepted practice in a jurisdiction may require
or permit the audi<strong>to</strong>r <strong>to</strong> report on other responsibilities. Such matters would be
addressed in a separate paragraph following the audi<strong>to</strong>r’s opinion.