Links

Document Search

International Journal

ISSAI Executive Summaries

Executive Summary:

ISSAI 1705 – Modifications to the Opinion in the Independent Auditor's Report

Purpose:

This Practice Note provides supplementary guidance on ISA 705 – Modifications to the Opinion in the Independent Auditor's Report

ISSAI Category:

Level 4: General Auditing Guidelines - General Auditing Guidelines on Financial Audit

Target Group:

Public sector external auditors

Principle:

ISA 705 deals with the auditor's responsibility to issue an appropriate report in circumstances when, in forming an opinion in accordance with ISA 700, the auditor concludes that a modification to the auditor's opinion on the financial statements is necessary.

ISA 705 establishes three types of modified opinions, namely

  • A qualified opinion,
  • An adversed (i.e. a negative) opinion and
  • A disclaimer of opinion.

The decision regarding which type of modified opinion is appropriate depends upon

  • The nature of the matter giving rise to the modification, that is whether the financial statements are or may be materially misstated, and
  • The auditor's judgement about the pervasiveness of the effects or possible effects of the matter on the financial statements.
Scope - Content:

The Practice Note provides additional guidance for public sector auditors related to

  • Circumstances when a modification to the auditor's opinion is required
  • Determining the type of modification to the auditor's opinion
  • Nature of material misstatements or of an inability to obtain sufficient appropriate audit evidence
  • Form and content of the auditor's report when the opinion is modified
  • Communication with those charged with governance.

The appendix of ISA 705 illustrates auditor's reports with modifications to the opinion.

Author - Committee:

INTOSAI Professional Standards Committee – Financial Audit Subcommittee

Status:

Approved at XXth Congress of INTOSAI, Johannesburg 2010

Download:

http://www.issai.org/en_us/site-issai/issai-framework/4-auditing-guidelines.htm

Related Documents - Executive Summaries:
Related Documents - ISSAI Full Versions:
Related Documents - Others:

ISA 705 is applicable to auditors of public sector entities in their role as auditors of financial statements. Other related ISA are

ISA 700 – Forming an Opinion and Reporting on Financial Statements

ISA 706 – Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report


<< back