ISA 200 begins with a statement of the objectives
of an audit. The primary objective of an audit of financial statements is
prepared, in all material (i.e. significant) respects in accordance with an
applicable financial reporting framework. The
of an audit. The primary objective of an audit of financial statements is
prepared, in all material (i.e. significant) respects in accordance with an
applicable financial reporting framework. The
phrases used to express the
auditor’s opinion are ‘give a true and fair view’ or ‘present fairly in all
material respects’ which are equivalent terms.
The financial reporting framework is the law and
accounting standards applicable financial reporting standards’ issued by the
accounting standards board.
accounting standards applicable financial reporting standards’ issued by the
accounting standards board.
Let us look at three key phrases.
·
Opinion-is
not a guarantee or a certificate, just an opinion-see chapter 27. ISA 200 goes
on to point out that although the auditor’s opinion enhances the credibility of
the financial statements the user of the accounts cannot assume that the audit
opinion is an assurance as to the future viability of the entry nor of the
efficiency or effectiveness with which management have conducted its affairs.
Opinion-is
not a guarantee or a certificate, just an opinion-see chapter 27. ISA 200 goes
on to point out that although the auditor’s opinion enhances the credibility of
the financial statements the user of the accounts cannot assume that the audit
opinion is an assurance as to the future viability of the entry nor of the
efficiency or effectiveness with which management have conducted its affairs.
·
In all
material respects-this is a difficult point. Essentially there is a degree of
imprecision in all but the very simplest of financial statements because they
contain accounting estimates about uncertainties and unresolved transactions.
There may even be some non-material misstatements in some of the individual
items. However, the objective is that the auditor’s work will provide evidence
to support an opinion that the overall view given by the financial statements
is a true and fair one (or that it is not).
In all
material respects-this is a difficult point. Essentially there is a degree of
imprecision in all but the very simplest of financial statements because they
contain accounting estimates about uncertainties and unresolved transactions.
There may even be some non-material misstatements in some of the individual
items. However, the objective is that the auditor’s work will provide evidence
to support an opinion that the overall view given by the financial statements
is a true and fair one (or that it is not).
·
True and
fair concept. Broadly, it means that the financial statements show the
financial position of the entity in as fair and accurate a way as is reasonably
possible.
True and
fair concept. Broadly, it means that the financial statements show the
financial position of the entity in as fair and accurate a way as is reasonably
possible.