1.

Purpose
KEY BOOK
Topic
SA 700
Keywords

FORMING AN OPINION AND REPORTING ON THE FS

Applies to GPFS, Brings global consistency & comparability in AR, promote user's
Mnemonics

understanding and focus on unusual matters

2. Forming an opinion on the FS 1. FS as per FRFW,
2. Obtain RA that FS free from MM,
3. if FP-FW, whether ossverall presentation and FS including notes presented to
achieve fair presentation
3. Basic elements of the Auditor’s
Report
A Title Independent Auditor's Report
B Addressee Company - Members, Other - As appropriate
C Auditor’s opinion Intro section:
Entity name, Fact audit done, Title of each FS, Reference to notes incl a/cing policies
and period covered
Unmodified Opinion Section:
a) Compliance FW - In our opinion accompany FS are prepared in all material
respect in accordance with A_FRFW
b) Fair Presentation FW - In our opinion the accompanying FS present fairly or give
a T&F view of (state of affairs, profit/loss, cash flows, changes in equity -
BS/PL/CFS/SOCIE) and are prepared in accordance with A-FRFW
D Basis for opinion 1. SAs - Audit as per Sas
2. REs - Responsibility under SA elaborated in other section
3. REs - Independent + Other ethical responsibility fulfilled
4. SAAE - AE is S&A to base opinion
E Going concern - As per SA 570
- Para on MU-GC given additionally when MU exists, MGT has disclosed the MU and
its future plans to overcome, auditor concludes entity to be a GC, and highlights
Mgt disclosure here
- Remember where qualified or adverse opinion required for GC then this para not
relevant
F Responsibilities of Management (a) Preparing FS as per A-FRFW + IC to enable preparation of FS free from MM.
for the FS (& TCWG if any) (b) Assessing the entity’s ability to continue as going concern.
(c) Identify those responsible for the oversight of FR.
G Auditor’s Responsibilities for the 1. Objectives of Auditor
audit of FS 2. Responsibility in Audit of FS
3. Additional Matters to be included in Auditor's Responsibilities Para
4. Location of A-Resp for audit of FS para - In body/AS appendix within report/Where
Law permits on website with reference in report
1. Objectives of Auditor 1. To obtain RA and issue report
2. RA = high assurance but not guarantee
3. Misstatement may arise from F or E and

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 KEY BOOK
Topic

2. Responsibility in Audit of
FS -
Keywords

4. When misstatement treated as material with definition of materiality as per FRFW

1. PJ & PS,
2. Description of auditor's responsibility –
Mnemonics

(i) I&A ROMM and apply AP responsive to risk +

(ii) Obtain understanding of IC relevant to audit +
(iii) Evaluate appropriateness of a. A Policies; b. AEst; c. Disclosure
(iv) Aptness of GC assumption
(v) Overall presentation structure of FS
3. Responsibility in case of group engagement SA 600
3. Additional Matters to be Auditor communicates with TCWG:
included in Auditor's 1. Planned Scope & Timing, Significant Findings and IC deficiencies
Responsibilities Para 2. Statement of compliance with ethical req. incl. independence
(TCWG Related) 3. KAM if reported
H Other Reporting Responsibilities Report on Other Legal Requirements (well differentiated from auditor's resp. under
SAs. Matters like S143(3), CARO, etc.
I Signature, etc Individual - Name and M No
Firm - Name of auditor and firm, M No and Firm Reg No
Place where report signed + Date of Auditor's report (not before SAAE obtained)
4. Auditor’s Report Prescribed by Law Wordings provided by Lor R then mention AUDIT AS PER SAs only if minimum
or Regulation following elements included:
1. Title, Addressee, Opinion section with reference to FRFW and identification of FS
with fact that they have been audited
2. Statement of independence + ethical requirement fulfillment + reference to code
of ethics
3. SA 570 like section where applicable
4. Basis of Qualified/Adverse Opinion para
5. Para as required under SA 701, 720, where applicable
6. Description to MGT resp.
7. Auditor's resp. with reference to SA + LorR
8. Auditor's signature, place and date of report
Above information to be provided with content similar to as required under Sas
5. Auditor’s Report for Audits Refer to SA and other SA both (and identify their jurisdiction separately in the
Conducted in Accordance with Both report) in AR only if:
SA Issued by ICAI and International 1. No conflict leading to difference opinion / EOM / OM para
Standards on Auditing or Auditing 2. Minimum elements of AR as discussed above where AR prescribed by LorR, to be
Standards of Any Other Jurisdiction included
6. Supplementary Information 1. If integral part of FS - To be audited by auditor (Say additional EPS with
Presented with the FS (SI) calculations disclosed with BEPS and DEPS)
SI - Information presented with FS 2. If not integral to FS but not clearly differentiated in the FS - Ask MGT to correct,
but not required to be presented as if refuses, identify UNAUDITED SI in AR (Eg Additional P&L with specific exp
per A-FRFW presented - Usually can be clearly differentiated)

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 KEY BOOK
Topic Keywords

3. Notes include explanation how FS comply with another FRFW- Such case
differentiation not possible, treat notes/supplementary schedules as integral part
of FS and cover under audit
Mnemonics

SA 701 COMMUNICATING KAM IN THE INDEPENDENT AUDITOR’S REPORT

1. Scope of this SA
2. Purpose 1. Enhance communicative value of AR
2. Provide additional information to intender user (IU) of KAM
3. May assist in understanding entity and MGT judgements better
3. Scope: KAM Not 1. Substitute for DISCLOSURE in FS
2. Substitute for MODIFICATION reporting
3. Substitute for GC - SA 570 reporting
4. Separate Option on individual matter
4. Applicability - Listed companies GPFS audit – Mandatory
- Others - If Lor R demands, or auditor decides to report
- Disclaimer of Opinion - No KAM reported unless LorR requires
- Where Mandatory and no KAM to report - Include KAM para specifying this fact
in AR
5. Definition Those matters that in auditor's PJ were of most significance in the audit of FS of the
current period.
1 Determining KAM 1. Reported from matter communicated to TCWG, that needed significant attention
2. Matters with:
a. Higher assessed ROMM, significant risk areas
b. Involves sign. MGT judgement incl Aest with high EU
c. Significant EorT during the period
Examples: Impairment, Valuation of FI, Provision for contingencies, Revere
recognition, tax matters etc.
2 Communicating KAM
A. Introductory language KAM those matters that in auditor's PJ were of most significant in the audit of FS of
current period and identified for FS as a whole with no separate opinion provided
B. Description of individual KAM Reference to each KAM to include reference to related disclosure + Why of most
significance + How addressed in audit
C. KAM not reported 1. If LorR prohibits disclosure or
2. Extremely Rare - As adverse consequences of reporting > public benefits of
reporting such matter and info not already publicly available
D. KAM Vs Other elements in AR SA 705 modification, or SA 570 MU-GC - Report such matter under other SAs and
include a reference to the Basis for modified opinion or MU-GC para in the KAM
section as by nature these matters could be KAM
3 Communication with TCWG Communicate matters determined to be KAM/fact that no KAM to report
4 Documentation 1. Matters needing sign. auditor attention - Fact whether it is KAM or not
2. Rationale for no KAM reported
3. Rationale for not reporting a KAM

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 KEY BOOK
Topic

SA 705
Keywords

MODIFICATIONS TO THE OPINION IN THE INDEPENDENT AUDITOR’S

REPORT
Mnemonics

1. Scope of this SA When opinion modified

2. Types of Modified Opinions 3 types - QO, AO, DOO
4. Definitions - Pervasive - Used in context of Misstatement (M)
- describes effect of or possible effect (where SAAE not available) of M
- Termed as pervaise when in auditor's judgement it is:
a. not confined to single element of FS
b. if confined, represent substantial portion of FS, or
c. In relation to disclosure in Fundamental to users understanding of FS
5. Determining the type of UMM + Pervasive = Adverse (AO)
Modification to the Auditor’s Unable to Obtain SAAE + Pervasive = Disclaimer (DOO)
Opinion UMM / Unable to obtain SAAE + non-Pervasive = Qualified (QO)
6. Consequence of an Inability to 1. Ask MGT to remove, if MGT refuses talk to TCWG unless they are involved in MGT
Obtain SAAE Due to a Management 2. Assess alternate AE available?
Imposed Limitation after the 3. If not available - possible effect of MM if
Auditor has Accepted the (a) non-pervasive – QO
Engagement (b) pervasive - Consider withdrawal, if not practicable then DOO
7. If the Auditor Decides to Withdraw 1. Communicate TCWG - matters leading to modification op opinion
2. Comple with Listing agreement directive (Resigns:
a. within 45 days of quarter end - report on previous quarter
b. after 45 days of quarter - report of next quarter as well;
c. reported for 3 quarters - then need to report on annual FS as well; before
resignation
3. ICAI Directive - Do not give pre-occupation as reason for resignation and give clear
reasons to company
8. Other Considerations Relating to AO / DOO on FS AS A WHOLE - Then do not express unmodified opinion on Single FS,
AO or DOO Specific Element of FS included in the SAME FS Can Issue unmodified opinion in such
cases on:
a) FS prepared under different FRFW
b) Where AO/DOO not given on FS as a whole, can issue AO/DOO on say Cash Flow
but Unmodified opinion on BS, SPL
9. Form and Content of the Auditor’s Opinion para language to change to:
Report when the Opinion is
Modified
1 Special Consideration required QO due to a MM in the FS:
for expressing QO 'Except for the effects / possible effects@ of the matter(s) described in the Basis for
QO section the accompanying FS present fairly*, in all material respects

@ where QO due to inability of obtain SAAE

(*in case of compliance FW:

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 2
KEY BOOK
Topic

Special consideration required

Keywords

the accompanying FS have been prepared, in all material respects, in accordance with
the applicable FRF)
AO due to a MM in the FS:
Mnemonics

for AO 'Because of significance of matters described in the Basis for AO section the
accompanying FS do not present fairly*

(*in case of compliance FW:

the accompanying FS have not been prepared, in all material respects, in accordance
with the applicable FRF)
3 Special Consideration required 1. Opinion para
for DOO State that, because of the significance of the matter described in the Basis for DOO
section, the auditor has not been able to obtain SAAE to provide a basis for an
audit opinion on the FS; and
2. Opinion para – Introduction
Change FS have been audited, to auditor was engaged to audit the FS.
3. No KAM and OI para - Unless required by LorR
4. No reference of auditor's responsibility section in AR prepared as per SA 700
(See 11B below)
5. Do not mention SAAE obtained
10. Basis for Opinion Para in case of A. Heading - “Basis for Opinion” to “Basis for QO/AO/DOO
modified opinion B. Include inside a description of the matter giving rise to the modification:
1. Misstatement relates to specific amounts:
Description + quantification of financial effects of the misstatement, unless
impracticable (state so).
2. Misstatement relates to Narrative Disclosures:
Explanation how disclosures are misstated.
3. Misstatement relates to Non-disclosure of information:
(a) Discuss with TCWG.
(b) Describe the nature of the omitted information, and
(c) Unless prohibited by LorR, include the omitted disclosures provided SAAE
obtained and not impracticable to include.
4. Inability to obtain SAAE: Include the reasons for that inability.
11A. Other Modifications to report Include any other matters that would have led to modifications in the opinion
in case of AO/DO and its effect thereon
11B. Description of Auditor’s Include only the following statement:
Responsibilities section When - that auditor’s responsibility is to conduct an audit of the entity’s FS in accordance
Auditor gives DO - As per SA with SA and to issue an auditor’s report;
700 - that, however, because of the matters described in the Basis for DOO section,
the auditor was not able to obtain SAAE to provide a basis for an audit opinion
on the FS; and
- The statement about auditor independence and other ethical responsibilities
required in SA 700 (reference to auditor's responsibility under SAs para removed)

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 KEY BOOK
Topic
12. Communication with TCWG
Keywords

Circumstances + Wording of modification to be first communicated to TCWG

EMPHASIS OF MATTER PARAGRAPHS AND OTHER MATTER

Mnemonics

SA 706
PARAGRAPHS IN THE INDEPENDENT AUDITOR’S REPORT
3A. Meaning of EOM Para Matter presented or disclosed in FS are of such importance that they are
fundamental to users’ understanding of FS.
3B. Meaning of Other Matter Matter other than those presented/disclosed in FS that are relevant to users’
Paragraph understanding of audit/ auditor’s responsibilities / AR.
4. Requirements w.r.t. EOM Report EOM when it is not a KAM or modification to opinion
- EOM Para reporting Separate section with heading incl words "EOM" + Clear reference to matter in FS +
Fact that opinion is not modified for such matter
- Circumstances needed KAM FRF unacceptable but prescribed by LorR, SPFS (SA800), amended audit report
(SA560), uncertainty of future outcome of LorC, early application of Ind AS, major
catastrophe affecting FS
5. When to issue other Matter Matter not already presented in FS
paragraphs in the Auditor’s In auditor's judgement relevant to understanding of Audit/Auditor's Resp./Auditor's
Report? report
Provided not prohibited by LorR/not KAM
Given under separate section with heading including words "OM"
6. Communication with TCWG EOM or OM to be communicated with expected wordings
7. Placement of emphasis of matter Depends - Nature of info communicated and significance to IU compared to other
paragraphs and other matter matters in the AR
paragraphs in the auditor’s report
8. The Relationship between KAM:
Emphasis of Matter Paragraphs If KAM by nature relevant to user's understanding of FS - Auditor may highlight such
and KAM in the Auditor’s Report fact
EOM:
Do not use extensively, its not a substitute for KAM hence only those matters that
are significant to FS understanding but did not require sign. auditor attention in
current audit are EOM

COMPARATIVE INFORMATION - CORRESPONDING FIGURES AND

COMPARATIVE FS
SA 710
Comparative Information (CFI) presented in 2 approach specified by LorR or ToE:
Corresponding Figures (CYF) and Comparative FS (CFS)
1. Nature of Comparative Information CYF - PY figures given to facilitate understanding of CY figures. Auditor's opinion
does not covers such period
CFS - PY figures given in equal details as CY figure and if audited, auditor reports on
each period presented
2. Objective Obtain SAAE on CFI whether as per A-FRFW and report

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 3. Definitions
KEY BOOK
Topic Keywords

CYF - PY figures integral part of current period FS, read only in relation to CY
CFS - Prior period included for comparison, if audited referred to in opinion, same
level of information
Mnemonics

4. Audit Procedures for Comparative 1. Specific AP

Information a. Tally information with PY
b. Consistent A policies
c. Changes in policies a/cted and disclosed properly
2. Suspected misstatement - Perform AP, SA560 relevant
3. WR - For all period covered in report + prior period item if covered in CY FS
5. Audit Reporting Additionally include in AR:
CYF Only refer to CYF where
a. PY report modification not resolved
b. PY related MM detected in CY (if affects only Py specify so)
Note: If PY unaudited - SA 510 relevant
CFS 1. Opinion on each period presented
2. If opinion on prior period differs from opinion previously issued then:
i. Disclose reason for difference in OM para
ii. If MM in previous period, ask MGT to request previous auditor to-
(a) Inform predecessor auditor
(b) amend FS
(c) seek new report by predecessor auditor
(d) then report only on current period
CYF + CFS 1. PY different auditor
Where Law permits to refer PY auditor + auditor decides to do so:
Report in OM Para:
(a) PY FS audited by predecessor auditor
(b) type of opinion with reasons of modified opinion if issued
(c) Date of AR
2. PY unaudited - May report this fact in his AR

SA 720 THE AUDITOR’S RESPONSIBILITY RELATING TO OTHER INFORMATION

Refer DC

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 SA 720
CHAPTER 7 : REPORTING
THE AUDITOR’S RESPONSIBILITY RELATING TO OTHER INFORMATION
5. Reading OI 6. Response to MI or MM of OI – Discussion with MGT and
1. AUDITOR’S OBJECTIVES
a To consider material inconsistency between:
• The other information and F.S.; Consider
on i erweather
hether MIith
with Concludes Unable to
• The other information and the auditor’s
conclude
knowledge obtained in the audit;
FS AK MM in OI MM in FS AK needs updation
b To respond appropriately when material Request MGT to
inconsistencies appear to exist, or when becomes Need not Primarily through
compare all reconciliation + consult qualified
aware of such MM; and 3rd party (Mgt
data enquiry through Respond as per Other
Known OI obtained expert / legal
c To report in accordance with this SA. them + referring SAs as it may require –
Prior to after AR counsel)
documentations AR Date Date
2. MISSTATEMENT OF THE OTHER INFORMATION
& Re-assessment Still unable to
A misstatement Request conclude
MGT to Corrected Not corrected of risk – SA 315
of the other correct (after TCWG)
information Remain alert whether
If refuses Check UMM – SA 450 One or more
exists when the MM exists in corrections Actions following action
other OI
information To TCWG
Consider legal Subsequent Advice from
is incorrectly Steps to rights to alert Events – SA 560 legal
GK
AK Internal
stated or Still communicate users by: counsel
inconsistency uncorrected users on
otherwise
misleading revised
report / OI Assess
Providing reporting
3 OTHER INFORMATION Action new or requirement
amended as in
Financial or non-financial information (other than report limitation
financial statements and the auditor’s report thereon) Consider on audit
included in an entity’s annual report impact Informing
on
reporting appointing Consider
4. Obtaining OI authority withdrawal

Withdrawal
Discuss with Mgt, doc’s part of OI Informing
Regulator
Reporting
Available Obtain prior to AR date to
Regulators, Withdrawal
Available Take WR, will be provided if required
later after AR date

Legends : OI – Other Information FS- Financial Statements AK- Auditor’s Knowledge MI- Material Inconsistency MM-Material Misstatement AR- Audit Report
90 SA 720 CA FINAL AUDIT
SA 720 : THE AUDITOR’S RESPONSIBILITY BY CA
RELATING TOSJ
OTHER INFORMATION 74
 SA 720
CHAPTER 7 : REPORTING
THE AUDITOR’S RESPONSIBILITY RELATING TO OTHER INFORMATION

e ortin

A. Applicability of SA
e ortin re cri e a or e lation
itor inion on mo ifie
The auditor’s report shall refer to SA’s only if
Requirements Reporting under SA (a) Q or A the auditor’s report includes, at a minimum:
of SA under separate para • entification of the other information
of Other Information obtained prior to the date of the auditor’s
Applies on Not report;
Only on corporates A ecting
all entities a ecting • A description of the auditor’s
OI also OI re on i ilitie with respect to the other
information; and
Listed Unlisted No
or orate ntit Adverse • An explicit statement addressing the
ualified implication
on OI para outcome of the auditor’s work for this
When at date purpose
of AR obtained Auditor has If
or expects to Obtained OI UMM imitation impacts E. Examples of Amounts or Other Items oc mentation
obtain OI (some or all) on scope OI modify • Documentation
para (e) Amounts
of the procedures
if impacts • Items in a mmar of e financial re lt such as net
OI, report performed under
a er to e incl e in ther nformation Auditor income, earnings per share, dividends, sales and other
ection of itor e ort in para unable to this SA; and
operating revenues, and purchases and operating expenses. • The final er ion
(e) assess its
a A statement of management’s responsibility for the impact • Capital expenditures by segment or division. of the other
other information; on OI • Amounts involved in, and related financial e ects of, information on
b n i entification of o - alance heet arran ement which the auditor
o ther information if obtained prior to the date of the • Amounts involved in arantee contract al o li ation has performed the
auditor’s report; and Modify para (e) that le al or en ironmental claim an other contin encie
auditor unable to work required
o For audit of F.S. of a listed entity, other information, under this SA.
consider mgt’s Other Items
expected to be obtained after the date of the auditor’s
description of OI refer • Explanations of critical acco ntin e timate an relate
report;
to basis of ualified a m tion
c A statement that the auditor’s opinion does not cover Opinion para
the other information • Identification of relate artie and descriptions of
d A description of the a itor re on i ilitie transactions with them.
e Other information obtained prior to the date of the auditor’s • Descriptions of trends in market prices of key commodities
report, either: or raw materials.
(b) Disclaimer • ontra t of l eman an regulatory circumstances
o A statement that the auditor has nothing to report; or
o If the auditor has concluded that there is an between geographic regions.
uncorrected MM of the other information, a statement • Explanations of ecific factor in uencing the entity’s
No OI para
that describes the uncorrected MM profitability in ecific e ment

75 CA FINAL AUDIT
SA 720 : THE AUDITOR’S RESPONSIBILITY BY CATO
RELATING SJOTHER INFORMATION SA 720 91