ISA 705 – NBC Institute

AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

Question

You are the partner responsible for the audit of JJ Industries Limited for the year ended 31 December 2017. The final audit has been completed, and you are aware that there is guidance for auditors relating to audit reports – ISA 706: Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report.

Required:

a. i. Explain “Emphasis of Matter paragraph” and provide three examples and the potential situations in which such a paragraph may be used. (6 Marks)

ii. Define “Other Matter paragraph” and give two examples of the use of such a paragraph. (4 Marks)

Note: You are not required to produce draft paragraphs.

b. ISA 705: Modifications to the Opinion in the Independent Auditor’s Report requires the auditor to modify their opinion in the audit report. Discuss the two situations under which the auditor must issue a modified opinion in line with ISA 705. (5 Marks)

Answer

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Tags: Emphasis of Matter, ISA 705, ISA 706, Modified Opinion, Other Matter
Level: Level 3

Topic: Audit Reporting

AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

Question

c) According to ISA 705: Modification of the auditor’s report, the auditor’s opinion on financial statements other than unmodified opinion depends on his/her judgement on two major circumstances.

Required:
i) State the TWO (2) circumstances that may result in an audit opinion being modified. (2 marks)
ii) Discuss the types of opinion that may be issued under each of the two circumstances. (8 marks)

Answer

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Tags: Audit evidence, Audit opinion, Financial Misstatements, ISA 705
Level: Level 2

Topic: Completion Procedures and Reporting
Series: JULY 2023

AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

Question

ISA 705: Modifications to the opinion in the independent auditor’s report and ISA 706: Emphasis of Matter paragraphs and Other Matter paragraphs in the independent auditor’s report provide modifying phrases for use when issuing modified reports.

Required:
Write brief notes on the following terms:

i) Qualified opinion
ii) Disclaimer of opinion
iii) Emphasis of Matter paragraph
iv) Other Matter paragraph
(10 marks)

Answer

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Tags: Disclaimer of Opinion, Emphasis of Matter, ISA 705, ISA 706, Other Matter Paragraph, Qualified Opinion
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2023

AA – May 2021 – L2 – Q5b – Completion Procedures and Reporting

Discuss the impact of unresolved issues related to redundancy provision and contingent liability on the Auditor’s report.

Question

Logistics Ltd is a logistics and freight forwarding company based in the port city of Takoradi, and you are the Audit Manager in charge of the year-end audit. The draft financial statements show a profit before tax of GH¢2.6 million and total assets of GH¢18 million.

In your discussion with management, the following issues came up:

i) Management informed you that due to the ongoing coronavirus pandemic, shipping from China has slowed down considerably, and as a result, many employees have been laid off. A redundancy provision of GH¢220,000 is included in the draft financial statements. The audit review and calculations confirmed that the redundancy provision should be GH¢450,000. The Finance Director is, however, not willing to adjust the draft financial statements. (5 marks)

ii) An employee has filed a wrongful dismissal lawsuit against Logistics Ltd for GH¢1.2 million. This case is ongoing and will not be resolved before the Auditor’s report is signed. The matter is disclosed as a contingent liability. (5 marks)

Required:
Discuss each of the issues and describe their impact on the Auditor’s report, if any, should these issues remain unresolved in terms of ISA 705 (revised); Modification of the Auditor’s Opinion.

Answer

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Tags: Audit report, Contingent Liability, IAS 37, ISA 705, Redundancy Provision
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2021

AA – April 2022 – L2 – Q5b – Completion Procedures and Reporting

Comments on the appropriateness of issuing an adverse opinion and suggests an alternative opinion under ISA 705 for a company facing a data loss due to hacking.

Question

b) The Auditor of Pegasus Technologies, a fintech company, issued an adverse opinion on the financial statements for the year ended 31 December 2020. This was due to the fact that management could not make available the sales ledger, cash book, and other ledgers to the auditors due to a massive hack suffered by the company. Hackers used SIM cards to gain access to the company’s mobile money platform, stole funds, and destroyed company records. The hackers have been caught, and the IT unit has fixed the loophole that led to the hacking.

Required:
Comment on the Auditor’s issue of an adverse opinion and suggest whether another opinion would be more appropriate under ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report. (10 marks)

Answer

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Tags: Adverse Opinion, Audit Reporting, Disclaimer of Opinion, ISA 705, Scope Limitation
Level: Level 2

Topic: Completion Procedures and Reporting
Series: APR 2022

AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

Question

Required:

a. i. Explain “Emphasis of Matter paragraph” and provide three examples and the potential situations in which such a paragraph may be used. (6 Marks)

ii. Define “Other Matter paragraph” and give two examples of the use of such a paragraph. (4 Marks)

Note: You are not required to produce draft paragraphs.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Emphasis of Matter, ISA 705, ISA 706, Modified Opinion, Other Matter
Level: Level 3

Topic: Audit Reporting

AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

Question

c) According to ISA 705: Modification of the auditor’s report, the auditor’s opinion on financial statements other than unmodified opinion depends on his/her judgement on two major circumstances.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit evidence, Audit opinion, Financial Misstatements, ISA 705
Level: Level 2

Topic: Completion Procedures and Reporting
Series: JULY 2023

AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

Question

Required:
Write brief notes on the following terms:

i) Qualified opinion
ii) Disclaimer of opinion
iii) Emphasis of Matter paragraph
iv) Other Matter paragraph
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Disclaimer of Opinion, Emphasis of Matter, ISA 705, ISA 706, Other Matter Paragraph, Qualified Opinion
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2023

AA – May 2021 – L2 – Q5b – Completion Procedures and Reporting

Discuss the impact of unresolved issues related to redundancy provision and contingent liability on the Auditor’s report.

Question

In your discussion with management, the following issues came up:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit report, Contingent Liability, IAS 37, ISA 705, Redundancy Provision
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2021

AA – April 2022 – L2 – Q5b – Completion Procedures and Reporting

Comments on the appropriateness of issuing an adverse opinion and suggests an alternative opinion under ISA 705 for a company facing a data loss due to hacking.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adverse Opinion, Audit Reporting, Disclaimer of Opinion, ISA 705, Scope Limitation
Level: Level 2

Topic: Completion Procedures and Reporting
Series: APR 2022

Question Tag: ISA 705

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AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

AA – May 2021 – L2 – Q5b – Completion Procedures and Reporting

Discuss the impact of unresolved issues related to redundancy provision and contingent liability on the Auditor’s report.

AA – April 2022 – L2 – Q5b – Completion Procedures and Reporting

Comments on the appropriateness of issuing an adverse opinion and suggests an alternative opinion under ISA 705 for a company facing a data loss due to hacking.

AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

AA – May 2021 – L2 – Q5b – Completion Procedures and Reporting

Discuss the impact of unresolved issues related to redundancy provision and contingent liability on the Auditor’s report.

AA – April 2022 – L2 – Q5b – Completion Procedures and Reporting

Comments on the appropriateness of issuing an adverse opinion and suggests an alternative opinion under ISA 705 for a company facing a data loss due to hacking.

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Question Tag: ISA 705

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AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

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AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

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AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

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AA – May 2021 – L2 – Q5b – Completion Procedures and Reporting

Discuss the impact of unresolved issues related to redundancy provision and contingent liability on the Auditor’s report.

You're reporting an error for "AA – May 2021 – L2 – Q5b – Completion Procedures and Reporting"

AA – April 2022 – L2 – Q5b – Completion Procedures and Reporting

Comments on the appropriateness of issuing an adverse opinion and suggests an alternative opinion under ISA 705 for a company facing a data loss due to hacking.

You're reporting an error for "AA – April 2022 – L2 – Q5b – Completion Procedures and Reporting"

AAA – Nov 2018 – L3 – Q7 – Audit Reporting

Explanation of Emphasis of Matter, Other Matter, and conditions for modified opinions in audit reporting

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AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

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AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

You're reporting an error for "AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting"

AA – May 2021 – L2 – Q5b – Completion Procedures and Reporting

Discuss the impact of unresolved issues related to redundancy provision and contingent liability on the Auditor’s report.

You're reporting an error for "AA – May 2021 – L2 – Q5b – Completion Procedures and Reporting"

AA – April 2022 – L2 – Q5b – Completion Procedures and Reporting

Comments on the appropriateness of issuing an adverse opinion and suggests an alternative opinion under ISA 705 for a company facing a data loss due to hacking.

You're reporting an error for "AA – April 2022 – L2 – Q5b – Completion Procedures and Reporting"

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