Skip to content

CS Professional · Compliance Management, Audit and Due Diligence · Forming an Opinion and Reporting

While auditing Kaveri Textiles Ltd, the auditor has obtained sufficient appropriate audit evidence and finds no uncorrected misstatements. The financial statements meet the applicable financial reporting framework in all material respects. What must the auditor form an opinion on, as per SA 700 (Revised)?

The auditor forms an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. The opinion concerns framework compliance and material misstatement, not future profits, management efficiency or absolute arithmetical accuracy of every transaction.

  1. AWhether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting frameworkCorrect
  2. BWhether the company will continue to be profitable in future years
  3. CWhether management has been efficient in running operations
  4. DWhether every transaction recorded in the books is free of error to the last rupee

Explanation

SA 700 (Revised) requires the auditor to form an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. The opinion is not about future profitability, management efficiency or absolute accuracy, which would imply a standard higher than reasonable assurance.

Did you get it right without looking?

One question tells you little. A timed set on Forming an Opinion and Reporting shows your real accuracy, how long you take and where you lose marks.

Practise Forming an Opinion and ReportingFree diagnostic mock

More Forming an Opinion and Reporting questions