PSA-705-Revised-and-Redrafted

PSA-705-Revised-and-Redrafted - Standards B Auditing and...

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Standards B Philippine Standard on Auditing 705 (Revised and Redrafted) MODIFICATIONS TO THE OPINION IN THE INDEPENDENT AUDITOR’S REPORT Auditing and Assurance Standards Council
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PSA 705 (Revised and Redrafted) 1 PHILIPPINE STANDARD ON AUDITING 705 * (REVISED AND REDRAFTED) MODIFICATIONS TO THE OPINION IN THE INDEPENDENT AUDITOR’S REPORT (Effective for audits of financial statements for periods beginning on or after December 15, 2009) CONTENTS Paragraphs Introduction Scope of this PSA ................................................................................................. 1-2 Effective Date ....................................................................................................... 3 Objective .............................................................................................................. 4 Definitions ............................................................................................................. 5 Requirements Circumstances When a Modification to the Auditor’s Opinion is Required .......... 6 Determining the Type of Modification to the Auditor’s Opinion .......................... 7-15 Form and Content of the Auditor’s Report When the Opinion is Modified .......... 16-27 Communication with Those Charged with Governance ....................................... 28 Application and Other Explanatory Material Scope of this PSA………………………………………………………………. A1 Nature of Material Misstatements ........................................................................ A2-A7 Nature of an Inability to Obtain Sufficient Appropriate Audit Evidence ............ A8-A12 Consequence of an Inability to Obtain Sufficient Appropriate Audit Evidence Due to a Management-Imposed Limitation after the Auditor Has Accepted the Engagement……..……………………. A13-A15 * [References in this PSA to other PSAs that have not yet been finalized reflect the working titles of those PSAs. The references are indicated in brackets and will be updated when those PSAs are finalized.]
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PSA 705 (Revised and Redrafted) 2 Other Considerations Relating to an Adverse Opinion or Disclaimer of Opinion ....................................................................................................... A16 Form and Content of the Auditor’s Report When the Opinion is Modified ......... A17-A24 Communication with Those Charged with Governance ....................................... A25 Acknowledgment Appendix: Illustrations of Auditors’ Reports with Modifications to the Opinion Philippine Standard on Auditing PSA 705 (Revised and Redrafted), “Modifications to the Opinion in the Independent Auditor’s Report,” should be read in conjunction with PSA 200 (Revised and Redrafted), “Overall Objectives of the Independent Auditor, and the Conduct of an Audit in Accordance with Philippine Standards on Auditing.”
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PSA 705 (Revised and Redrafted) 3 Introduction Scope of this PSA 1. This Philippine Standard on Auditing (PSA) deals with the auditor’s responsibility to issue an appropriate report in circumstances when, in forming an opinion in accordance with PSA 700 (Redrafted), 1 the auditor concludes that a modification to the auditor’s opinion on the financial statements is necessary. Types of Modified Opinions 2. This PSA establishes three types of modified opinions, namely, a qualified opinion, an adverse opinion, and a disclaimer of opinion. The decision regarding which type of modified opinion is appropriate depends upon: (Ref: Para. A1) (a) The nature of the matter giving rise to the modification, that is, whether the financial statements are materially misstated or, in the case of an inability to obtain sufficient appropriate audit evidence, may be materially misstated; and (b)
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