Audit reports

The Audit Report

Objectives

The objectives of an auditor, in accordance with ISA 700 Forming an Opinion and Reporting on Financial Statements, are:

• to form an opinion on the financial statements based upon an evaluation of their conclusions drawn from audit evidence; and
• to express clearly that opinion through a written report.

Forming an opinion

The auditor forms an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. In order to do that they must conclude whether they have obtained reasonable assurance about whether the financial statements as a whole are free from material misstatement (whether due to fraud or error).

In particular the auditor should evaluate whether:

• the financial statements adequately disclose the significant accounting policies;
• the accounting policies selected are consistently applied and appropriate;
• accounting estimates are reasonable;
• information is relevant, reliable, comparable and understandable;
• the financial statements provide adequate disclosures to enable the users to understand the effects of material transactions and events; and
• the terminology used is appropriate.

Auditor's conclusions

Unmodified reports

Modified reports

• the financial statements as a whole are not free from material misstatement,
• they have been unable to obtain sufficient appropriate evidence, or
• there are additional matters to report,

then they have to issue a modified audit report.

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