9/2/2021
FORMING AN OPINION AND REPORTING ON
FINANCIAL STATEMENTS
PHILIPPINE STANDARDS ON AUDITING 700
FINANCIAL STATEMENTS
Statement of Financial Position
Statement of Profit and Loss and
Other Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
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Form an Opinion whether the FS are prepared, in all material respects,
in accordance with applicable reporting framework
Reasonable assurance as to whether FS, as a whole, is free from
material misstatement
Conclusions are based on sufficient appropriate audit evidence
Materiality of uncorrected misstatements taken individually or
aggregately
Qualitative aspects of the entity’s accounting practices, including
indicators of possible bias in management’s decision
Form an Opinion whether the FS are prepared, in all material respects,
in accordance with applicable reporting framework
Adequate disclosure of significant accounting policies
Adopted accounting policies are consistent and appropriate applicable
financial accounting framework
Accounting estimates are reasonable
Information presented in the FS is relevant, reliable, comparable and
understandable
Understandability of the effect of material transactions and events in
the FS through adequate disclosures
Terminology used in the FS is appropriate
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INDEPENDENT AUDITOR’S REPORT
Title. “Independent Auditor’s Report affirms
compliance with ethical requirements and
independence
Addressee. For whom the report was
prepared (Board/Stockholders)
Source: https://www.sanmiguel.com.ph/storage/files/reports/SMC-SEC_FORM_17A_04_16_2021_Part_1_-FINAL.pdf
AUDITOR’S OPINION
Section with the Heading
for the Auditor’s Opinion
should be included
State that FS have been
Whose FS are audited
audited
Composition
of FS
Period
covered
Referral to the summary of significant
accounting policies and other
explanatory information
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AUDITOR’S OPINION
For unmodified opinion, it is inappropriate to use phrases that may suggest
conditional opinion (i.e., “subject to”, “with the foregoing explanation”)
It is possible that there are more than one applicable financial reporting
framework. Hence, more than one opinion will be rendered
The law or regulation may require different format of an opinion
BASIS OF OPINION
Section with the Heading
for the Basis of Opinion
should be included
Conducted with
established standards
Referral to the Auditor’s
responsibility
Statement of
independence and
fulfillment of ethical
requirements
Statement that audit evidence is sufficient and appropriate to provide opinion
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Required for listed entities.
Laws should also be
included on the matters
need to be reported
GOING CONCERN
Separate section as “Material Uncertainty Related to Going Concern” if
adequate disclosure was made in the FS
Draw attention to the note in the FS and indicate that a material uncertainty
exist that may cast significant doubt to continue on a going concern basis
RESPONSIBILITIES FOR THE FS
Section with the Heading for the
Management’s responsibility should
be included Description of management’s
responsibility in the preparation
of FS in accordance with
applicable financial reporting
framework, design and
implementation of controls and
that the FS are free from material
misstatement of errors/fraud
Assessment of going concern
Identification of those responsible
for oversight of the reporting
process
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AUDITOR’S RESPONSIBILITIES ON THE FS
Section with the Heading
for the Auditor’s
responsibility should be
included
Responsibility to express an opinion
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AUDITOR’S RESPONSIBILITIES ON THE FS
Statement on the exercise of
professional judgment and
professional skepticism
Description of the auditor’s
responsibilities
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AUDITOR’S RESPONSIBILITIES ON THE FS
Description of the auditor’s
responsibilities
Description of the auditor’s
responsibilities in group
audit engagement
Presentation of the Description of Auditor’s Responsibilities
Enumerated in the Audit Report
Referred in the Auditor’s Responsibility portion as a separate appendix
Reference to a website of an appropriate authority, only if expressly permitted
by law, regulation or national accounting standards
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AUDITOR’S RESPONSIBILITIES ON THE FS
Communication with the
Board on issues noted
Requirement for listed
entities
Requirement for listed
entities and other entities
for which key matters are
communicated
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OTHER REPORTING RESPONSIBILITIES
Some jurisdictions require additional responsibilities other than those required
under PSAs and may be required to perform additional procedures and express
an opinion on certain matters
Addressed as separate section with heading “Report on Other Legal and
Regulatory Requirements”
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NAME/SIGNATURE/DATE/ADDRESS
Name of engagement partner should be
indicated unless there are security
concerns. The same should be discussed
with the Board
Maybe under the name of the audit name, personal name,
or both. Some jurisdictions allow electronic signatures
Law, regulations or national standards may require
certain credentials to further identify the
engagement partner
Dated after the auditor obtained sufficient and appropriate evidence which is the basis of
the audit opinion. This inform the users of FS that the auditor has considered all the
events and transactions the auditor became aware up to the date of the audit report
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For audit reports with prescribed format by law or regulation, the
auditor can only refer to PSA if the it meets the minimum
requirements of the standards
For audit conducted with both PSA and standards of a specific jurisdiction -
May still refer to PSA if there unless it would lead to the auditor to form
different opinion or not to include and “Emphasis of Matter” or “Other Matter”
paragraph
Identify the jurisdiction of origin of the national auditing standards
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Supplementary Information
Presented in the FS
May be required by law, regulations,
standards or voluntarily presented
Supplementary info that is not
required by the applicable financial
reporting framework may be
considered as integral in the FS based
on the professional judgment of the
auditor. Hence, it will be covered in
the opinion of the audit report
If not integral and required by any
laws financial reporting framework,
ensure that it is presented in way that
sufficiently and clearly differentiates
from the audited FS
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