Auditing and Ethics · Audit Report

Basic Elements of the Auditor's Report (SA 700)

Updated 4 October 2026 · Fact-checked

SA 700 (Revised) sets the form and content of the auditor's report on general purpose financial statements. An unmodified report has set elements in a set order: title, addressee, opinion, basis for opinion, going concern and KAM where applicable, responsibilities, signature, date and place. Learn the order and what each part says.

Understand Basic Elements of the Auditor's Report (SA 700)

An auditor's report is the final output of an audit. It tells users, in a standard form, what was audited, what the auditor concluded and on what basis. A fixed format lets readers compare reports and understand them without guessing.

SA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, says the auditor must form an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. The report must be in writing. The opinion comes first, right after the addressee, so the reader sees the conclusion at once.

The main elements, in order, are: Title (it must clearly show it is an independent auditor's report); Addressee (as required by the engagement circumstances, for a company usually the members); Auditor's Opinion; Basis for Opinion; Going Concern related matters where relevant; Key Audit Matters (for listed entities, and where the auditor otherwise decides or is required to communicate them, under SA 701); Other Information (SA 720) where applicable; Responsibilities of Management and those charged with governance; Auditor's Responsibilities; Other reporting responsibilities (for companies, matters under the Companies Act such as section 143 and CARO); Signature, firm details, date and place.

The Opinion section identifies the entity, states that the financial statements were audited, names each statement and the notes including material accounting policy information, and gives the opinion in words such as "give a true and fair view". The Basis for Opinion section states that the audit was conducted per the Standards on Auditing, refers to the auditor's responsibilities section, states independence under the Code of Ethics and other ethical requirements, and says the evidence is sufficient and appropriate.

The report is dated no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence to support the opinion, including that those with recognised authority have asserted responsibility for the financial statements. The date should not precede the approval of the financial statements.

Key rules to remember

Order of elements in an unmodified report: Title → Addressee → Opinion → Basis for Opinion → Going Concern (if relevant) → KAM → Other Information → Management's responsibilities → Auditor's responsibilities → Other reporting → Signature, date, place; Opinion comes first after the addressee. Use this sequence in written answers.
Opinion section content: Entity identified + statements audited named + notes with accounting policy information + opinion on true and fair view / fair presentation; The opinion wording depends on the framework. A compliance framework uses "prepared, in all material respects, in accordance with".
Basis for Opinion content: Audit per SAs + reference to auditor's responsibilities + independence (Code of Ethics) + sufficient appropriate evidence; Without these four points the answer is incomplete.
Auditor's responsibilities paragraph: Reasonable assurance + misstatement from fraud or error + professional judgment and skepticism + risk assessment + internal controls relevance + evaluate policies and estimates + going concern conclusion + overall presentation + communicate with those charged with governance; Reasonable assurance is high but not absolute, so it does not guarantee detection of every misstatement.
Signature and date: Auditor's signature (name and membership number for a firm, plus firm registration number) + date + place; The date must not be earlier than the date of sufficient appropriate evidence.

How to solve Basic Elements of the Auditor's Report (SA 700) questions

Whether the question asks for contents, a draft report or a defect, use the same route.

1Read the question and mark what is asked: list of elements, a particular section, or a full draft.
2Identify the entity type. A listed company needs KAM and company-law reporting; other entities may not.
3Write the elements in SA 700 order, one heading per element.
4Under Opinion and Basis for Opinion, include the key content points, not just the headings.
5Add the Responsibilities paragraphs for management and for the auditor, stating that assurance is reasonable.
6Add other reporting requirements, then signature, firm registration number, date and place.
7If the facts show a problem, such as a wrong date, a missing element or a misplaced opinion, state the SA 700 requirement and conclude.

Quickest way: Order-and-content recall

When to use it: For MCQs on which element comes where, and for short written answers on contents.

For MCQs, recall the sequence: opinion first, then basis, then KAM, then responsibilities, then signature.
Eliminate options that put the Basis for Opinion before the Opinion.
Eliminate options that call the assurance absolute or a guarantee.
In written answers, use one line per element with a heading, then add two or three key points where the marks justify it.
Close with the signature, date and place so you do not lose the final step mark.

Common mistakes in Basic Elements of the Auditor's Report (SA 700)

Placing Basis for Opinion before the Opinion
Students think the reasoning should come before the conclusion, as in older report formats.
Fix: Remember that SA 700 (Revised) places the Opinion first, then the Basis for Opinion.
Saying the auditor gives absolute assurance
The report sounds final, so students read it as a guarantee.
Fix: Write "reasonable assurance", which is high but not absolute, because of the inherent limitations of an audit.
Leaving out independence and Code of Ethics in the Basis for Opinion
Students focus on the reference to the SAs and forget the ethical statement.
Fix: Always add that the auditor is independent as per the Code of Ethics and has met other ethical responsibilities.
Dating the report before evidence is complete
Students treat the date as the date of the balance sheet or of the last fieldwork visit.
Fix: The date cannot be earlier than the date on which sufficient appropriate evidence supports the opinion and the financial statements are approved by those with authority.
Mixing up management's and the auditor's responsibilities
Both sections talk about financial statements and controls, so they blur.
Fix: Management prepares the statements, maintains internal control and assesses going concern. The auditor expresses an opinion and obtains reasonable assurance.
Forgetting place and firm details in the signature
Students treat the signature as a formality.
Fix: List the signature, membership number, firm registration number where a firm signs, date and place.

Worked examples

Example 1

List the basic elements of an auditor's report on financial statements as required by SA 700 (Revised), in the order they appear in an unmodified report.

Show the solution

Start with the Title, which must show that the report is by an independent auditor.
Next is the Addressee, as required by the engagement circumstances, such as the members of the company.
Then give the Auditor's Opinion, which identifies the entity and statements audited and states the opinion.
Follow with the Basis for Opinion: audit per SAs, independence under the Code of Ethics, and sufficient appropriate evidence.
Add going concern related matters where relevant, and Key Audit Matters where applicable.
Then the Responsibilities of management and those charged with governance, followed by the Auditor's Responsibilities.
Add other reporting responsibilities where applicable, such as company-law matters.
End with the signature, firm details, date and place.

Answer: Title, Addressee, Opinion, Basis for Opinion, going concern matters (if relevant), Key Audit Matters (if applicable), Other Information (if applicable), Management's responsibilities, Auditor's responsibilities, Other reporting responsibilities, and Signature with date and place.

Example 2

An auditor completed fieldwork on 10 May and obtained sufficient appropriate evidence on 20 May. The board approved the financial statements on 25 May. The auditor signed the report dated 15 May. Comment on the date under SA 700.

Show the solution

Recall the rule: the report date must not be earlier than the date on which the auditor obtained sufficient appropriate audit evidence to support the opinion.
This evidence includes confirming that those with recognised authority have asserted responsibility for the financial statements.
Evidence was complete on 20 May, and the statements were approved on 25 May.
The report is dated 15 May, which precedes both dates.
So the date is wrong. The report must be dated on or after 25 May, since approval of the financial statements is part of the evidence.

Answer: The date of 15 May is incorrect. The report should be dated no earlier than 25 May, when the financial statements were approved and sufficient appropriate evidence was available.

Exam tips

Learn the element order as a sequence. Many MCQs test only which element comes first or after another.
In descriptive answers, give a heading for each element and two or three key words of content. This earns step marks quickly.
Use exact terms: reasonable assurance, those charged with governance, sufficient appropriate audit evidence, professional skepticism.
When a case study gives dates or a signature problem, state the SA 700 rule, apply it to the facts and give a clear conclusion.
Do not drift into modified opinion detail unless asked. Mention SA 705 only when the facts show a qualification.

Practice questions from Audit Report

Basic Elements of the Auditor's Report (SA 700) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Basic Elements of the Auditor's Report (SA 700): frequently asked questions

What are the basic elements of an auditor's report under SA 700?

They are the title, addressee, opinion, basis for opinion, going concern and KAM where applicable, other information, responsibilities of management and of the auditor, other reporting responsibilities, and signature with date and place. Learn them in that order.

Why does the opinion come before the basis for opinion?

SA 700 (Revised) puts the conclusion first so readers see it immediately. The Basis for Opinion follows and explains the framework of the audit and the independence of the auditor.

Is the Key Audit Matters section required in every audit report?

No. SA 701 requires KAM communication for audits of listed entities. It also applies where the auditor decides to communicate them or law or regulation requires it. Check the entity type in the question.

What should the auditor's responsibilities paragraph say?

It states that the auditor obtains reasonable assurance that the financial statements are free from material misstatement, and that this is not a guarantee. It also covers risk assessment, professional judgment and skepticism, evaluation of policies and estimates, going concern conclusions, and communication with those charged with governance.