Identify six basic elements of the auditor‘s report containing an unqualified opinion on the financial statements

You are required to identify six basic elements of the auditors’ report containing an unqualified opinion on the financial statements.

The elements of the auditors’ report include the following: (ISA 700)

 Appropriate title-The auditor‘s report should have an appropriate title such as
‗theindependent auditors report‘ to distinguish the auditor‘s report from any other reportsthat may be annexed to the annual report and financial statements.

 Addressee-The Auditor‘s report should be appropriately addressed as required by the circumstances of the engagement and local regulations. Usually the auditors report is addressed to the members on whose behalf the audit is carried out.

 Introductory Paragraph-This identifies the Financial Statements audited including the date of and period covered by the financial statements. Under the Companies Act, financial statements or accounts consist primarily of the Balance Sheet, Profit and Loss account and notes to the account. International Accounting Standards on Cash Flow Statements requires auditors to recognize the Cash Flows as part of the Financial Statements;

 Paragraph on the scope of the audit-The auditor‘s report should describe the scope of the audit by stating that the audit was conducted in accordance with the International Standards on Auditing (ISAs) or in accordance with relevant national standards or practices as appropriate. Scope refers to the auditor‘s ability to perform audit procedures deemed necessary in the circumstances. The report should include a statement that the audit was planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatements. The auditor‘s report should describe the audit as including;

 Opinion Paragraph- The report should clearly state the auditor‘s opinion as to whether the financial statements give a true and fair view in accordance with the relevant financial reporting framework and whether they comply with the companies Act requirements.
The terms used to express the auditor‘s opinion are ―give a true and fair view‖ or ―presents fairly, in all material respects‖ and are equivalent. Both terms indicate, amongstother things, that the auditor considers only those matters that are material to the financial statements.

 Dating the audit report- the auditor should date the report as of completion date of the audit. This informs the reader that the auditor has considered the effect on the financial statements and on the report of events and transactions of which the auditor became aware ad that occurred up to that date.

 Auditor‘s address-The report should name a specific location, which is ordinarily the city where the auditor maintains the office that is responsible for the audit.

 Auditor‘s signature-The report should be signed in the name of the audit firm, the personal name of the auditor or both, as appropriate.

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