INTERNATIONAL STANDARD ON AUDITING 700 (REVISED)

FORMING AN OPINION AND REPORTING ON FINANCIAL

STATEMENTS
(Effective for audits of financial statements for periods
ending on or after December 15, 2016)

CONTENTS
Paragraph
Introduction
Scope of this ISA ........................................................................................ 1−4
Effective Date ............................................................................................. 5
Objectives ................................................................................................... 6
Definitions .................................................................................................. 7–9
Requirements
Forming an Opinion on the Financial Statements ....................................... 10−15
Form of Opinion ......................................................................................... 16−19
Auditor’s Report ......................................................................................... 20−52
Supplementary Information Presented with the Financial Statements ....... 53−54
Application and Other Explanatory Material
Qualitative Aspects of the Entity’s Accounting Practices ........................... A1−A3
Accounting Policies Appropriately Disclosed
in the Financial Statements …………………...................................... A4
Information Presented in the Financial Statements Is Relevant, Reliable,
Comparable and Understandable......................................................... A5
Disclosure of the Effect of Material Transactions and Events on the
Information Conveyed in the Financial Statements ............................. A6
Evaluating Whether the Financial Statements Achieve Fair Presentation..... A7–A9
Description of the Applicable Financial Reporting Framework ................. A10−A15
Form of Opinion ......................................................................................... A16−A17
Auditor’s Report ......................................................................................... A18−A77
Supplementary Information Presented with the Financial Statements ....... A78−A84
Appendix: Illustrations of Independent Auditor’s Reports on Financial
Statements

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

International Standard on Auditing (ISA) 700 (Revised), Forming an Opinion and

Reporting on Financial Statements, should be read in conjunction with ISA 200,
Overall Objectives of the Independent Auditor and the Conduct of an Audit in
Accordance with International Standards on Auditing.

ISA

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Introduction
Scope of this ISA
1. This International Standard on Auditing (ISA) deals with the auditor’s
responsibility to form an opinion on the financial statements. It also deals with
the form and content of the auditor’s report issued as a result of an audit of
financial statements.
2. ISA 7011 deals with the auditor’s responsibility to communicate key audit matters
in the auditor’s report. ISA 7052 (Revised) and ISA 706 (Revised)3 deal with
how the form and content of the auditor’s report are affected when the auditor
expresses a modified opinion or includes an Emphasis of Matter paragraph or an
Other Matter paragraph in the auditor’s report. Other ISAs also contain reporting
requirements that are applicable when issuing an auditor’s report.
3. This ISA applies to an audit of a complete set of general purpose financial
statements and is written in that context. ISA 800 (Revised)4 deals with
special considerations when financial statements are prepared in accordance
with a special purpose framework. ISA 805 (Revised)5 deals with special
considerations relevant to an audit of a single financial statement or of a specific
element, account or item of a financial statement. This ISA also applies to audits
for which ISA 800 (Revised) or ISA 805 (Revised) apply.
4. The requirements of this ISA are aimed at addressing an appropriate balance
between the need for consistency and comparability in auditor reporting globally
and the need to increase the value of auditor reporting by making the information
provided in the auditor’s report more relevant to users. This ISA promotes
consistency in the auditor’s report, but recognizes the need for flexibility to
accommodate particular circumstances of individual jurisdictions. Consistency
in the auditor’s report, when the audit has been conducted in accordance with
ISAs, promotes credibility in the global marketplace by making more readily
identifiable those audits that have been conducted in accordance with globally
recognized standards. It also helps to promote the user’s understanding and to
identify unusual circumstances when they occur.

Effective Date
5. This ISA is effective for audits of financial statements for periods ending on or
after December 15, 2016.
1
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
2
ISA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report
3
ISA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent
Auditor’s Report
4
ISA 800 (Revised), Special Considerations—Audits of Financial Statements Prepared in Accordance
with Special Purpose Frameworks
5
ISA 805 (Revised), Special Considerations—Audits of Single Financial Statements and Specific
Elements, Accounts or Items of a Financial Statement

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Objectives
6. The objectives of the auditor are:
(a) To form an opinion on the financial statements based on an evaluation of
the conclusions drawn from the audit evidence obtained; and
(b) To express clearly that opinion through a written report.

Definitions
7. For purposes of the ISAs, the following terms have the meanings attributed
below:
(a) General purpose financial statements – Financial statements prepared in
accordance with a general purpose framework.
(b) General purpose framework – A financial reporting framework designed
to meet the common financial information needs of a wide range of users.
The financial reporting framework may be a fair presentation framework
or a compliance framework.
The term “fair presentation framework” is used to refer to a financial
reporting framework that requires compliance with the requirements of
the framework and:
(i) Acknowledges explicitly or implicitly that, to achieve fair
presentation of the financial statements, it may be necessary for
management to provide disclosures beyond those specifically
required by the framework; or
(ii) Acknowledges explicitly that it may be necessary for management
to depart from a requirement of the framework to achieve fair
presentation of the financial statements. Such departures are
expected to be necessary only in extremely rare circumstances.
ISA
The term “compliance framework” is used to refer to a financial
reporting framework that requires compliance with the requirements of
the framework, but does not contain the acknowledgements in (i) or (ii)
above.6
(c) Unmodified opinion – The opinion expressed by the auditor when
the auditor concludes that the financial statements are prepared, in all
material respects, in accordance with the applicable financial reporting
framework.7

6
ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance
with International Standards on Auditing, paragraph 13(a)
7
Paragraphs 25–26 deal with the phrases used to express this opinion in the case of a fair presentation
framework and a compliance framework respectively.

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8. Reference to “financial statements” in this ISA means “a complete set of general

purpose financial statements.”8 The requirements of the applicable financial
reporting framework determine the presentation, structure and content of the
financial statements, and what constitutes a complete set of financial statements.
9. Reference to “International Financial Reporting Standards” in this ISA
means the International Financial Reporting Standards (IFRSs) issued by the
International Accounting Standards Board, and reference to “International
Public Sector Accounting Standards” means the International Public Sector
Accounting Standards (IPSASs) issued by the International Public Sector
Accounting Standards Board.

Requirements
Forming an Opinion on the Financial Statements
10. The auditor shall form an opinion on whether the financial statements are
prepared, in all material respects, in accordance with the applicable financial
reporting framework.9,10
11. In order to form that opinion, the auditor shall conclude as to whether the auditor
has obtained reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error. That
conclusion shall take into account:
(a) The auditor’s conclusion, in accordance with ISA 330, whether sufficient
appropriate audit evidence has been obtained;11
(b) The auditor’s conclusion, in accordance with ISA 450, whether
uncorrected misstatements are material, individually or in aggregate;12
and
(c) The evaluations required by paragraphs 12–15.
12. The auditor shall evaluate whether the financial statements are prepared, in
all material respects, in accordance with the requirements of the applicable
financial reporting framework. This evaluation shall include consideration of
the qualitative aspects of the entity’s accounting practices, including indicators
of possible bias in management’s judgments. (Ref: Para. A1–A3)
13. In particular, the auditor shall evaluate whether, in view of the requirements of
the applicable financial reporting framework:

8
ISA 200, paragraph 13(f) sets out the content of financial statements.
9
ISA 200, paragraph 11
10
Paragraphs 25–26 deal with the phrases used to express this opinion in the case of a fair presentation
framework and a compliance framework respectively.
11
ISA 330, The Auditor’s Responses to Assessed Risks, paragraph 26
12
ISA 450, Evaluation of Misstatements Identified during the Audit, paragraph 11

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(a) The financial statements appropriately disclose the significant accounting

policies selected and applied. In making this evaluation, the auditor
shall consider the relevance of the accounting policies to the entity, and
whether they have been presented in an understandable manner; (Ref:
Para. A4)
(b) The accounting policies selected and applied are consistent with the
applicable financial reporting framework and are appropriate;
(c) The accounting estimates made by management are reasonable;
(d) The information presented in the financial statements is relevant, reliable,
comparable, and understandable. In making this evaluation, the auditor
shall consider whether:
•• The information that should have been included has been
included, and whether such information is appropriately classified,
aggregated or disaggregated, and characterized.
•• The overall presentation of the financial statements has been
undermined by including information that is not relevant or that
obscures a proper understanding of the matters disclosed. (Ref:
Para. A5)
(e) The financial statements provide adequate disclosures to enable the
intended users to understand the effect of material transactions and
events on the information conveyed in the financial statements; and
(Ref: Para. A6)
(f) The terminology used in the financial statements, including the title of
each financial statement, is appropriate.
14. When the financial statements are prepared in accordance with a fair
presentation framework, the evaluation required by paragraphs 12–13 shall also
include whether the financial statements achieve fair presentation. The auditor’s ISA
evaluation as to whether the financial statements achieve fair presentation shall
include consideration of: (Ref: Para A7–A9)
(a) The overall presentation, structure and content of the financial statements;
and
(b) Whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
15. The auditor shall evaluate whether the financial statements adequately refer to
or describe the applicable financial reporting framework. (Ref: Para. A10–A15)

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Form of Opinion
16. The auditor shall express an unmodified opinion when the auditor concludes
that the financial statements are prepared, in all material respects, in accordance
with the applicable financial reporting framework.
17. If the auditor:
(a) Concludes that, based on the audit evidence obtained, the financial
statements as a whole are not free from material misstatement; or
(b) Is unable to obtain sufficient appropriate audit evidence to conclude that
the financial statements as a whole are free from material misstatement,
the auditor shall modify the opinion in the auditor’s report in accordance with
ISA 705 (Revised).
18. If financial statements prepared in accordance with the requirements of a fair
presentation framework do not achieve fair presentation, the auditor shall
discuss the matter with management and, depending on the requirements of the
applicable financial reporting framework and how the matter is resolved, shall
determine whether it is necessary to modify the opinion in the auditor’s report
in accordance with ISA 705 (Revised). (Ref: Para. A16)
19. When the financial statements are prepared in accordance with a compliance
framework, the auditor is not required to evaluate whether the financial
statements achieve fair presentation. However, if in extremely rare circumstances
the auditor concludes that such financial statements are misleading, the auditor
shall discuss the matter with management and, depending on how it is resolved,
shall determine whether, and how, to communicate it in the auditor’s report.
(Ref: Para. A17)

Auditor’s Report
20. The auditor’s report shall be in writing. (Ref: Para. A18–A19)

Auditor’s Report for Audits Conducted in Accordance with International Standards

on Auditing

Title
21. The auditor’s report shall have a title that clearly indicates that it is the report of
an independent auditor. (Ref: Para. A20)

Addressee
22. The auditor’s report shall be addressed, as appropriate, based on the
circumstances of the engagement. (Ref: Para. A21)

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Auditor’s Opinion
23. The first section of the auditor’s report shall include the auditor’s opinion, and
shall have the heading “Opinion.”
24. The Opinion section of the auditor’s report shall also:
(a) Identify the entity whose financial statements have been audited;
(b) State that the financial statements have been audited;
(c) Identify the title of each statement comprising the financial statements;
(d) Refer to the notes, including the summary of significant accounting
policies; and
(e) Specify the date of, or period covered by, each financial statement
comprising the financial statements. (Ref: Para. A22–A23)
25. When expressing an unmodified opinion on financial statements prepared in
accordance with a fair presentation framework, the auditor’s opinion shall,
unless otherwise required by law or regulation, use one of the following phrases,
which are regarded as being equivalent:
(a) In our opinion, the accompanying financial statements present fairly, in
all material respects, […] in accordance with [the applicable financial
reporting framework]; or
(b) In our opinion, the accompanying financial statements give a true and
fair view of […] in accordance with [the applicable financial reporting
framework]. (Ref: Para. A24–A31)
26. When expressing an unmodified opinion on financial statements prepared in
accordance with a compliance framework, the auditor’s opinion shall be that
the accompanying financial statements are prepared, in all material respects,
in accordance with [the applicable financial reporting framework]. (Ref: Para.
A26–A31) ISA
27. If the reference to the applicable financial reporting framework in the auditor’s
opinion is not to IFRSs issued by the International Accounting Standards Board
or IPSASs issued by the International Public Sector Accounting Standards
Board, the auditor’s opinion shall identify the jurisdiction of origin of the
framework.

Basis for Opinion

28. The auditor’s report shall include a section, directly following the Opinion
section, with the heading “Basis for Opinion”, that: (Ref: Para. A32)
(a) States that the audit was conducted in accordance with International
Standards on Auditing; (Ref: Para. A33)

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(b) Refers to the section of the auditor’s report that describes the auditor’s
responsibilities under the ISAs;
(c) Includes a statement that the auditor is independent of the entity in
accordance with the relevant ethical requirements relating to the audit,
and has fulfilled the auditor’s other ethical responsibilities in accordance
with these requirements. The statement shall identify the jurisdiction of
origin of the relevant ethical requirements or refer to the International
Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code); and (Ref: Para. A34–A39)
(d) States whether the auditor believes that the audit evidence the auditor
has obtained is sufficient and appropriate to provide a basis for the
auditor’s opinion.

Going Concern
29. Where applicable, the auditor shall report in accordance with ISA 570
(Revised).13

Key Audit Matters

30. For audits of complete sets of general purpose financial statements of listed
entities, the auditor shall communicate key audit matters in the auditor’s report
in accordance with ISA 701.
31. When the auditor is otherwise required by law or regulation or decides to
communicate key audit matters in the auditor’s report, the auditor shall do so in
accordance with ISA 701. (Ref: Para. A40–A42)

Other Information
32. Where applicable, the auditor shall report in accordance with ISA 720
(Revised).14

Responsibilities for the Financial Statements

33. The auditor’s report shall include a section with a heading “Responsibilities
of Management for the Financial Statements.” The auditor’s report shall
use the term that is appropriate in the context of the legal framework in the
particular jurisdiction and need not refer specifically to “management”. In
some jurisdictions, the appropriate reference may be to those charged with
governance. (Ref: Para. A44)
34. This section of the auditor’s report shall describe management’s responsibility
for: (Ref: Para. A45–A48)

13
ISA 570 (Revised), Going Concern, paragraphs 21–23
14
ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

(a) Preparing the financial statements in accordance with the applicable

financial reporting framework, and for such internal control as
management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether
due to fraud or error; and
(b) Assessing the entity’s ability to continue as a going concern15 and
whether the use of the going concern basis of accounting is appropriate
as well as disclosing, if applicable, matters relating to going concern.
The explanation of management’s responsibility for this assessment
shall include a description of when the use of the going concern basis of
accounting is appropriate. (Ref: Para. A48)
35. This section of the auditor’s report shall also identify those responsible for the
oversight of the financial reporting process, when those responsible for such
oversight are different from those who fulfill the responsibilities described in
paragraph 34 above. In this case, the heading of this section shall also refer
to “Those Charged with Governance” or such term that is appropriate in the
context of the legal framework in the particular jurisdiction. (Ref: Para. A49)
36. When the financial statements are prepared in accordance with a fair presentation
framework, the description of responsibilities for the financial statements in the
auditor’s report shall refer to “the preparation and fair presentation of these
financial statements” or “the preparation of financial statements that give a true
and fair view,” as appropriate in the circumstances.

Auditor’s Responsibilities for the Audit of the Financial Statements

37. The auditor’s report shall include a section with the heading “Auditor’s
Responsibilities for the Audit of the Financial Statements.”
38. This section of the auditor’s report shall: (Ref: Para. A50)
(a) State that the objectives of the auditor are to:
ISA
(i) Obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement,
whether due to fraud or error; and
(ii) Issue an auditor’s report that includes the auditor’s opinion. (Ref:
Para. A51)
(b) State that reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists; and
(c) State that misstatements can arise from fraud or error, and either:

15
ISA 570 (Revised), paragraph 2

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

(i) Describe that they are considered material if, individually or in

the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements;16 or
(ii) Provide a definition or description of materiality in accordance
with the applicable financial reporting framework. (Ref: Para.
A53)
39. The Auditor’s Responsibilities for the Audit of the Financial Statements section
of the auditor’s report shall further: (Ref: Para. A50)
(a) State that, as part of an audit in accordance with ISAs, the auditor
exercises professional judgment and maintains professional skepticism
throughout the audit; and
(b) Describe an audit by stating that the auditor’s responsibilities are:
(i) To identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error; to design and
perform audit procedures responsive to those risks; and to obtain
audit evidence that is sufficient and appropriate to provide a basis
for the auditor’s opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
(ii) To obtain an understanding of internal control relevant to the
audit in order to 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. In
circumstances when the auditor also has a responsibility to express
an opinion on the effectiveness of internal control in conjunction
with the audit of the financial statements, the auditor shall omit
the phrase that the auditor’s consideration of internal control is
not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control.
(iii) To evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by management.
(iv) To conclude on the appropriateness of management’s use of
the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the entity’s
ability to continue as a going concern. If the auditor concludes

16
ISA 320, Materiality in Planning and Performing an Audit, paragraph 2

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that a material uncertainty exists, the auditor is required to draw

attention in the auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to
modify the opinion. The auditor’s conclusions are based on the
audit evidence obtained up to the date of the auditor’s report.
However, future events or conditions may cause an entity to cease
to continue as a going concern.
(v) When the financial statements are prepared in accordance with a
fair presentation framework, to evaluate the overall presentation,
structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
(c) When ISA 60017 applies, further describe the auditor’s responsibilities in
a group audit engagement by stating that:
(i) The auditor’s responsibilities are to obtain sufficient appropriate
audit evidence regarding the financial information of the entities
or business activities within the group to express an opinion on
the group financial statements;
(ii) The auditor is responsible for the direction, supervision and
performance of the group audit; and
(iii) The auditor remains solely responsible for the auditor’s opinion.
40. The Auditor’s Responsibilities for the Audit of the Financial Statements section
of the auditor’s report also shall: (Ref: Para. A50)
(a) State that the auditor communicates with those charged with governance
regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies
in internal control that the auditor identifies during the audit; ISA
(b) For audits of financial statements of listed entities, state that the auditor
provides those charged with governance with a statement that the auditor
has complied with relevant ethical requirements regarding independence
and communicates with them all relationships and other matters that
may reasonably be thought to bear on the auditor’s independence, and
where applicable, related safeguards; and
(c) For audits of financial statements of listed entities and any other entities
for which key audit matters are communicated in accordance with ISA
701, state that, from the matters communicated with those charged with
governance, the auditor determines those matters that were of most

17
ISA 600, Special Considerations—Audits of Group Financial Statements (Including the Work of
Component Auditors)

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

significance in the audit of the financial statements of the current period

and are therefore the key audit matters. The auditor describes these
matters in the auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances,
the auditor determines that a matter should not be communicated in the
auditor’s report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such
communication. (Ref: Para. A53)
Location of the description of the auditor’s responsibilities for the audit of the financial
statements
41. The description of the auditor’s responsibilities for the audit of the financial
statements required by paragraphs 39–40 shall be included: (Ref: Para. A54)
(a) Within the body of the auditor’s report;
(b) Within an appendix to the auditor’s report, in which case the auditor’s
report shall include a reference to the location of the appendix; or (Ref:
Para. A55–A57)
(c) By a specific reference within the auditor’s report to the location of
such a description on a website of an appropriate authority, where law,
regulation or national auditing standards expressly permit the auditor to
do so. (Ref: Para. A54, A56–A57)
42. When the auditor refers to a description of the auditor’s responsibilities
on a website of an appropriate authority, the auditor shall determine that
such description addresses, and is not inconsistent with, the requirements in
paragraphs 39–40 of this ISA. (Ref: Para. A56)

Other Reporting Responsibilities

43. If the auditor addresses other reporting responsibilities in the auditor’s report
on the financial statements that are in addition to the auditor’s responsibilities
under the ISAs, these other reporting responsibilities shall be addressed in a
separate section in the auditor’s report with a heading titled “Report on Other
Legal and Regulatory Requirements” or otherwise as appropriate to the content
of the section, unless these other reporting responsibilities address the same
topics as those presented under the reporting responsibilities required by the
ISAs in which case the other reporting responsibilities may be presented in the
same section as the related report elements required by the ISAs. (Ref: Para.
A58–A60)
44. If other reporting responsibilities are presented in the same section as the
related report elements required by the ISAs, the auditor’s report shall clearly
differentiate the other reporting responsibilities from the reporting that is
required by the ISAs. (Ref: Para. A60)

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45. If the auditor’s report contains a separate section that addresses other reporting
responsibilities, the requirements of paragraphs 21–40 of this ISA shall be
included under a section with a heading “Report on the Audit of the Financial
Statements.” The “Report on Other Legal and Regulatory Requirements”
shall follow the “Report on the Audit of the Financial Statements.” (Ref: Para.
A60)

Name of the Engagement Partner

46. The name of the engagement partner shall be included in the auditor’s report
on financial statements of listed entities unless, in rare circumstances, such
disclosure is reasonably expected to lead to a significant personal security
threat. In the rare circumstances that the auditor intends not to include the name
of the engagement partner in the auditor’s report, the auditor shall discuss this
intention with those charged with governance to inform the auditor’s assessment
of the likelihood and severity of a significant personal security threat. (Ref:
Para. A61–A63)

Signature of the Auditor

47. The auditor’s report shall be signed. (Ref: Para. A64–A65)

Auditor’s Address
48. The auditor’s report shall name the location in the jurisdiction where the auditor
practices.

Date of the Auditor’s Report

49. The auditor’s report shall be dated no earlier than the date on which the auditor
has obtained sufficient appropriate audit evidence on which to base the auditor’s
opinion on the financial statements, including evidence that: (Ref: Para. A66–
A69)
(a) All the statements and disclosures that comprise the financial statements ISA
have been prepared; and
(b) Those with the recognized authority have asserted that they have taken
responsibility for those financial statements.

Auditor’s Report Prescribed by Law or Regulation

50. If the auditor is required by law or regulation of a specific jurisdiction to use a
specific layout, or wording of the auditor’s report, the auditor’s report shall refer
to International Standards on Auditing only if the auditor’s report includes, at a
minimum, each of the following elements: (Ref: Para. A70–A71)
(a) A title.
(b) An addressee, as required by the circumstances of the engagement.

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

(c) An Opinion section containing an expression of opinion on the

financial statements and a reference to the applicable financial reporting
framework used to prepare the financial statements (including identifying
the jurisdiction of origin of the financial reporting framework that is
not International Financial Reporting Standards or International Public
Sector Accounting Standards, see paragraph 27).
(d) An identification of the entity’s financial statements that have been
audited.
(e) A statement that the auditor is independent of the entity in accordance
with the relevant ethical requirements relating to the audit, and has
fulfilled the auditor’s other ethical responsibilities in accordance with
these requirements. The statement shall identify the jurisdiction of origin
of the relevant ethical requirements or refer to the IESBA Code.
(f) Where applicable, a section that addresses, and is not inconsistent with,
the reporting requirements in paragraph 22 of ISA 570 (Revised).
(g) Where applicable, a Basis for Qualified (or Adverse) Opinion section
that addresses, and is not inconsistent with, the reporting requirements
in paragraph 23 of ISA 570 (Revised).
(h) Where applicable, a section that includes the information required by
ISA 701, or additional information about the audit that is prescribed by
law or regulation and that addresses, and is not inconsistent with, the
reporting requirements in that ISA.18 (Ref: Para. A72–A75)
(i) Where applicable, a section that addresses the reporting requirements in
paragraph 24 of ISA 720 (Revised).
(j) A description of management’s responsibilities for the preparation of
the financial statements and an identification of those responsible for
the oversight of the financial reporting process that addresses, and is not
inconsistent with, the requirements in paragraphs 33–36.
(k) A reference to International Standards on Auditing and the law or
regulation, and a description of the auditor’s responsibilities for an audit
of the financial statements that addresses, and is not inconsistent with,
the requirements in paragraphs 37–40. (Ref: Para. A50–A53)
(l) For audits of complete sets of general purpose financial statements
of listed entities, the name of the engagement partner unless, in rare
circumstances, such disclosure is reasonably expected to lead to a
significant personal security threat.
(m) The auditor’s signature.

18
ISA 701, paragraphs 11–16

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

(n) The auditor’s address.

(o) The date of the auditor’s report.

Auditor’s Report for Audits Conducted in Accordance with Both Auditing Standards
of a Specific Jurisdiction and International Standards on Auditing
51. An auditor may be required to conduct an audit in accordance with the auditing
standards of a specific jurisdiction (the “national auditing standards”), and has
additionally complied with the ISAs in the conduct of the audit. If this is the
case, the auditor’s report may refer to International Standards on Auditing in
addition to the national auditing standards, but the auditor shall do so only if:
(Ref: Para. A76–A77)
(a) There is no conflict between the requirements in the national auditing
standards and those in ISAs that would lead the auditor (i) to form a
different opinion, or (ii) not to include an Emphasis of Matter paragraph
or Other Matter paragraph that, in the particular circumstances, is
required by ISAs; and
(b) The auditor’s report includes, at a minimum, each of the elements set
out in paragraphs 50(a)–(o) when the auditor uses the layout or wording
specified by the national auditing standards. However, reference to
“law or regulation” in paragraph 50(k) shall be read as reference to the
national auditing standards. The auditor’s report shall thereby identify
such national auditing standards.
52. When the auditor’s report refers to both the national auditing standards and
International Standards on Auditing, the auditor’s report shall identify the
jurisdiction of origin of the national auditing standards.

Supplementary Information Presented with the Financial Statements (Ref: Para.

A78–A84)
53. If supplementary information that is not required by the applicable financial ISA
reporting framework is presented with the audited financial statements,
the auditor shall evaluate whether, in the auditor’s professional judgment,
supplementary information is nevertheless an integral part of the financial
statements due to its nature or how it is presented. When it is an integral part
of the financial statements, the supplementary information shall be covered by
the auditor’s opinion.
54. If supplementary information that is not required by the applicable financial
reporting framework is not considered an integral part of the audited financial
statements, the auditor shall evaluate whether such supplementary information
is presented in a way that sufficiently and clearly differentiates it from the
audited financial statements. If this is not the case, then the auditor shall
ask management to change how the unaudited supplementary information
is presented. If management refuses to do so, the auditor shall identify the

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

unaudited supplementary information and explain in the auditor’s report that

such supplementary information has not been audited.
***

Application and Other Explanatory Material

Qualitative Aspects of the Entity’s Accounting Practices (Ref: Para. 12)
A1. Management makes a number of judgments about the amounts and disclosures
in the financial statements.
A2. ISA 260 (Revised) contains a discussion of the qualitative aspects of accounting
practices.19 In considering the qualitative aspects of the entity’s accounting
practices, the auditor may become aware of possible bias in management’s
judgments. The auditor may conclude that the cumulative effect of a lack of
neutrality, together with the effect of uncorrected misstatements, causes the
financial statements as a whole to be materially misstated. Indicators of a lack
of neutrality that may affect the auditor’s evaluation of whether the financial
statements as a whole are materially misstated include the following:
•• The selective correction of misstatements brought to management’s
attention during the audit (e.g., correcting misstatements with the effect
of increasing reported earnings, but not correcting misstatements that
have the effect of decreasing reported earnings).
•• Possible management bias in the making of accounting estimates.
A3. ISA 540 addresses possible management bias in making accounting estimates.20
Indicators of possible management bias do not constitute misstatements for
purposes of drawing conclusions on the reasonableness of individual accounting
estimates. They may, however, affect the auditor’s evaluation of whether the
financial statements as a whole are free from material misstatement.

Accounting Policies Appropriately Disclosed in the Financial Statements (Ref:

Para. 13(a))
A4. In evaluating whether the financial statements appropriately disclose the
significant accounting policies selected and applied, the auditor’s consideration
includes matters such as:
•• Whether all disclosures related to the significant accounting policies
that are required to be included by the applicable financial reporting
framework have been disclosed;
•• Whether the information about the significant accounting policies that
has been disclosed is relevant and therefore reflects how the recognition,
19
ISA 260 (Revised), Communication with Those Charged with Governance, Appendix 2
20
ISA 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related
Disclosures, paragraph 21

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measurement and presentation criteria in the applicable financial

reporting framework have been applied to classes of transactions,
account balances and disclosures in the financial statements in the
particular circumstances of the entity’s operations and its environment;
and
•• The clarity with which the significant accounting policies have been
presented.

Information Presented in the Financial Statements Is Relevant, Reliable,

Comparable and Understandable (Ref: Para. 13(d))
A5. Evaluating the understandability of the financial statements includes
consideration of such matters as whether:
•• The information in the financial statements is presented in a clear and
concise manner.
•• The placement of significant disclosures gives appropriate prominence to
them (e.g., when there is perceived value of entity-specific information
to users), and whether the disclosures are appropriately cross-referenced
in a manner that would not give rise to significant challenges for users in
identifying necessary information.

Disclosures of the Effect of Material Transactions and Events on the

Information Conveyed in the Financial Statements (Ref: Para. 13(e))
A6. It is common for financial statements prepared in accordance with a general
purpose framework to present an entity’s financial position, financial
performance and cash flows. Evaluating whether, in view of the applicable
financial reporting framework, the financial statements provide adequate
disclosures to enable the intended users to understand the effect of material
transactions and events on the entity’s financial position, financial performance
and cash flows includes consideration of such matters as: ISA
•• The extent to which the information in the financial statements is relevant
and specific to the circumstances of the entity; and
•• Whether the disclosures are adequate to assist the intended users to
understand:
○○ The nature and extent of the entity’s potential assets and liabilities
arising from transactions or events that do not meet the criteria for
recognition (or the criteria for derecognition) established by the
applicable financial reporting framework.
○○ The nature and extent of risks of material misstatement arising
from transactions and events.

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

○○ The methods used and the assumptions and judgments made,

and changes to them, that affect amounts presented or otherwise
disclosed, including relevant sensitivity analyses.

Evaluating Whether the Financial Statements Achieve Fair Presentation (Ref:

Para. 14)
A7. Some financial reporting frameworks acknowledge explicitly or implicitly
the concept of fair presentation.21 As noted in paragraph 7(b) of this ISA, a
fair presentation22 financial reporting framework not only requires compliance
with the requirements of the framework, but also acknowledges explicitly or
implicitly that it may be necessary for management to provide disclosures
beyond those specifically required by the framework.23
A8. The auditor’s evaluation about whether the financial statements achieve fair
presentation, both in respect of presentation and disclosure, is a matter of
professional judgment. This evaluation takes into account such matters as
the facts and circumstances of the entity, including changes thereto, based
on the auditor’s understanding of the entity and the audit evidence obtained
during the audit. The evaluation also includes consideration, for example, of
the disclosures needed to achieve a fair presentation arising from matters that
could be material (i.e., in general, misstatements are considered to be material
if they could reasonably be expected to influence the economic decisions of
the users taken on the basis of the financial statements as a whole), such as the
effect of evolving financial reporting requirements or the changing economic
environment.
A9. Evaluating whether the financial statements achieve fair presentation may
include, for example, discussions with management and those charged with
governance about their views on why a particular presentation was chosen,
as well as alternatives that may have been considered. The discussions may
include, for example:
•• The degree to which the amounts in the financial statements are
aggregated or disaggregated, and whether the presentation of amounts
or disclosures obscures useful information, or results in misleading
information.
•• Consistency with appropriate industry practice, or whether any departures
are relevant to the entity’s circumstances and therefore warranted.
21
For example, International Financial Reporting Standards (IFRSs) note that fair presentation requires
the faithful representation of the effects of transactions, other events and conditions in accordance with
the definitions and recognition criteria for assets, liabilities, income and expenses.
22
See ISA 200, paragraph 13(a)
23
For example, IFRSs require an entity to provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the entity’s financial position and financial performance
(International Accounting Standard 1, Presentation of Financial Statements, paragraph 17(c)).

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Description of the Applicable Financial Reporting Framework (Ref: Para. 15)

A10. As explained in ISA 200, the preparation of the financial statements by management
and, where appropriate, those charged with governance requires the inclusion of
an adequate description of the applicable financial reporting framework in the
financial statements.24 That description advises users of the financial statements
of the framework on which the financial statements are based.
A11. A description that the financial statements are prepared in accordance with a
particular applicable financial reporting framework is appropriate only if the
financial statements comply with all the requirements of that framework that
are effective during the period covered by the financial statements.
A12. A description of the applicable financial reporting framework that contains
imprecise qualifying or limiting language (e.g., “the financial statements are
in substantial compliance with International Financial Reporting Standards”)
is not an adequate description of that framework as it may mislead users of the
financial statements.

Reference to More than One Financial Reporting Framework

A13. In some cases, the financial statements may represent that they are prepared
in accordance with two financial reporting frameworks (e.g., the national
framework and IFRSs). This may be because management is required, or has
chosen, to prepare the financial statements in accordance with both frameworks,
in which case both are applicable financial reporting frameworks. Such
description is appropriate only if the financial statements comply with each of
the frameworks individually. To be regarded as being prepared in accordance
with both frameworks, the financial statements need to comply with both
frameworks simultaneously and without any need for reconciling statements.
In practice, simultaneous compliance is unlikely unless the jurisdiction has
adopted the other framework (e.g., IFRSs) as its own national framework, or
has eliminated all barriers to compliance with it.
ISA
A14. Financial statements that are prepared in accordance with one financial
reporting framework and that contain a note or supplementary statement
reconciling the results to those that would be shown under another framework
are not prepared in accordance with that other framework. This is because the
financial statements do not include all the information in the manner required
by that other framework.
A15. The financial statements may, however, be prepared in accordance with one
applicable financial reporting framework and, in addition, describe in the notes
to the financial statements the extent to which the financial statements comply
with another framework (e.g., financial statements prepared in accordance with
the national framework that also describe the extent to which they comply with

24
ISA 200, paragraphs A4–A5

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

IFRSs). Such description may constitute supplementary financial information

as discussed in paragraph 54 and is covered by the auditor’s opinion if it cannot
be clearly differentiated from the financial statements.

Form of Opinion
A16. There may be cases where the financial statements, although prepared in
accordance with the requirements of a fair presentation framework, do
not achieve fair presentation. Where this is the case, it may be possible for
management to include additional disclosures in the financial statements
beyond those specifically required by the framework or, in extremely rare
circumstances, to depart from a requirement in the framework in order to
achieve fair presentation of the financial statements. (Ref: Para. 18)
A17. It will be extremely rare for the auditor to consider financial statements that
are prepared in accordance with a compliance framework to be misleading
if, in accordance with ISA 210, the auditor determined that the framework is
acceptable.25 (Ref: Para. 19)

Auditor’s Report (Ref: Para. 20)

A18. A written report encompasses reports issued in hard copy and those using an
electronic medium.
A19. The Appendix to this ISA contains illustrations of auditor’s reports on financial
statements, incorporating the elements set out in paragraphs 21–49. With
the exception of the Opinion and Basis for Opinion sections, this ISA does
not establish requirements for ordering the elements of the auditor’s report.
However, this ISA requires the use of specific headings, which are intended to
assist in making auditor’s reports that refer to audits that have been conducted
in accordance with ISAs more recognizable, particularly in situations where the
elements of the auditor’s report are presented in an order that differs from the
illustrative auditor’s reports in the Appendix to this ISA.

Auditor’s Report for Audits Conducted in Accordance with International Standards

on Auditing
Title (Ref: Para. 21)
A20. A title indicating the report is the report of an independent auditor, for example,
“Independent Auditor’s Report,” distinguishes the independent auditor’s report
from reports issued by others.

Addressee (Ref: Para. 22)

A21. Law, regulation or the terms of the engagement may specify to whom the
auditor’s report is to be addressed in that particular jurisdiction. The auditor’s
report is normally addressed to those for whom the report is prepared, often

25
ISA 210, Agreeing the Terms of Audit Engagements, paragraph 6(a)

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

either to the shareholders or to those charged with governance of the entity

whose financial statements are being audited.

Auditor’s Opinion (Ref: Para. 24–26)

Reference to the financial statements that have been audited

A22. The auditor’s report states, for example, that the auditor has audited the financial
statements of the entity, which comprise [state the title of each financial
statement comprising the complete set of financial statements required by the
applicable financial reporting framework, specifying the date or period covered
by each financial statement] and notes to the financial statements, including a
summary of significant accounting policies.
A23. When the auditor is aware that the audited financial statements will be included
in a document that contains other information, such as an annual report, the
auditor may consider, if the form of presentation allows, identifying the page
numbers on which the audited financial statements are presented. This helps
users to identify the financial statements to which the auditor’s report relates.

“Present fairly, in all material respects” or “give a true and fair view”
A24. The phrases “present fairly, in all material respects,” and “give a true and fair
view” are regarded as being equivalent. Whether the phrase “present fairly, in
all material respects,” or the phrase “give a true and fair view” is used in any
particular jurisdiction is determined by the law or regulation governing the audit
of financial statements in that jurisdiction, or by generally accepted practice in
that jurisdiction. Where law or regulation requires the use of different wording,
this does not affect the requirement in paragraph 14 of this ISA for the auditor
to evaluate the fair presentation of financial statements prepared in accordance
with a fair presentation framework.
A25. When the auditor expresses an unmodified opinion, it is not appropriate to use
phrases such as “with the foregoing explanation” or “subject to” in relation ISA
to the opinion, as these suggest a conditional opinion or a weakening or
modification of opinion.

Description of the financial statements and the matters they present

A26. The auditor’s opinion covers the complete set of financial statements as defined
by the applicable financial reporting framework. For example, in the case
of many general purpose frameworks, the financial statements may include:
a statement of financial position, a statement of comprehensive income, a
statement of changes in equity, a statement of cash flows, and related notes,
which ordinarily comprise a summary of significant accounting policies and
other explanatory information. In some jurisdictions, additional information
may also be considered to be an integral part of the financial statements.

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A27. In the case of financial statements prepared in accordance with a fair presentation
framework, the auditor’s opinion states that the financial statements present
fairly, in all material respects, or give a true and fair view of, the matters that
the financial statements are designed to present. For example, in the case of
financial statements prepared in accordance with IFRSs, these matters are
the financial position of the entity as at the end of the period and the entity’s
financial performance and cash flows for the period then ended. Consequently,
the […] in paragraph 25 and elsewhere in this ISA is intended to be replaced
by the words in italics in the preceding sentence when the applicable financial
reporting framework is IFRSs or, in the case of other applicable financial
reporting frameworks, be replaced with words that describe the matters that the
financial statements are designed to present.

Description of the applicable financial reporting framework and how it may affect
the auditor’s opinion
A28. The identification of the applicable financial reporting framework in the
auditor’s opinion is intended to advise users of the auditor’s report of the
context in which the auditor’s opinion is expressed; it is not intended to limit
the evaluation required in paragraph 14. The applicable financial reporting
framework is identified in such terms as:
“… in accordance with International Financial Reporting Standards” or
“… in accordance with accounting principles generally accepted in Jurisdiction X …”

A29. When the applicable financial reporting framework encompasses financial

reporting standards and legal or regulatory requirements, the framework
is identified in such terms as “… in accordance with International Financial
Reporting Standards and the requirements of Jurisdiction X Corporations
Act.” ISA 210 deals with circumstances where there are conflicts between the
financial reporting standards and the legislative or regulatory requirements.26
A30. As indicated in paragraph A13, the financial statements may be prepared in
accordance with two financial reporting frameworks, which are therefore
both applicable financial reporting frameworks. Accordingly, each framework
is considered separately when forming the auditor’s opinion on the financial
statements, and the auditor’s opinion in accordance with paragraphs 25–27
refers to both frameworks as follows:
(a) If the financial statements comply with each of the frameworks
individually, two opinions are expressed: that is, that the financial
statements are prepared in accordance with one of the applicable
financial reporting frameworks (e.g., the national framework) and an
opinion that the financial statements are prepared in accordance with
the other applicable financial reporting framework (e.g., IFRSs). These
opinions may be expressed separately or in a single sentence (e.g., the

26
ISA 210, paragraph 18

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 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

financial statements are presented fairly, in all material respects […], in

accordance with accounting principles generally accepted in Jurisdiction
X and with IFRSs).
(b) If the financial statements comply with one of the frameworks but fail to
comply with the other framework, an unmodified opinion can be given
that the financial statements are prepared in accordance with the one
framework (e.g., the national framework) but a modified opinion given
with regard to the other framework (e.g., IFRSs) in accordance with ISA
705 (Revised).
A31. As indicated in paragraph A15, the financial statements may represent
compliance with the applicable financial reporting framework and, in addition,
disclose the extent of compliance with another financial reporting framework.
Such supplementary information is covered by the auditor’s opinion if it cannot
be clearly differentiated from the financial statements (see paragraphs 53–54
and related application material in paragraphs A78–A84). Accordingly,
(a) If the disclosure as to the compliance with the other framework is
misleading, a modified opinion is expressed in accordance with ISA 705
(Revised).
(b) If the disclosure is not misleading, but the auditor judges it to be of
such importance that it is fundamental to the users’ understanding of
the financial statements, an Emphasis of Matter paragraph is added in
accordance with ISA 706 (Revised), drawing attention to the disclosure.

Basis for Opinion (Ref: Para. 28)

A32. The Basis for Opinion section provides important context about the auditor’s
opinion. Accordingly, this ISA requires the Basis for Opinion section to directly
follow the Opinion section in the auditor’s report.
A33. The reference to the standards used conveys to the users of the auditor’s report
that the audit has been conducted in accordance with established standards.
ISA
Relevant ethical requirements (Ref: Para. 28(c))
A34. The identification of the jurisdiction of origin of relevant ethical requirements
increases transparency about those requirements relating to the particular audit
engagement. ISA 200 explains that relevant ethical requirements ordinarily
comprise Parts A and B of the IESBA Code related to an audit of financial
statements together with national requirements that are more restrictive.27
When the relevant ethical requirements include those of the IESBA Code, the
statement may also make reference to the IESBA Code. If the IESBA Code
constitutes all of the ethical requirements relevant to the audit, the statement
need not identify a jurisdiction of origin.

27
ISA 200, paragraph A16
725 ISA 700 (Revised)
 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

A35. In some jurisdictions, relevant ethical requirements may exist in several

different sources, such as the ethical code(s) and additional rules and
requirements within law and regulation. When the independence and other
relevant ethical requirements are contained in a limited number of sources, the
auditor may choose to name the relevant source(s) (e.g., the name of the code,
rule or regulation applicable in the jurisdiction), or may refer to a term that is
commonly understood and that appropriately summarizes those sources (e.g.,
independence requirements for audits of private entities in Jurisdiction X).
A36. Law or regulation, national auditing standards or the terms of an audit
engagement may require the auditor to provide in the auditor’s report more
specific information about the sources of the relevant ethical requirements,
including those pertaining to independence, that applied to the audit of the
financial statements.
A37. In determining the appropriate amount of information to include in the auditor’s
report when there are multiple sources of relevant ethical requirements relating
to the audit of the financial statements, an important consideration is balancing
transparency against the risk of obscuring other useful information in the
auditor’s report.

Considerations specific to group audits

A38. In group audits when there are multiple sources of relevant ethical requirements,
including those pertaining to independence, the reference in the auditor’s report
to the jurisdiction ordinarily relates to the relevant ethical requirements that
are applicable to the group engagement team. This is because, in a group audit,
component auditors are also subject to ethical requirements that are relevant to
the group audit.28
A39. The ISAs do not establish specific independence or ethical requirements for
auditors, including component auditors, and thus do not extend, or otherwise
override, the independence requirements of the IESBA Code or other ethical
requirements to which the group engagement team is subject, nor do the ISAs
require that the component auditor in all cases to be subject to the same specific
independence requirements that are applicable to the group engagement
team. As a result, relevant ethical requirements, including those pertaining to
independence, in a group audit situation may be complex. ISA 60029 provides
guidance for auditors in performing work on the financial information of a
component for a group audit, including those situations where the component
auditor does not meet the independence requirements that are relevant to the
group audit.

28
ISA 600, paragraph A37
29
ISA 600, paragraphs 19–20

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Key Audit Matters (Ref: Para. 31)

A40. Law or regulation may require communication of key audit matters for audits
of entities other than listed entities, for example, entities characterized in such
law or regulation as public interest entities.
A41. The auditor may also decide to communicate key audit matters for other entities,
including those that may be of significant public interest, for example because
they have a large number and wide range of stakeholders and considering the
nature and size of the business. Examples of such entities may include financial
institutions (such as banks, insurance companies, and pension funds), and other
entities such as charities.
A42. ISA 210 requires the auditor to agree the terms of the audit engagement with
management and those charged with governance, as appropriate, and explains
that the roles of management and those charged with governance in agreeing
the terms of the audit engagement for the entity depend on the governance
arrangements of the entity and relevant law or regulation.30 ISA 210 also
requires the audit engagement letter or other suitable form of written agreement
to include reference to the expected form and content of any reports to be issued
by the auditor.31 When the auditor is not otherwise required to communicate
key audit matters, ISA 21032 explains that it may be helpful for the auditor
to make reference in the terms of the audit engagement to the possibility
of communicating key audit matters in the auditor’s report and, in certain
jurisdictions, it may be necessary for the auditor to include a reference to such
possibility in order to retain the ability to do so.

Considerations specific to public sector entities

A43. Listed entities are not common in the public sector. However, public sector
entities may be significant due to size, complexity or public interest aspects.
In such cases, an auditor of a public sector entity may be required by law or
regulation or may otherwise decide to communicate key audit matters in the
auditor’s report.
ISA
Responsibilities for the Financial Statements (Ref: Para. 33–34)
A44. ISA 200 explains the premise, relating to the responsibilities of management
and, where appropriate, those charged with governance, on which an audit in
accordance with ISAs is conducted.33 Management and, where appropriate,
those charged with governance, accept responsibility for the preparation of
the financial statements in accordance with the applicable financial reporting
framework, including, where relevant, their fair presentation. Management also

30
ISA 210, paragraphs 9 and A22
31
ISA 210, paragraph 10
32
ISA 210, paragraph A25
33
ISA 200, paragraph 13(j)

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accepts responsibility for such internal control as it determines is necessary

to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error. The description of management’s
responsibilities in the auditor’s report includes reference to both responsibilities
as it helps to explain to users the premise on which an audit is conducted.
ISA 260 (Revised) uses the term those charged with governance to describe
the person(s) or organization(s) with responsibility for overseeing the entity,
and provides a discussion about the diversity of governance structures across
jurisdictions and by entity.
A45. There may be circumstances when it is appropriate for the auditor to add to
the descriptions of the responsibilities of management and those charged with
governance in paragraphs 34–35 to reflect additional responsibilities that are
relevant to the preparation of the financial statements in the context of the
particular jurisdiction or the nature of the entity.
A46. ISA 210 requires the auditor to agree management’s responsibilities in an
engagement letter or other suitable form of written agreement.34 ISA 210
provides some flexibility in doing so, by explaining that, if law or regulation
prescribes the responsibilities of management and, where appropriate, those
charged with governance, in relation to financial reporting, the auditor may
determine that the law or regulation includes responsibilities that, in the
auditor’s judgment, are equivalent in effect to those set out in ISA 210. For
such responsibilities that are equivalent, the auditor may use the wording of
the law or regulation to describe them in the engagement letter or other suitable
form of written agreement. In such cases, this wording may also be used in the
auditor’s report to describe the responsibilities as required by paragraph 34(a)
of this ISA. In other circumstances, including where the auditor decides not to
use the wording of law or regulation as incorporated in the engagement letter,
the wording in paragraph 34(a) of this ISA is used. In addition to including the
description of management’s responsibilities in the auditor’s report as required
by paragraph 34, the auditor may refer to a more detailed description of these
responsibilities by including a reference to where such information may be
obtained (e.g., in the annual report of the entity or a website of an appropriate
authority).
A47. In some jurisdictions, law or regulation prescribing management’s
responsibilities may specifically refer to a responsibility for the adequacy
of accounting books and records, or accounting system. As books, records
and systems are an integral part of internal control (as defined in ISA 315
(Revised)35), the descriptions in ISA 210 and in paragraph 34 do not make
specific reference to them.

34
ISA 210, paragraph 6(b)(i)–(ii)
35
ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through
Understanding the Entity and Its Environment, paragraph 4(c)

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A48. The Appendix to this ISA provides illustrations of how the requirement in
paragraph 34(b) would be applied when IFRSs is the applicable financial
reporting framework. If an applicable financial reporting framework other than
IFRSs is used, the illustrative statements featured in the Appendix to this ISA
may need to be adapted to reflect the application of the other financial reporting
framework in the circumstances.

Oversight of the financial reporting process (Ref: Para. 35)

A49. When some, but not all, of the individuals involved in the oversight of the
financial reporting process are also involved in preparing the financial
statements, the description as required by paragraph 35 of this ISA may need
to be modified to appropriately reflect the particular circumstances of the
entity. When individuals responsible for the oversight of the financial reporting
process are the same as those responsible for the preparation of the financial
statements, no reference to oversight responsibilities is required.

Auditor’s Responsibilities for the Audit of the Financial Statements (Ref: Para.
37–40)
A50. The description of the auditor’s responsibilities as required by paragraphs 37–
40 of this ISA may be tailored to reflect the specific nature of the entity, for
example, when the auditor’s report addresses consolidated financial statements.
Illustration 2 in the Appendix to this ISA includes an example of how this may
be done.

Objectives of the auditor (Ref: Para. 38(a))

A51. The auditor’s report explains that the objectives of the auditor are to obtain
reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes the auditor’s opinion. These are in contrast to
management’s responsibilities for the preparation for the financial statements.
ISA
Description of materiality (Ref: Para. 38(c))
A52. The Appendix to this ISA provides illustrations of how the requirement in
paragraph 38(c), to provide a description of materiality, would be applied when
IFRSs is the applicable financial reporting framework. If an applicable financial
reporting framework other than IFRSs is used, the illustrative statements
presented in the Appendix to this ISA may need to be adapted to reflect the
application of the other financial reporting framework in the circumstances.

Auditor’s responsibilities relating to ISA 701 (Ref: Para. 40(c))

A53. The auditor may also consider it useful to provide additional information
in the description of the auditor’s responsibilities beyond what is required

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by paragraph 40(c). For example, the auditor may make reference to the
requirement in paragraph 9 of ISA 701 to determine the matters that required
significant auditor attention in performing the audit, taking into account areas
of higher assessed risk of material misstatement or significant risks identified
in accordance with ISA 315 (Revised); significant auditor judgments relating
to areas in the financial statements that involved significant management
judgment, including accounting estimates that have been identified as having
high estimation uncertainty; and the effects on the audit of significant events or
transactions that occurred during the period.

Location of the description of the auditor’s responsibilities for the audit of the finan-
cial statements (Ref: Para. 41, 50(j))
A54. Including the information required by paragraphs 39–40 of this ISA in an
appendix to the auditor’s report or, when law, regulation or national auditing
standards expressly permit, referring to a website of an appropriate authority
containing such information may be a useful way of streamlining the content
of the auditor’s report. However, because the description of the auditor’s
responsibilities contains information that is necessary to inform users’
expectations of an audit conducted in accordance with ISAs, a reference is
required to be included in the auditor’s report indicating where such information
can be accessed.
Location in an appendix (Ref: Para. 41(b), 50(j))
A55. Paragraph 41 permits the auditor to include the statements required by
paragraphs 39–40 describing the auditor’s responsibilities for the audit of
the financial statements in an appendix to the auditor’s report, provided that
appropriate reference is made within the body of the auditor’s report to the
location of the appendix. The following is an illustration of how such a reference
to an appendix could be made in the auditor’s report:

Auditor’s Responsibilities for the Audit of the Financial

Statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.

ISA 700 (Revised) 730

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

A further description of our responsibilities for the audit of

the financial statements is included in appendix X of this
auditor’s report. This description, which is located at [indicate
page number or other specific reference to the location of the
description], forms part of our auditor’s report.

Reference to a website of an appropriate authority (Ref: Para. 41(c), 42)

A56. Paragraph 41 explains that the auditor may refer to a description of the auditor’s
responsibilities located on a website of an appropriate authority, only if expressly
permitted by law, regulation or national auditing standards. The information on
the website that is incorporated in the auditor’s report by way of a specific
reference to the website location where such information can be found may
describe the auditor’s work, or the audit in accordance with ISAs more broadly,
but it cannot be inconsistent with the description required in paragraphs 39–40
of this ISA. This means that the wording of the description of the auditor’s
responsibilities on the website may be more detailed, or may address other
matters relating to an audit of financial statements, provided that such wording
reflects and does not contradict the matters addressed in paragraphs 39–40.
A57. An appropriate authority could be a national auditing standard setter, regulator,
or an audit oversight body. Such organizations are well-placed to ensure
the accuracy, completeness and continued availability of the standardized
information. It would not be appropriate for the auditor to maintain such a
website. The following is an illustration of how such a reference to a website
could be made in the auditor’s report:
Auditor’s Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
ISA
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the
financial statements is located at [Organization’s] website at:
[website address]. This description forms part of our auditor’s
report.

731 ISA 700 (Revised)

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Other Reporting Responsibilities (Ref: Para. 43–45)

A58. In some jurisdictions, the auditor may have additional responsibilities to report
on other matters that are supplementary to the auditor’s responsibilities under
the ISAs. For example, the auditor may be asked to report certain matters if they
come to the auditor’s attention during the course of the audit of the financial
statements. Alternatively, the auditor may be asked to perform and report on
additional specified procedures, or to express an opinion on specific matters,
such as the adequacy of accounting books and records, internal control over
financial reporting or other information. Auditing standards in the specific
jurisdiction often provide guidance on the auditor’s responsibilities with respect
to specific additional reporting responsibilities in that jurisdiction.
A59. In some cases, the relevant law or regulation may require or permit the auditor
to report on these other responsibilities as part of their auditor’s report on the
financial statements. In other cases, the auditor may be required or permitted to
report on them in a separate report.
A60. Paragraphs 43–45 of this ISA permit combined presentation of other reporting
responsibilities and the auditor’s responsibilities under the ISAs only when
they address the same topics and the wording of the auditor’s report clearly
differentiates the other reporting responsibilities from those under the ISAs.
Such clear differentiation may make it necessary for the auditor’s report to
refer to the source of the other reporting responsibilities and to state that such
responsibilities are beyond those required under the ISAs. Otherwise, other
reporting responsibilities are required to be addressed in a separate section in
the auditor’s report with a heading “Report on Other Legal and Regulatory
Requirements,” or otherwise as appropriate to the content of the section. In such
cases, paragraph 44 requires the auditor to include reporting responsibilities
under the ISAs under a heading titled “Report on the Audit of the Financial
Statements.”

Name of the Engagement Partner (Ref: Para. 46)

A61. ISQC 136 requires that the firm establish policies and procedures to provide
reasonable assurance that engagements are performed in accordance with
professional standards and applicable legal and regulatory requirements.
Notwithstanding these ISQC 1 requirements, naming the engagement partner
in the auditor’s report is intended to provide further transparency to the users of
the auditor’s report on financial statements of a listed entity.

36
ISQC 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and
Other Assurance and Related Services Engagements, paragraph 32

ISA 700 (Revised) 732

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

A62. Law, regulation or national auditing standards may require that the auditor’s
report include the name of the engagement partner responsible for audits other
than those of financial statements of listed entities. The auditor may also be
required by law, regulation or national auditing standards, or may decide to
include additional information beyond the engagement partner’s name in
the auditor’s report to further identify the engagement partner, for example,
the engagement partner’s professional license number that is relevant to the
jurisdiction where the auditor practices.
A63. In rare circumstances, the auditor may identify information or be subject to
experiences that indicate the likelihood of a personal security threat that, if the
identity of the engagement partner is made public, may result in physical harm
to the engagement partner, other engagement team members or other closely
related individuals. However, such a threat does not include, for example, threats
of legal liability or legal, regulatory or professional sanctions. Discussions with
those charged with governance about circumstances that may result in physical
harm may provide additional information about the likelihood or severity of
the significant personal security threat. Law, regulation or national auditing
standards may establish further requirements that are relevant to determining
whether the disclosure of the name of the engagement partner may be omitted.

Signature of the Auditor (Ref: Para. 47)

A64. The auditor’s signature is either in the name of the audit firm, the personal name
of the auditor or both, as appropriate for the particular jurisdiction. In addition
to the auditor’s signature, in certain jurisdictions, the auditor may be required to
declare in the auditor’s report the auditor’s professional accountancy designation
or the fact that the auditor or firm, as appropriate, has been recognized by the
appropriate licensing authority in that jurisdiction.
A65. In some cases, law or regulation may allow for the use of electronic signatures
in the auditor’s report.
ISA
Date of the Auditor’s Report (Ref: Para. 49)
A66. The date of the auditor’s report informs the user of the auditor’s report that the
auditor has considered the effect of events and transactions of which the auditor
became aware and that occurred up to that date. The auditor’s responsibility for
events and transactions after the date of the auditor’s report is addressed in ISA
560.37
A67. Since the auditor’s opinion is provided on the financial statements and the
financial statements are the responsibility of management, the auditor is not
in a position to conclude that sufficient appropriate audit evidence has been
obtained until evidence is obtained that all the statements and disclosures that

37
ISA 560, Subsequent Events, paragraphs 10–17

733 ISA 700 (Revised)

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

comprise the financial statements have been prepared and management has
accepted responsibility for them.
A68. In some jurisdictions, law or regulation identifies the individuals or bodies
(e.g., the directors) that are responsible for concluding that all the statements
and disclosures that comprise the financial statements have been prepared, and
specifies the necessary approval process. In such cases, evidence is obtained
of that approval before dating the report on the financial statements. In
other jurisdictions, however, the approval process is not prescribed in law or
regulation. In such cases, the procedures the entity follows in preparing and
finalizing its financial statements in view of its management and governance
structures are considered in order to identify the individuals or body with
the authority to conclude that all the statements that comprise the financial
statements, including the related notes, have been prepared. In some cases, law
or regulation identifies the point in the financial statement reporting process at
which the audit is expected to be complete.
A69. In some jurisdictions, final approval of the financial statements by shareholders
is required before the financial statements are issued publicly. In these
jurisdictions, final approval by shareholders is not necessary for the auditor to
conclude that sufficient appropriate audit evidence has been obtained. The date
of approval of the financial statements for purposes of ISAs is the earlier date
on which those with the recognized authority determine that all the statements
and disclosures that comprise the financial statements have been prepared and
that those with the recognized authority have asserted that they have taken
responsibility for them.

Auditor’s Report Prescribed by Law or Regulation (Ref: Para. 50)

A70. ISA 200 explains that the auditor may be required to comply with legal or
regulatory requirements in addition to ISAs.38 When the differences between
the legal or regulatory requirements and ISAs relate only to the layout and
wording of the auditor’s report, the requirements in paragraph 50(a)–(o) set
out the minimum elements to be included in the auditor’s report to enable a
reference to the International Standards on Auditing. In those circumstances,
the requirements in paragraphs 21–49 that are not included in paragraph 50(a)–
(o) do not need to be applied including, for example, the required ordering of
the Opinion and Basis for Opinion sections.
A71. Where specific requirements in a particular jurisdiction do not conflict with
ISAs, the layout and wording required by paragraphs 21–49 of this ISA assist
users of the auditor’s report in more readily recognizing the auditor’s report as
a report of an audit conducted in accordance with ISAs.

38
ISA 200, paragraph A57

ISA 700 (Revised) 734

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Information Required by ISA 701 (Ref: Para. 50(h))

A72. Law or regulation may require the auditor to provide additional information
about the audit that was performed, which may include information that is
consistent with the objectives of ISA 701, or may prescribe the nature and
extent of communication about such matters.
A73. The ISAs do not override law or regulation that governs an audit of financial
statements. When ISA 701 is applicable, reference can only be made to ISAs in
the auditor’s report if, in applying the law or regulation, the section required by
paragraph 50(h) of this ISA is not inconsistent with the reporting requirements
in ISA 701. In such circumstances, the auditor may need to tailor certain aspects
of the communication of key audit matters in the auditor’s report required by
ISA 701, for example by:
•• Modifying the heading “Key Audit Matters”, if law or regulation
prescribes a specific heading;
•• Explaining why the information required by law or regulation is being
provided in the auditor’s report, for example by making a reference
to the relevant law or regulation and describing how that information
relates to the key audit matters;
•• Where law or regulation prescribes the nature and extent of the
description, supplementing the prescribed information to achieve an
overall description of each key audit matter that is consistent with the
requirement in paragraph 13 of ISA 701.
A74. ISA 210 deals with circumstances where law or regulation of the relevant
jurisdiction prescribes the layout or wording of the auditor’s report in terms that
are significantly different from the requirements of ISAs, which in particular
includes the auditor’s opinion. In these circumstances, ISA 210 requires the
auditor to evaluate:
(a) Whether users might misunderstand the assurance obtained from the ISA
audit of the financial statements and, if so,
(b) Whether additional explanation in the auditor’s report can mitigate
possible misunderstanding.
If the auditor concludes that additional explanation in the auditor’s report can-
not mitigate possible misunderstanding, ISA 210 requires the auditor not to
accept the audit engagement, unless required by law or regulation to do so.
In accordance with ISA 210, an audit conducted in accordance with such law
or regulation does not comply with ISAs. Accordingly, the auditor does not
include any reference in the auditor’s report to the audit having been conducted
in accordance with International Standards on Auditing.39

39
ISA 210, paragraph 21

735 ISA 700 (Revised)

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Considerations specific to public sector entities

A75. Auditors of public sector entities may also have the ability pursuant to law or
regulation to report publicly on certain matters, either in the auditor’s report
or in a supplementary report, which may include information that is consistent
with the objectives of ISA 701. In such circumstances, the auditor may need to
tailor certain aspects of the communication of key audit matters in the auditor’s
report required by ISA 701 or include a reference in the auditor’s report to a
description of the matter in the supplementary report.

Auditor’s Report for Audits Conducted in Accordance with Both Auditing Standards
of a Specific Jurisdiction and International Standards on Auditing (Ref: Para. 51)
A76. The auditor may refer in the auditor’s report to the audit having been conducted
in accordance with both International Standards on Auditing as well as the
national auditing standards when, in addition to complying with the relevant
national auditing standards, the auditor complies with each of the ISAs relevant
to the audit.40
A77. A reference to both International Standards on Auditing and the national auditing
standards is not appropriate if there is a conflict between the requirements in
ISAs and those in the national auditing standards that would lead the auditor
to form a different opinion or not to include an Emphasis of Matter or Other
Matter paragraph that, in the particular circumstances, is required by ISAs. In
such a case, the auditor’s report refers only to the auditing standards (either
International Standards on Auditing or the national auditing standards) in
accordance with which the auditor’s report has been prepared.

Supplementary Information Presented with the Financial Statements (Ref:

Para. 53–54)
A78. In some circumstances, the entity may be required by law, regulation or
standards, or may voluntarily choose, to present together with the financial
statements supplementary information that is not required by the applicable
financial reporting framework. For example, supplementary information might
be presented to enhance a user’s understanding of the applicable financial
reporting framework or to provide further explanation of specific financial
statement items. Such information is normally presented in either supplementary
schedules or as additional notes.
A79. Paragraph 53 of this ISA explains that the auditor’s opinion covers supplementary
information that is an integral part of the financial statements because of
its nature or how it is presented. This evaluation is a matter of professional
judgment. To illustrate:
•• When the notes to the financial statements include an explanation or the
reconciliation of the extent to which the financial statements comply with

40
ISA 200, paragraph A58

ISA 700 (Revised) 736

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

another financial reporting framework, the auditor may consider this to

be supplementary information that cannot be clearly differentiated from
the financial statements. The auditor’s opinion would also cover notes
or supplementary schedules that are cross-referenced from the financial
statements.
•• When an additional profit and loss account that discloses specific
items of expenditure is disclosed as a separate schedule included as an
Appendix to the financial statements, the auditor may consider this to be
supplementary information that can be clearly differentiated from the
financial statements.
A80. Supplementary information that is covered by the auditor’s opinion does not
need to be specifically referred to in the auditor’s report when the reference
to the notes in the description of the statements that comprise the financial
statements in the auditor’s report is sufficient.
A81. Law or regulation may not require that the supplementary information be
audited, and management may decide to ask the auditor not to include the
supplementary information within the scope of the audit of the financial
statements.
A82. The auditor’s evaluation whether unaudited supplementary information is
presented in a manner that could be construed as being covered by the auditor’s
opinion includes, for example, where that information is presented in relation
to the financial statements and any audited supplementary information, and
whether it is clearly labeled as “unaudited.”
A83. Management could change the presentation of unaudited supplementary
information that could be construed as being covered by the auditor’s opinion,
for example, by:
•• Removing any cross-references from the financial statements to unaudited
supplementary schedules or unaudited notes so that the demarcation ISA
between the audited and unaudited information is sufficiently clear.
•• Placing the unaudited supplementary information outside of the financial
statements or, if that is not possible in the circumstances, at a minimum
placing the unaudited notes together at the end of the required notes to the
financial statements and clearly labeling them as unaudited. Unaudited
notes that are intermingled with the audited notes can be misinterpreted
as being audited.
A84. The fact that supplementary information is unaudited does not relieve the
auditor of the responsibilities described in ISA 720 (Revised).

737 ISA 700 (Revised)

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Appendix
(Ref: Para. A19)

Illustrations of Independent Auditor’s Reports on Financial

Statements
•• Illustration 1: An auditor’s report on financial statements of a listed entity
prepared in accordance with a fair presentation framework
•• Illustration 2: An auditor’s report on consolidated financial statements of a
listed entity prepared in accordance with a fair presentation framework
•• Illustration 3: An auditor’s report on financial statements of an entity other than
a listed entity prepared in accordance with a fair presentation framework (where
reference is made to material that is located on a website of an appropriate
authority)
•• Illustration 4: An auditor’s report on financial statements of an entity other
than a listed entity prepared in accordance with a general purpose compliance
framework

ISA 700 (revised) appendix 738

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Illustration 1 – Auditor’s Report on Financial Statements of a Listed Entity

Prepared in Accordance with a Fair Presentation Framework
For purposes of this illustrative auditor’s report, the following circumstances
are assumed:
•• Audit of a complete set of financial statements of a listed entity using a
fair presentation framework. The audit is not a group audit (i.e., ISA 600
does not apply).
•• The financial statements are prepared by management of the entity in
accordance with IFRSs (a general purpose framework).
•• The terms of the audit engagement reflect the description of management’s
responsibility for the financial statements in ISA 210.
•• The auditor has concluded an unmodified (i.e., “clean”) opinion is
appropriate based on the audit evidence obtained.
•• The relevant ethical requirements that apply to the audit comprise the
International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants together with the ethical requirements relating to
the audit in the jurisdiction, and the auditor refers to both.
•• Based on the audit evidence obtained, the auditor has concluded that a
material uncertainty does not exist related to events or conditions that
may cast significant doubt on the entity’s ability to continue as a going
concern in accordance with ISA 570 (Revised).
•• Key audit matters have been communicated in accordance with ISA 701.
•• The auditor has obtained all of the other information prior to the date of
the auditor’s report and has not yet identified a material misstatement
of the other information.
•• Those responsible for oversight of the financial statements differ from ISA
those responsible for the preparation of the financial statements.
•• In addition to the audit of the financial statements, the auditor has other
reporting responsibilities required under local law.

739 ISA 700 (revised) appendix

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of ABC Company [or Other Appropriate Addressee]

Report on the Audit of the Financial Statements1

Opinion
We have audited the financial statements of ABC Company (the Company), which
comprise the statement of financial position as at December 31, 20X1, and the
statement of comprehensive income, statement of changes in equity and statement of
cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material
respects, (or give a true and fair view of) the financial position of the Company as at
December 31, 20X1, and (of) its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing
(ISAs). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Company in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code)
together with the ethical requirements that are relevant to our audit of the financial
statements in [jurisdiction], and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters
were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
[Description of each key audit matter in accordance with ISA 701.]

Other Information [or another title if appropriate such as “Information Other

than the Financial Statements and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ISA 720 (Revised) – see
Illustration 1 in Appendix 2 of ISA 720 (Revised).]

1
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when
the second sub-title “Report on Other Legal and Regulatory Requirements” is not applicable.

ISA 700 (revised) appendix 740

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Responsibilities of Management and Those Charged with Governance for the

Financial Statements2
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with IFRSs,3 and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial
reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
Paragraph 41(b) of this ISA explains that the shaded material below can be located in an Appendix to
the auditor’s report. Paragraph 41(c) explains that when law, regulation or national auditing standards
expressly permit, reference can be made to a website of an appropriate authority that contains the
description of the auditor’s responsibilities, rather than including this material in the auditor’s report,
provided that the description on the website addresses, and is not inconsistent with, the description of
the auditor’s responsibilities below.

As part of an audit in accordance with ISAs, we exercise professional judgment and

ISA
maintain professional skepticism throughout the audit. We also:
•• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting

2
Throughout these illustrative auditor’s reports, the terms management and those charged with
governance may need to be replaced by another term that is appropriate in the context of the legal
framework in the particular jurisdiction.
3
Where management’s responsibility is to prepare financial statements that give a true and fair view,
this may read: “Management is responsible for the preparation of financial statements that give a true
and fair view in accordance with International Financial Reporting Standards, and for such ...”

741 ISA 700 (revised) appendix

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.
•• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company’s
internal control.4
•• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
•• Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to
continue as a going concern.
•• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.

We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements
of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.

4
This sentence would be modified, as appropriate, in circumstances when the auditor also has a
responsibility to issue an opinion on the effectiveness of internal control in conjunction with the audit
of the financial statements.

ISA 700 (revised) appendix 742

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Report on Other Legal and Regulatory Requirements

[The form and content of this section of the auditor’s report would vary depending
on the nature of the auditor’s other reporting responsibilities prescribed by local
law, regulation or national auditing standards. The matters addressed by other
law, regulation or national auditing standards (referred to as “other reporting
responsibilities”) shall be addressed within this section unless the other reporting
responsibilities address the same topics as those presented under the reporting
responsibilities required by the ISAs as part of the Report on the Audit of the Financial
Statements section. The reporting of other reporting responsibilities that address
the same topics as those required by the ISAs may be combined (i.e., included in
the Report on the Audit of the Financial Statements section under the appropriate
subheadings) provided that the wording in the auditor’s report clearly differentiates
the other reporting responsibilities from the reporting that is required by the ISAs
where such a difference exists.
The engagement partner on the audit resulting in this independent auditor’s report is
[name].
[Signature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor Address]

[Date]

ISA

743 ISA 700 (revised) appendix

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Illustration 2 – Auditor’s Report on Consolidated Financial Statements of a

Listed Entity Prepared in Accordance with a Fair Presentation Framework

For purposes of this illustrative auditor’s report, the following circumstances

are assumed:

•• Audit of a complete set of consolidated financial statements of a listed

entity using a fair presentation framework. The audit is a group audit of
an entity with subsidiaries (i.e., ISA 600 applies).
•• The consolidated financial statements are prepared by management of the
entity in accordance with IFRSs (a general purpose framework).
•• The terms of the audit engagement reflect the description of management’s
responsibility for the consolidated financial statements in ISA 210.
•• The auditor has concluded an unmodified (i.e., “clean”) opinion is
appropriate based on the audit evidence obtained.
•• The International Ethics Standards Board for Accountants’ Code of
Ethics for Professional Accountants comprises all of the relevant ethical
requirements that apply to the audit.
•• Based on the audit evidence obtained, the auditor has concluded that a
material uncertainty does not exist related to events or conditions that
may cast significant doubt on the entity’s ability to continue as a going
concern in accordance with ISA 570 (Revised).
•• Key audit matters have been communicated in accordance with ISA 701.
•• The auditor has obtained all of the other information prior to the date of the
auditor’s report and has not identified a material misstatement of the other
information.
•• Those responsible for oversight of the consolidated financial statements
differ from those responsible for the preparation of the consolidated
financial statements.
•• In addition to the audit of the consolidated financial statements, the auditor
has other reporting responsibilities required under local law.

ISA 700 (revised) appendix 744

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of ABC Company [or Other Appropriate Addressee]

Report on the Audit of the Consolidated Financial Statements5

Opinion
We have audited the consolidated financial statements of ABC Company and its
subsidiaries (the Group), which comprise the consolidated statement of financial
position as at December 31, 20X1, and the consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of
cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly,
in all material respects, (or give a true and fair view of) the consolidated financial
position of the Group as at December 31, 20X1, and (of) its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance
with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing
(ISAs). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements section of our
report. We are independent of the Group in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA
Code), and we have fulfilled our other ethical responsibilities in accordance with the
IESBA Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most ISA
significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.

[Description of each key audit matter in accordance with ISA 701.]

Other Information [or another title if appropriate such as “Information Other

than the Financial Statements and Auditor’s Report Thereon”]

[Reporting in accordance with the reporting requirements in ISA 720 (Revised) – see
Illustration 1 in Appendix 2 of ISA 720 (Revised).]

5
The sub-title “Report on the Audit of the Consolidated Financial Statements” is unnecessary in circum­
stances when the second sub-title “Report on Other Legal and Regulatory Requirements” is not applicable.

745 ISA 700 (revised) appendix

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Responsibilities of Management and Those Charged with Governance for the

Consolidated Financial Statements6
Management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with IFRSs,7 and for such internal control as
management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has
no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial
reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial

Statements
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
Paragraph 41(b) of this ISA explains that the shaded material below can be located in an Appendix to
the auditor’s report. Paragraph 41(c) explains that when law, regulation or national auditing standards
expressly permit, reference can be made to a website of an appropriate authority that contains the
description of the auditor’s responsibilities, rather than including this material in the auditor’s report,
provided that the description on the website addresses, and is not inconsistent with, the description of
the auditor’s responsibilities below.

As part of an audit in accordance with ISAs, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:
•• Identify and assess the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of

6
Or other terms that are appropriate in the context of the legal framework of the particular jurisdiction
7
Where management’s responsibility is to prepare financial statements that give a true and fair view,
this may read: “Management is responsible for the preparation of financial statements that give a true
and fair view in accordance with International Financial Reporting Standards, and for such ...”

ISA 700 (revised) appendix 746

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
•• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.8
•• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
•• Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
•• Evaluate the overall presentation, structure and content of the consolidated
financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
•• Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion. ISA
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated

8
This sentence would be modified, as appropriate, in circumstances when the auditor also has a
responsibility to issue an opinion on the effectiveness of internal control in conjunction with the audit
of the consolidated financial statements.

747 ISA 700 (revised) appendix

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

[The form and content of this section of the auditor’s report would vary depending
on the nature of the auditor’s other reporting responsibilities prescribed by local
law, regulation, or national auditing standards. The matters addressed by other
law, regulation or national auditing standards (referred to as “other reporting
responsibilities”) shall be addressed within this section unless the other reporting
responsibilities address the same topics as those presented under the reporting
responsibilities required by the ISAs as part of the Report on the Audit of the Consolidated
Financial Statements section. The reporting of other reporting responsibilities that
address the same topics as those required by the ISAs may be combined (i.e., included
in the Report on the Audit of the Consolidated Financial Statements section under the
appropriate subheadings) provided that the wording in the auditor’s report clearly
differentiates the other reporting responsibilities from the reporting that is required by
the ISAs where such a difference exists.]
The engagement partner on the audit resulting in this independent auditor’s report is
[name].
[Signature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor Address]

[Date]

ISA 700 (revised) appendix 748

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Illustration 3 – Auditor’s Report on Financial Statements of an Entity

Other than a Listed Entity Prepared in Accordance with a Fair Presentation
Framework
For purposes of this illustrative auditor’s report, the following circumstances
are assumed:
•• Audit of a complete set of financial statements of an entity other than
a listed entity using a fair presentation framework. The audit is not a
group audit (i.e., ISA 600 does not apply).
•• The financial statements are prepared by management of the entity in
accordance with IFRSs (a general purpose framework).
•• The terms of the audit engagement reflect the description of management’s
responsibility for the financial statements in ISA 210.
•• The auditor has concluded an unmodified (i.e., “clean”) opinion is
appropriate based on the audit evidence obtained.
•• The relevant ethical requirements that apply to the audit are those of the
jurisdiction.
•• Based on the audit evidence obtained, the auditor has concluded that a
material uncertainty does not exist related to events or conditions that may
cast significant doubt on the entity’s ability to continue as a going concern
in accordance with ISA 570 (Revised).
•• The auditor is not required, and has otherwise not decided, to communicate
key audit matters in accordance with ISA 701.
•• The auditor has obtained all of the other information prior to the date of
the auditor’s report and has not identified a material misstatement of the
other information.
•• Those responsible for oversight of the financial statements differ from ISA
those responsible for the preparation of the financial statements.
•• The auditor has no other reporting responsibilities required under local law.
•• The auditor elects to refer to the description of the auditor’s responsibility
included on a website of an appropriate authority.

749 ISA 700 (revised) appendix

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of ABC Company [or Other Appropriate Addressee]

Opinion
We have audited the financial statements of ABC Company (the Company), which
comprise the statement of financial position as at December 31, 20X1, and the
statement of comprehensive income, statement of changes in equity and statement of
cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material
respects, (or give a true and fair view of) the financial position of the Company as at
December 31, 20X1, and (of) its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing
(ISAs). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We
are independent of the Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Other Information [or another title if appropriate such as “Information Other
than the Financial Statements and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ISA 720 (Revised) – see
Illustration 1 in Appendix 2 of ISA 720 (Revised).]
Responsibilities of Management and Those Charged with Governance for the
Financial Statements9
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with IFRSs,10 and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless

9
Or other terms that are appropriate in the context of the legal framework of the particular jurisdiction
10
Where management’s responsibility is to prepare financial statements that give a true and fair view,
this may read: “Management is responsible for the preparation of financial statements that give a true
and fair view in accordance with International Financial Reporting Standards, and for such ...”

ISA 700 (revised) appendix 750

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

management either intends to liquidate the Company or to cease operations, or has no

realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial
reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
A further description of the auditor’s responsibilities for the audit of the financial
statements is located at [Organization’s] website at: [website link]. This description
forms part of our auditor’s report.
[Signature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor Address]
[Date]

ISA

751 ISA 700 (revised) appendix

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Illustration 4 – Auditor’s Report on Financial Statements of an Entity

Other than a Listed Entity Prepared in Accordance with a General Purpose
Compliance Framework

For purposes of this illustrative auditor’s report, the following circumstances

are assumed:

•• Audit of a complete set of financial statements of an entity other than a

listed entity required by law or regulation. The audit is not a group audit
(i.e., ISA 600 does not apply).
•• The financial statements are prepared by management of the entity in
accordance with the Financial Reporting Framework (XYZ Law) of
Jurisdiction X (that is, a financial reporting framework, encompassing law
or regulation, designed to meet the common financial information needs of a
wide range of users, but which is not a fair presentation framework).
•• The terms of the audit engagement reflect the description of management’s
responsibility for the financial statements in ISA 210.
•• The auditor has concluded an unmodified (i.e., “clean”) opinion is
appropriate based on the audit evidence obtained.
•• The relevant ethical requirements that apply to the audit are those of the
jurisdiction.
•• Based on the audit evidence obtained, the auditor has concluded that a
material uncertainty does not exist related to events or conditions that may
cast significant doubt on the entity’s ability to continue as a going concern in
accordance with ISA 570 (Revised).
•• The auditor is not required, and has otherwise not decided, to communicate
key audit matters in accordance with ISA 701.
•• The auditor has obtained all of the other information prior to the date of the
auditor’s report and has not identified a material misstatement of the other
information.
•• Those responsible for oversight of the financial statements differ from those
responsible for the preparation of the financial statements.
•• The auditor has no other reporting responsibilities required under local law.

ISA 700 (revised) appendix 752

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

[Appropriate Addressee]

Opinion
We have audited the financial statements of ABC Company (the Company), which
comprise the balance sheet as at December 31, 20X1, and the income statement,
statement of changes in equity and cash flow statement for the year then ended, and
notes to the financial statements, including a summary of significant accounting
policies.
In our opinion, the accompanying financial statements of the Company are prepared,
in all material respects, in accordance with XYZ Law of Jurisdiction X.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing
(ISAs). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We
are independent of the Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled
our other responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Other Information [or another title if appropriate such as “Information Other

than the Financial Statements and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ISA 720 (Revised) – see
Illustration 1 in Appendix 2 of ISA 720 (Revised).]

Responsibilities of Management and Those Charged with Governance for the

Financial Statements11
ISA
Management is responsible for the preparation of the financial statements in accordance
with XYZ Law of Jurisdiction X,12 and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.

Or other terms that are appropriate in the context of the legal framework of the particular jurisdiction
11

12
Where management’s responsibility is to prepare financial statements that give a true and fair view,
this may read: “Management is responsible for the preparation of financial statements that give a true
and fair view in accordance with International Financial Reporting Standards, and for such ...”

753 ISA 700 (revised) appendix

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

Those charged with governance are responsible for overseeing the Company’s financial
reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
Paragraph 41(b) of this ISA explains that the shaded material below can be located in an Appendix to
the auditor’s report. Paragraph 41(c) explains that when law, regulation or national auditing standards
expressly permit, reference can be made to a website of an appropriate authority that contains the
description of the auditor’s responsibilities, rather than including this material in the auditor’s report,
provided that the description on the website addresses, and is not inconsistent with, the description of
the auditor’s responsibilities below.

As part of an audit in accordance with ISAs, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:
•• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
•• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company’s
internal control.13
•• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
•• Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention

13
This sentence would be modified, as appropriate, in circumstances when the auditor also has
responsibility to issue an opinion on the effectiveness of internal control in conjunction with the audit
of the financial statements.

ISA 700 (revised) appendix 754

 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

in our auditor’s report to the related disclosures in the financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to
continue as a going concern.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.
[Signature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor Address]
[Date]

ISA

755 ISA 700 (revised) appendix