Document ID: chunk:federal_register_of_legislation:F2023C01137:body:0:p4
Version: federal_register_of_legislation:F2023C01137
Segment Type: other
Provision Reference: 
Character Range: 9484–12601

is operative for financial reporting periods ending on or after 15 December 2016.  [Note: For operative dates of paragraphs changed or added by an Amending Standard, see Compilations Details.]

Introduction

Scope of this Auditing Standard

      1. This Auditing Standard deals with the auditor's responsibility to issue an appropriate report in circumstances when, in forming an opinion in accordance with ASA 700,[1] the auditor concludes that a modification to the auditor's opinion on the financial report is necessary.  This Auditing Standard also deals with how the form and content of the auditor's report is affected when the auditor expresses a modified opinion.  In all cases, the reporting requirements in ASA 700 apply, and are not repeated in this Auditing Standard unless they are explicitly addressed or amended by the requirements of this Auditing Standard.

Types of Modified Opinions

2.                   This Auditing Standard 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:

(a)                The nature of the matter giving rise to the modification, that is, whether the financial report is materially misstated or, in the case of an inability to obtain sufficient appropriate audit evidence, may be materially misstated; and

(b)                The auditor's judgement about the pervasiveness of the effects or possible effects of the matter on the financial report.  (Ref: Para. A1)

Effective Date

3.                   [Deleted by the AUASB.  Refer Aus 0.3]

Objective

4.                   The objective of the auditor is to express clearly an appropriately modified opinion on the financial report that is necessary when:

(a)                The auditor concludes, based on the audit evidence obtained, that the financial report as a whole is not free from material misstatement; or

(b)                The auditor is unable to obtain sufficient appropriate audit evidence to conclude that the financial report as a whole is free from material misstatement.

Definitions

5.                   For the purposes of this Auditing Standard, the following terms have the meanings attributed below:

(a)                Pervasive – A term used, in the context of misstatements, to describe the effects on the financial report of misstatements or the possible effects on the financial report of misstatements, if any, that are undetected due to an inability to obtain sufficient appropriate audit evidence.  Pervasive effects on the financial report are those that, in the auditor's judgement:

(i)                 Are not confined to specific elements, accounts or items of the financial report;

(ii)               If so confined, represent or could represent a substantial proportion of the financial report; or

(iii)             In relation to disclosures, are fundamental to users' understanding of the financial report.

(b)                Modified opinion – A qualified opinion, an adverse opinion or a disclaimer of opinion on