ADVANCED AUDIT AND ASSURANCE - Quick Revision

ISA Acceptance Planning Performance Reporting

ICAP Code of Ethics
Qualification &
Disqualification of
Companies Act
Code of Corporate
Governance
ISA 300

ISA 210

ISA 315

ISA 320

ISA 530

ISA 240

ISA 570

ISA 550

ISA 402

ISA 540

ISA 600

ISA 701

ISA 705

ISA 706

ISA 710

ISA 720

ISA 800

ISA 805

ISA 810
Companies Act 2017

Sec. 247 Qualification and disqualification of auditors

01 A person shall not be qualified for appointment as an auditor;

In the case of a public company or a private company which is subsidiary of a public

a. company or a private company having paid up capital of three million rupees or more
unless such person is a chartered accountant having valid certificate of practice from the
Institute of Chartered Accountants of Pakistan or a firm of chartered accountants: and

In the case of a company other than specified in clause (a), unless such person, is a
b. chartered accountant or cost and management accountant having valid certificate of
practice from the respective institute or a firm of Chartered Accountants or cost and
manag ment accountants, having such criteria as may be specified:

Provided that for the purpose of clause (a) and (b), a firm whereof majonty of
practicing parters are qualified for appointment shall be appointed by its firm
name to be auditors of the company
ISA 300 PLANNING AN AUDIT OF FINANCIAL STATEMENTS

Preliminary Engagement Activities

1. Auditor evaluates as whether it is competent or not?

•As he has capability, experties resources and time for client

2. Can comply with ethical requirements?

3. Evaluate Integrity of management.

4. Has considered significant matters that have arisen during

the current or previous audit engagement, and their
implications for continuing the relationship.

Establish an understanding of terms of agreement as required

by ISA 200. (Engagement letter)

AGM ISA 200

ISA 300
(Appointment of auditor)
ISA 210 AGREEING THE TERMS OF AUDIT ENGAGEMENT

FRF acceptable

Precondition

Premise

Preparation of FS For IC to prepare FS free To provide the auditor

in a/c with IFRS from MM whether due to with all information
error or fraud
 ASSESSMENT OF RISK

NORMAL RISK SIGNIFICANT RISK

Significant risk are those risk

that requires special audit
consideration.

ESTIMATES FRAUD ONCOB / COMPLEX RELATED PARTY

PREPAID INSURANCE PPE IMPAIRMENT

RENT EXPENSE INVENTORY IMPAIRMENT
ISA-320 Materiality

Nature of an entity

Ownership / Shareholding
How to
determine Finance
Materiality

Elements of FS

User attention
 ILLUSTRATION

Misstatement Uncorrected
= Rs 80 Misstatement PWC
Materiality
AUDIT PWC = Rs 100 Audit risk = IR x CR x DR

Unmodefied Audit risk = 60% x 50% x 40%

opinion
Audit risk = 12%

Misstatement
= Rs 80
KPMG
Materiality
= Rs 100
AUDIT KPMG Audit risk = IR x CR x DR
Performance
materiality
= Rs 70
Audit risk = 60% x 50% x 20%
Audit risk = 6%
Unmodefied
opinion
 ISA 530 AUDIT SAMPLING

COMPANY AUDIT NBP

MATERIALITY = 100 MATERIALITY = 6 BILLION

PERFORMANCE MATERIALITY = 75 PERFORMANCE MATERIALITY = 4 BILLION

TOLERABLE MISSTATEMENT = 5 TOLERABLE MISSTATEMENT = 400 MILLION

MISSTATEMENT = 300 MILLION

IGNORE ( NO INVESTIGATION) MISSTATEMENT = 500 MILLION

IGNORE BOTH AGGREGATE

NO IMPACT ON FINANCIAL MISSTATEMENT = 600 MILLION

STATEMENT

MISSTATEMENT = 300 MILLION

MISSTATEMENT TOLERABLE MISSTATEMENT IGNORE NO WRITTEN REPRESENTATION REQUIRED

ISA 240 Fraud overview & planning

Creating culture of Honesty

and ethical behavior
Management
Responsibility strong emphasis on fraud
prevention

Consider the potential for

override of control
 ISA 240 Fraud overview & planning

1 Maintain Professional Skepticism

2 Engagement team discussion

Auditor’s
Responsibility 3 Identify and assess the ROMM

Response to those risk by performing

4 audit procedures to obtainSAAE

Respond if circumstances indicate

5 the possibility of fraud
 ISA 240 Fraud overview & planning

Risk Assessment procedures and related activities

Management process for identifying

and responding to the risk of fraud

Management assessment of the risk

that FS are materially misstated
Inquiry with the
management
Management communication to
TCWG regarding its process

Management communication to
its employees regarding business
practice and ethical behavior
ISA 240 Fraud overview & planning

Risk Assessment procedures and related activities

Obtain an understanding – how TCWG

Inquiry with BOD exercise oversight the management
process for identifying and responding
to risk of fraud

Whether They have knowledge of any

Inquiry with IA actual, suspected or alleged fraud
affecting the entity, and to obtain its
views about the risks of fraud
ISA 240 Fraud overview & planning

Procedures against fraud risk

Assign and supervise personnel

having knowledge, skill and
ability of the individual

Evaluate selection and application

FS LEVEL of Accounting policy

Incorporate element of
unpredictability in the selection
of nature, timing and extent of
audit procedures
ISA 240 Fraud overview & planning

Procedures against fraud risk

Test the appropriateness of

Journal Entry

Management
override Review accounting estimate for
of controls
bias
(MOC)

Evaluate business rational for

significant transaction outside
the normal course of business
ISA 315: RAP & ASSESSMENT OF AUDIT RISK

HOW TO OBTAIN AN UNDERSTANDING

Risk assessment procedures

These are procedure that assist Auditor in

identifying and assessing the risk of material
misstatement at FS level or at assertion level.

Observation & Analytical

Inquiry
Inspection procedure
AUDIT PROCEDURES
Obtain Going Concern Assessment atleast for the period
1
of 12 months.

2 Inspect cashflow and P&L forecast.

Inspect subsequent interim Financial Statements to compare

3
projected result with actual result.

4 Inspect minutes of meetings of Board of Directors.

5 Inquiry with in house legal counsel.

Confirm existence, terms and adequacy of borrowing

6
facilities.
 Yes Going Concern Assessment No Scope Limitation

Going Concern Material Material + Pervasive

Assumption Appropriate
Qualified Opinion Disclaimer

Yes No AB + AD Unmodified Opinion ?

AB + AD Adverse Opinion

Material Alternate Basis (AB) Material

Qualified
+ Opinion
Uncertainty Exist Adequately Disclosed AB + AD Material Adverse
+
(AD) Pervasive Opinion

No ? AB + AD Adverse Opinion

Unmodified MURTGC
Yes
Material + Pervasive
Yes Adverse Opinion
Adequately
Disclosed Misstatement Material
No
Qualified Opinion
 PLANNING COMPLETENESS OF ALL RP
IR + SHR + MoM of BoD If new related party or new

RISK IDENTIFY & DIRECTOR’S CONFLICT STATEMENT

INVOICE + LEGAL CONFIRMATION
transaction with existing
related party identified.
ASSESS Communicate new related party
to engagement team.
OUTSIDE THE NORMAL
RISK ASSESSMENT PROCEDURES COURSE OF BUSINESS Request management to identify
INSPECT THE AGREEMENT TO EVALUATE all transactions with new
related party.
INQUIRY WITH MANAGEMENT Business rationale.
Inquire why internal controls
Terms & conditions are consistent are ineffective.
with management explanation.
Related Party name Transaction is appropriately
Performed audit procedures on new
related party.
accounted for & disclosed.
Relationship Transaction is appropriately Revise the risk assessment.
Transaction authorized & approved.
If intentionally, consider fraud.
RELATED PARTY TRANSACTION
INTERNAL CONTROL MAY NOT BE DISCLOSED
Confirmation with related party.
RP IDENTIFY
A/C FOR & DISCLOSED Confirm with intermediaries such
as banks.
AUTHORIZE & APPROVE
If applicable, inspect the audited
ONCOB AUTHORIZE financial statments of related
& APPROVE party.

SHARING RP INFORMATION FRAUD

TO ENGAGEMENT TEAM Inquiry with MGT, TCWG, and RP.
Inspection of significant contracts.
ISA 402 OBJECTIVE 01 IMPLICATION OF TYPE 01 AND TYPE 02 REPORT
AUDIT CONSIDERATION RELATING TO AN ENTITY USING A SERVICE
USING A TYPE 1 OR TYPE 2 REPORT TO SUPPORT THE USER AUDITOR’S
ORGANISATION UNDERSTANDING OF THE SERVICE ORGANIZATION THE USER AUDITOR
SHALL BE SATISFIED AS TO:
How to obtain and understanding of the service provided by a
REQUIREMENT service organisation , including Internal Control (a) The service auditor’s (b) The adequacy of the
professional competence standards under which
USER AUDITOR SHALL OBTAIN AN IF THE USER AUDITOR IS UNABLE TO OBTAIN A SUFFICIENT
and independence from the the type 1 or type 2 report
UNDERSTANDING OF A HOW USER ENTITY UNDERSTANDING FROM THE USER ENTITY, THE USER
AUDITOR SHALL OBTAIN THAT UNDERSTANDING FROM service organization; and was issued.
USES THE SERVICE OF A SERVICE
ORGANIZATION: ONE OR MORE OF THE FOLLOWING PROCEDURES
IF THE USER AUDITOR PLANS TO USE A TYPE 1 OR TYPE 2 REPORT AS AUDIT
Nature of the service (a) Obtaining a type 1 or type 2 report, if available; EVIDENCE TO SUPPORT THE USER AUDITOR’S UNDERSTANDING ABOUT THE
Nature and materiality of transaction (b) Contacting the service organization, through the DESIGN AND IMPLEMENTATION OF CONTROLS AT THE SERVICE
processed user entity, to obtain specific information; ORGANIZATION, THE USER AUDITOR SHALL:
Degree of interaction (c) Visiting the service organization and performing
Relationship between user entity and procedures that will provide the necessary (a) Evaluate whether the (b) Evaluate the sufficiency and
service organisation information about the relevant controls at the description and design of appropriateness of the
service organization; or controls at the service evidence provided by the
INTERNAL CONTROL (d) Using another auditor to perform procedures that organization is at a date or for report for the understanding
When obtaining an understanding of will provide the necessary information about the a period that is appropriate of the user entity’s internal
internal control relevant to the audit in relevant controls at the service Organization. for the user auditor’s control relevant to the audit;
accordance with ISA 315 (Revised), the purposes; and
REPORTING IMPLICATIONS
user auditor shall evaluate the design The user auditor shall modify the opinion in the user
and implementation of relevant (c) Determine whether
auditor’s report in accordance with ISA 705 if the
controls at the user entity that relate to complementary user entity
user auditor is unable to obtain sufficient appropriate
the services provided by the service controls identified by the
audit evidence regarding the services provided by the
organization. service organization are
service organization relevant to the audit of the user
relevant to the user entity
The user auditor shall determine entity’s financial statements. When a user auditor is
and, if so, obtain an
whether a sufficient understanding of unable to obtain sufficient appropriate audit evidence
understanding of whether
the nature and significance of the regarding the services provided by the service
the user entity has designed
services provided by the service organization relevant to the audit of the user entity’s
and implemented such
organization and their effect on the user financial statements, a limitation on the scope of the
controls.
audit exists. This may be the case when:
entity’s internal control relevant to the
The user auditor is unable to obtain a sufficient
audit has been obtained to provide a
understanding of the services provided by the
basis for the identification and
service organization and does not have a basis for
assessment of risks of material
the identification and assessment of the risks of
misstatement.
material misstatement;
ISA 705: SCOPE LIMITATION

WHAT IS SCOPE LIMITATION?

Auditor is unable to obtain sufficient appropriate
audit evidence.

ON ACCOUNT OF SCOPE LIMITATION

BEYOND THE MATERIAL &

IMPOSSED BY MATERIAL
CONTROL OF
MANAGEMENT
MANAGEMENT PERVASIVE

QUALIFIED DISCLAIMER
ACCOUNTS OPINION
FIRE RECORDS SEIZED
BY NAB
Except for possible
We do not express
effect of PPE, these
any opinion on these
FS are prepared in
financial statement.
account with IFRS.
ISA 520 Analytical Procedures

PERFORMANCE

To obtain sufficient appropriate audit evidence (SAAE)

while performing analytical procedure

SUBSTANTIVE TEST OF CONTROL

PROCEDURE

TEST OF DETAILS

SUBSTANTIVE ANALYTICAL
PROCEDURE
RESPONSIBILITY
ISA
ACCOUNTING ESTIMATES
540

Responses to the Assessed Risks of Material Misstatement

As required by ISA 330,13 the auditor’s further audit procedures shall be responsive to the
assessed risks of material misstatement at the assertion level,14 considering the reasons for
the assessment given to those risks. The auditor’s further audit procedures shall include one
or more of the following approaches:

Obtaining audit evidence

from events occurring up Testing how management Developing an auditor’s
to the date of the auditor’s made the accounting point estimate or range
report estimate

The auditor’s further audit procedures shall take into account that the higher the assessed
risk of material misstatement, the more persuasive the audit evidence needs to be. The
auditor shall design and perform further audit procedures in a manner that is not biased
towards obtaining audit evidence that may be corroborative or towards excluding audit
evidence that may be contradictory.
ISA
ACCOUNTING ESTIMATES
540

Management’s Selection of a Point Estimate and Related Disclosures

about Estimation Uncertainty

In applying the requirements of paragraph 22, the auditor’s further

audit procedures shall address whether, in the context of the applicable
financial reporting framework, management has taken appropriate
steps to:

a. Understand estimation uncertainty; and

Address estimation uncertainty by selecting an

b. appropriate point estimate and by developing
related disclosures about estimation uncertainty
 Acceptance Planning Performance Reporting

ISA 300 ISA 210 ISA 320 ISA 500

ACCEPTANCE AND SUFFICIENT APPROPRIATE

ENGAGEMENT LETTER MATERIALITY
CONTINUANCE AUDIT EVIDENCE

HOLDING
ISA 300 ISA 315 ISA 330 +
SUBSIDIARY
UNDERSTANDING THE GROUP, =
AUDIT STRATEGY RESPONDING TO ASSESSED
ITS COMPONENT AND THEIR CONSOLIDATED
RISKS
ENVIRONMENT FINANCIAL
STATEMENT
ISA 701 KEY AUDIT MATTERS

Those matters that in auditor’s professional

judgement were of most significance in the audit
WHAT IS of FS of Current period (even if comparative FS
KEY AUDIT MATTERS? are presented). Key audit matters are selected
from matters communicated to those charged
with governance.

Manufacturing
Audit Bank Audit

Advances
Inventory
Investment
PPE Borrowing
Deposits

How to determine Key Audit Matters ?

How to communicate Key Audit Matters ?

 ISA 701 KEY AUDIT MATTERS

Matters communicated with Areas of higher assessed risk of materi-

those charged with al misstatement, or significant risks.
governance
Significant auditor judgments relating
Matters that required to areas in the financial statements
significant auditor that involved significant management
judgment, including accounting
attention
estimates identified as having high
estimation uncertainty.

KAM Effect on the audit of significant

events or transactions that occurred
during the period.

The nature and extent of communication with those charged with governance provides an indication of
which matters are of most significance. Other consideration in determining the relative significance of a
matter include

Nature of the
Nature and severity Importance of the
Nature and underlying Nature and
of difficulties in Severity of matter to intended
accounting policy or materiality of
extent of any control users’ understanding
applying audit complexity or corrected and
audit effort procedures or deficiencies of the financial subjectivity in uncorrected
needed. to obtaining relevant related to the statements as a whole, management’s
in particular its misstatements
address and reliable audit matter. selection of an related to the
the matter. evidence. materiality to the appropriate
financial statements. matter.
accounting policy.
ISA 701 KEY AUDIT MATTERS

How to communicate KAM?

Key Audit Matter

Key audit matters are those matters that, in the auditor’s

professional judgment, were of most significance in the
audit of the financial statements [of the current period]

These matters were addressed in the context of the audit of

the financial statements as a whole, and informing the
auditor’s opinion thereon, and the auditor does not provide
a separate opinion on these matters.
ISA 701 KEY AUDIT MATTERS

How to communicate Key Audit Matters ?

Impairment of inventory

Include a refernce to a related disclosure, if any !

Why this matter was considered to be one of the most

significant in the audit of the financial statement ?

What are the key audit procedure and how they are
addressed ?
ISA 701 KEY AUDIT MATTERS

INTERACTION OF KAM WITH OTHER ELEMENTS OF AUDIT REPORT

Key Audit Matter VS Material Uncertainty Relating to Going Concern

Company Audit

Events or conditions triggered

Doubts on going concerns

Management assessed going concern

Going concern assumption is appropriate

(does not intend to liquidate)

Material uncertainity exist

Adequately disclosed in F.S

ISA 701 KEY AUDIT MATTERS

Introductory paragraph

In addition to matter as described in material uncertainity relating

to going concern section, following are the key audit matters.

In addition to the matter as described in basis of qualified

opinion section, following are the key audit matters.

In addition to the matter as described in basis for adverse

opinion section, following are key audit matters.

Disclaimer
Unless required by law or regulation,when the auditor disclaims
an opinion on the financial statements, the auditor’s report shall
not include KAM section in accordance with ISA 701.
ISA
MODIFICATION
705

MATERIAL MISSTATEMENT MAY ARISE

A B C

Appropriateness of selected Application of selected Appropriateness or adequacy

accounting policies accounting policy of disclosure in the FS
Accounting Policy is not Not applied consistently Do not include all disclosure
consistent with the AFRF Due to the method of required by AFRF
FS do not represent the application of selected Not presented in/with the AFRF
underlying transaction and accounting policies Do not provide disclosure
events in a manner that (unintentional error) necessary to achieve fair
achieves fair presentation presentation

If the impact is material If the impact is MATERIAL + PERVASIVE

QUALIFIED OPINION ADVERSE OPINION

What is QUALIFIED OPINION? What is ADVERSE OPINION?

Except for the effect of the matter Because of the significance of the
described in basis for qualified matter discussed in the basis for
opinion, the FS prepared in adverse opinion, the FS is not
accordance with IFRS prepared in accordance with IFRS
ISA 705: SCOPE LIMITATION

WHAT IS SCOPE LIMITATION?

Auditor is unable to obtain sufficient appropriate
audit evidence.

ON ACCOUNT OF SCOPE LIMITATION

BEYOND THE MATERIAL &

IMPOSSED BY MATERIAL
CONTROL OF
MANAGEMENT
MANAGEMENT PERVASIVE

QUALIFIED DISCLAIMER
ACCOUNTS OPINION
FIRE RECORDS SEIZED
BY NAB
Except for possible
We do not express
effect of PPE, these
any opinion on these
FS are prepared in
financial statement.
 ISA EMPHASIS OF MATTER PARAGRAPHS AND OTHER MATTER
706 PARAGRAPHS IN THE INDEPENDENT AUDITOR’S REPORT

EOMP
Draw users’ attention to a matter or
matters presented or disclosed in
SCOPE
the financial statements that are of
This International such importance that they are
Standard on fundamental to users’
Auditing (ISA) deals understanding of the financial OBJECTIVE
with additional statements; or To draw user
communication in attention when in
OMP
the auditor’s report Draw users’ attention to any matter the auditor’s
when the auditor or matters other than those judgment it is
considers it presented or disclosed in the necessary to do so,
necessary to financial statements that are by way of clear
relevant to users’ understanding of additional
the audit, the communication in
auditor’s responsibilities or the the auditor’s report,
auditor’s report. to:
Relationship between KAM,
EOMP and OMP
 ISA OTHER MATTER PARAGRAPH
706

PLACEMENT OF EMPHASIS OF MATTER PARAGRAPH AND OTHER MATTER

PARAGRAPH IN THE AUDITORS REPORT

EOMP

When the Emphasis of Matter When a Key Audit Matters section is

paragraph relates to The applicable presented in the auditor's report, an
financial reporting framework, Emphasis of Matter paragraph may be
including circumstances where the presented either directly before or after
auditor determines that the financial the Key Audit Matter section based on the
reporting framework prescribed by auditor’s judgement as to the relative
law or regulation would otherwise be significance of the information included
unacceptable, the auditor may in the Emphasis of Matter paragraph. The
consider it necessary to place the auditor may also add further context to
paragraph immediately following the the heading "Emphasis Matter such as
of Opinion section to provide Subsequent event to differentiate the
appropriate context to the auditor's emphasis of matter paragraoh from the
opinion individual matters described in the Key
Audit Matters section.
 ISA OTHER MATTER PARAGRAPH
706

PLACEMENT OF EMPHASIS OF MATTER PARAGRAPH AND OTHER MATTER

PARAGRAPH IN THE AUDITORS REPORT

OMP

When a Key Audit Matters section is When relevant to all the auditor's
presented in the auditor's report and responsibilities or users understanding
an Other Matter paragraph is also of the auditor's report, the Other Matter
considered necessary, the auditor paragraph may be included as a
may add further context to the separate section following the Report on
heading "Other Matter", such as the Audit of the Financial Statements
"Other Matter Scope of the Audit, to and the Report on Other Legal and
differentiate the Other Matter Regulatory Requirements
paragraph from the individual
matters described in the Key Audit
Matters section
 Corresponding Figure
Amount and disclosure of prior period are included as
ISA Comparative Information
710
integral part of current period FS and are intended to be read
only in relation to the current period figures.
Scope The level of details presented in the corresponding amount
Auditors responsibility relating to Comparative information and disclosure is dictated primarily by its relevance to the
current period figures
Types of Comparative information
Comparative financial statement
Corresponding figure - Auditors opinion for current period only
Amount and disclosure of the prior period are included for
Comparative financial statement - Auditor’s opinion refer to comparision with the FS of current period and also referred in
each period auditor’s opinion (if audited).
Objective The level of inforamtion is comparable with the FS of current
period
To obtain SAAE that CI included in the FS in a/c with the AFRF

To report in a/c with the Auditor’s reporting responsibilities

Definition
Comparative financial information
Amount and disclosure included in the FS for one or more prior
period in a/c with AFRF
 ISA Comparative Information
710

Corresponding figure

Audit opinion shall not refer to corresponding figure because audit opinion is on the
current period financial statement as a whole which include corresponding figure.

Following are exceptions for referring corresponding figures

If the audit report on the prior period includes Qualification, adverse or disclaimer.
Corresponding Figure

Prior year modified opinion

Is matter resolved?

Yes No

Unmodified opinion Relevant

Yes No

In our opinion these fs for the year Qualified due

ended june 30, 2023 has not been to comparibility
perpared in a/c with IFRS.
Mention in basis of qualified opinion
 Material Misstatement in the Prior Period FS and unqualified
opinion by Another auditor
ISA Comparative Information Communicate misstatement to TCWG
710
If FS are amended and revised report issued by Previous
Comparative Financial Statement auditor - Report only on current figures

Auditors opinion shall refer to each period for which FS are If not issued by previous auditor but managemet make
presented could be different opinion for different period adjustment, include in OMP that we have reviewed the
amendment but is not giving opinion on whole FS
If the prior opinion differs from the opinion previously
expressed, the audior shall express reason for the
different opinion in OMP
Prior Period FS audited by Previous auditor

• Report on current period FS and OMP

• Exception for OMP
• When last year report reissued with FS

Prior Period FS not audited

OMP - Comparative FS are unaudited, however need to

obtain AE about OB
 31 Dec 2022 Jan 2023 Feb 2023

Covenant Breach Management Relaxation letter

went to bank from bank

2022
Non current liability 400
Current liability 100

In our opinion, except for the matter that has been

described in basis for qualified opinion. These f/s for the
year ended 2023 has been prepared in accordance with
IFRS except for the matter described in basis for qualified
opinion these f/s are prepared in accordance with IFRS.
 Any Material Inconsistency between Other
Information and Financial Statement
ISA 720 Auditors responsibilities relating to Other Information
Any Material Inconsistency between Other
SCOPE Information and Auditor’s Knowledge
Objective
Auditors responsibility relating to other information included in annual report. Respond when Material Inconsistency
Other information could be financial and non financial. identified
Auditors opinion does not cover other information nor ISA require to obtain such
kind of audit evidence Infact read and consider the other information to identify
To report in accordance with ISA
material inconsistencies because material misstatement may undermine the
credibility of financial statements.

This ISA assist the auditor in complying with the ethical requirement.

DEFINITION Where is the materiality defined

for Other Information
Annual Report
A document prepared annually by Use same framework such as:
management to provide owner with
information on entities operation, Common financial need of a user
financial result and financial position.
Does it effect economic decision of user
Other Information
Financial or non financial information Consider both qualitative and quantitative
included in annual report other than
Audit Report and Financial Statement.

Misstatement of Other information

When Other Information is misleading
or incorrectly stated.
ISA 720 Auditors responsibilities relating to other information

When Auditor concludes that Material Misstatement of Other Information Exist

Request management to correct other information If management refuse, request TCWG

Other Information obtained prior to the date of Audit Report

IF not corrected
Other information section
Withdraw from engagement
Implication in AR
Or disclaimer

It will create doubt on Management integrity, obtain legal advice, report to Regulator if
required by regulations.
Auditor in rare circumstances can issue disclaimer because it creates doubt on all the
evidence obtained.

Other Information obtained after the date of Audit report

Perform procedures
If corrected (correction made)

Take action considering auditors inform at AGM

legal rights and obligation
If not corrected Seek legal advice communicate with SECP or ICAP

implication on engagement
Provide new audit report continuance
ISA 720 Auditors responsibilities relating to other information

When Material Misstatement in Financial Statement exist

OR
Auditor’s understanding needs to be updated

Request management to correct Financial statement If management refuse, request TCWG

Other Information obtained prior to the date of Audit Report

IF not corrected

Implication in AR financial statement qualified or adversed

Other Information obtained after the date of Audit report

If the auditor concluded that there is a material misstatement

in the FS and not in OI then ISA 560 will be applied.
may need to revise risk assessment

evaluate misstatement

Auditors responsibility relating to subsequent event

 Objectives C. FORMING AN OPINION AND REPORTING ON FS
C1. Application of ISA 700 revised when reporting on SPFS

ISA OPENING BALANCE

800
Special purpose financial statements

General purpose financial statements

Financial statements prepared in accordance with

a general purpose framework
C2. Description of AFRF
Special purpose financial statements
Adequately disclose in the FS about the basis of preparation. If
Requirement management has choice, include in the MR that Management is
responsible for determining the acceptability of FRF
Prepared in a/c with Special Purpose framework.
A. WHEN TO ACCEPT ENGAGEMENT: C3. Alerting Reader and Restriction on distribution use:
General purpose framework
EOMP – FS are prepared in a/c with SPF and may not be suitable for
another purpose and restriction on distribution
A financial reporting framework designed to meet
the common financial information needs of a wide
range of users
B. PLANNING AND PERFORMING
Special Purpose framework

Designed to meet the financial information need

of specific users.

Scope
 D If auditors report on complete set of FS include

Modified, EOMP, OMP, Material uncertainty relating to GC, KAM, Uncorrect-

ed material misstatement in other information

ISA Audit of single Financial Statement or Check the implication on audit of single fs, or account balance and auditors
opinion
805 specific element of Financial Statement For e.g.: qualification on receivable due to classification may not be rele-
vant for single account balance
Audit of single FS or Single FS or specific element could be prepared in a/c
SCOPE specific element of FS. with GPF or SPF. If SPF than ISA 800 also apply (EOMP). Even if there is no implication auditor may consider it necessary to include OMP

KAM may be useful in auditors determination to how to address the

OBJECTIVE Acceptance Planning and performing Forming an Opinion
Adverse Opinion or Disclaimer of Opinion in AR on complete set of FS
REQUIREMENT
If adverse or disclaimer on complete set of FS – cannot give unmodified
opinion on single FS or specific account balance
Acceptability of Financial
A Reporting Framework
Consideration when accepting the Engagement
Exception when auditor still consider it appropriate to express unmodified
opinion on that element (only for specific account balance):
Whether application of financial reporting Comply with relevant ethical requirement Not prohibited by law or regulation;
framework will result in a presentation that including independence. Opinion is not published together with AR containing
provides adequate disclosure to enable the Compliance with the requirement of ISA relevant to adverse or disclaimer opinion; and
intended user to understand the information audit of single FS may not be practicable if auditor is The element does not constitute major portion of entity’s
conveyed in the Financial Statement. not engaged to audit complete set of General purpose complete set of FS
FS.
Single FS deemed to constitute major portion of those FS there could not give
unmodified opinion
B Planning and Performing

Adapt all ISA relevant to the audit as necessary in the circumstances for e.g. Materiality deter-
mined for a single FS maybe lower than the materialitydetermined for complete set of FS.

C Forming an Opinion

Going Concern: management and auditor responsibility will be change based on the circumstances.

Key Audit Matters: not applicable unless required by law or regulation or auditor otherwise decided to
include KAM.
Other Information: Applicable if your report is part of other information.

Name of Engagement Partner: Applicable to specific elements or single FS of listed entities.

For other than listed entities: law or regulation may require to include or auditor may decided.
ISA 810 Engagement to Report on Summary Financial Statement

Complete set of Financial Summarize Financial

statement statement
Applied
criteria

ISA 810

ISA 100 - ISA 720

Special purpose ISA 800

Specific element ISA 805

DEFINITION
Applied criteria Criteria applied by management in preparation of SFS

Acceptance Planning and performance Reporting

 Restriction on distribution of use or alerting
B NATURE OF PROCEDURES reader to the basis of accounting
Whether SFS adequately disclose their When such restriction or alertness in audited FS
summarized nature and identify the audited FS – the same restriction on SFS
Engagement to Report on
ISA 810 Summary Financial Statement When summary financial statements are not
accompanied by the audited financial statements,
Comparative
evaluate whether they describe clearly: If audited Fs contain comparative but FS do not –
the auditor shall determine effect on unreasonable
From whom or where the audited financial omission on AR on SFS
REQUIREMENT: statements are available; or
OTHER INFORMATION
Evaluate whether the summary financial statements
A ENGAGEMENT ACCEPTANCE adequately disclose the applied criteria. ISA 720 will apply
When also the auditor of FS from which SFS are derived. Because Compare the summary financial statements with the Auditor Association
Application of ISA 810 will not provide SAAE if auditor has not audited FS
related information in the audited financial statements
If auditor become aware that entity plan to state in a
Whether applied criteria is acceptable. Consider nature of the entity, to determine whether the summary financial document containing SFS that auditor has reported
purpose, need of the intended user, not to be misleading statements agree with or can be recalculated from the on SFS but does not plan to include AR – request
related information in the audited financial statements. management
SFS contain aggregated information therefore risk of misleading.
Evaluate whether the summary financial statements
Risk further increase when there is no acceptable criteria are prepared in accordance with the applied criteria. If management refuse – seek legal advice
Criteria prescribed by standard setting organization or law or
The auditor may be engaged to report on FS but not
regulation are normally acceptable
RISK be engaged to report on SFS and entity plans to
Criteria prepared by management will be acceptable only if: make a statement that SFA are derived from FS au-
Disclose the summarized nature and identify the audited FS Have not disclosed the summarized nature and not dited by auditor – the auditor shall be satisfied that:
From whom and where audited FS are available identified the audited FS.
Reference is made in the context of AR on audited
Adequately describe the applied criteria Not disclosed From whom and where audited FS are FS; and
available Statement does not give impression that auditor
Agree or can be recalculated from audited FS
Have not adequately described the applied criteria has reported on SFS
Not misleading
Obtain agreement of management that it acknowledged and u/s Not Agree or can’t be recalculated from audited FS If above 2 conditions not met – request management
Misleading to change the statement to meet them or not to refer
its responsibility to the auditor in the document or entity may engage
Preparation of FS in a/c with criteria Reference to the Auditors Report on Audited FS auditor to report on SFS – if refuse seek legal advice
To make audited FS available to the intended user of the SFS When auditors report on FS includes Q, EOMP or OMP,
To include the AR on SFS in any documents that contains SFS MURTGC,KAM, misstatement in OI
Agree with the management the form of opinion on SFS State that AR on FS includes Q, EOMP or OMP, MURTGC,
If applied criteria is unacceptable or unable to obtain agreement of KAM,misstatement in OI and describe the effect as well
management – shall not accept engagement unless required by law
When auditors report on audited FS includes adverse
or reg – in that case does not state that engagement conducted in
a/c with ISA
or disclaimer – Auditors report on SFS shall:
State AR on FS contain adverse or disclaimer
C Form of Opinion Basis for adverse or disclaimer
Subsequent Event As a result it is inappropriate to express opinion on SFS
SFS may be dated later than the date of AR – state that SFS and
AFS do not reflect event that occurred subsequent to date of AR on Modified Opinion on SFS
If aware not issue report on SFS until requirement of ISA 560 has IF SFS are not consistent with audited FS in accordance
been completed with the applied criteria – shall express adverse opinion