ALRAQABA . ISSUE 15
51
Second: Standards for reporting on financial
statements by external auditors:
Both the ISSAIs and the International Financial
Reporting Standards (IFRS) provide specific
standards for reporting on financial statements,
which shall be followed by the external
auditors. This shall include reporting on the
general purpose financial statements which are
regulated under the ISSAIs (i.e., ISSAIs 1700,
1701, and 1705) along with the International
Standards on Auditing and other assurance
pronouncements (i.e., ISAs 700, 701, and 705).
When external auditors report on financial
statements, the reports (whether modified or
non-modified reports or those that include
“Emphasis of Matters” or “Other Matters”
paragraphs ) shall comprise key elements in
accordance with the ISAs. Namely, the title
page, the addressee, the opinion section, a
reference to the defined financial statements
of the entity being audited, opinions on the
financial statements, and a reference to the
financial report framework adopted in preparing
the financial statements (if applicable). In
case of a qualified or an adverse opinion, the
auditor shall include a statement in the report
confirming the auditor›s independence and
affirming that the other ethical responsibilities
have been met as required by the defined audit-
related ethics.
The required information section, according
to ISA 701, shall include a description of the
management responsibilities with respect
to preparing the financial statements,
identification of the parties responsible for
supervising the financial reporting process, a
reference to the audit standanrds or regulation,
and a description of the responsibilities of
the auditor assigned to audit the financial
statements. It is also imperative to consider
including the auditor’s signature and address
along with the date of the audit report.
According to ISA 701, the primary purpose
for communicating key audit matters in the
independent auditor’s report is to enhance the
communicative value of the auditors’ report
by providing greater transparency to the
performed audit. Besides, communicating key
matters provides additional information to the
users of the financial statements to help them
understand those matters, which are according
to the auditor’s professional judgment are of
utmost significance in auditing the financial
statements. This process may also assist
users of financial statements in understanding
the auditee and the areas of significant
management judgment in the financial
statements being audited.
Further, the audit reports of SAIs shall serve as
the outcome of their undertaken audit tasks.
Such reports shall be prepared in accordance
with the professional audit standards, under
which the auditors are required to plan and
carry out the audit with professional skepticism.
It is also essential that such reports be
issued based on the auditor›s professional
judgment upon obtaining sufficient and proper
audit evidence.
References:
• INTOSAI Standards for Supreme Audit
Institutions (ISSAIs).
• International Standards on Auditing
(ISAs), Other Assurance, and Related
Services Pronouncements.
Audit
Finance and
