Guide to Using International Standards on Auditing in - IFAC

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232 <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 Signature Date of Report Audi<strong>to</strong>r’s Address Comments The audi<strong>to</strong>r’s signature will be based on what is appropriate for the particular jurisdiction. It could be the firm name, personal name of the audi<strong>to</strong>r, or both. It may also require the audi<strong>to</strong>r’s professional accountancy designation or reference <strong>to</strong> the fact that the audi<strong>to</strong>r/firm has been recognized by the appropriate licensing authority. This is no earlier than the date on which the audi<strong>to</strong>r obtained sufficient appropriate audit evidence on which <strong>to</strong> base the opinion. This evidence includes: • A complete set of financial statements has been prepared; • Consideration of the effect of events and transactions (of which the audi<strong>to</strong>r became aware) that occurred up <strong>to</strong> that date (refer <strong>to</strong> ISA 560); and • Assertions by those with the recognized authority that they have taken responsibility for the financial statements. Indicate the name of the audi<strong>to</strong>r’s location in the jurisdiction where the audi<strong>to</strong>r practices. Unmodified Audit Opinion—Fair Presentation Framework The standard wording for an audi<strong>to</strong>r’s report (from ISA 700) on general purpose financial statements, prepared in accordance with a fair presentation framework and expressing an unmodified opinion, is illustrated below. Exhibit 17.4-2 INDEPENDENT AUDITOR’S REPORT [Appropriate Addressee] We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as at December 31, 20X1, and the income statement, statement of changes in equity and cashflow statement for the period then ended, and a summary of significant accounting policies and other explana<strong>to</strong>ry information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with <strong>International</strong> Financial Reporting <strong>Standards</strong>, and for such internal control as management determines is necessary <strong>to</strong> enable the preparation of financial statements that are free from material misstatement, whether due <strong>to</strong> fraud or error. Audi<strong>to</strong>r’s Responsibility Our responsibility is <strong>to</strong> express an opinion on these financial statements based on our audit. We conducted our audit in accordance with <strong>International</strong> <strong>Standards</strong> on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit <strong>to</strong> obtain reasonable assurance about whether the financial statements are free from material misstatement.
233 <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 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 and fair presentation 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate <strong>to</strong> provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects (or give a true and fair view of) the financial position of ABC Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the period then ended, in accordance with <strong>International</strong> Financial Reporting <strong>Standards</strong>. [Audi<strong>to</strong>r’s signature] [Date of the audi<strong>to</strong>r’s report] [Audi<strong>to</strong>r’s address] Unmodified Audit Opinion—Compliance Framework The standard wording for an audi<strong>to</strong>r’s report on general purpose financial statements, prepared in accordance with a compliance framework and expressing an unmodified opinion, is illustrated below. Exhibit 17.4-3 INDEPENDENT AUDITOR’S REPORT [Appropriate Addressee] We have audited the accompanying financial statements of CDE Company, which comprise the balance sheet as at December 31, 20X1, and the income statement, statement of changes in equity and cashflow statement for the period then ended, and a summary of significant accounting policies and other explana<strong>to</strong>ry information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements in accordance with XYZ Law of Jurisdiction X, and for such internal control as management determines is necessary <strong>to</strong> enable the preparation of financial statements that are free from material misstatement, whether due <strong>to</strong> fraud or error.
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