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

While finalising the audit of Kaveri Textiles Ltd, the auditor must conclude whether reasonable assurance has been obtained that the financial statements as a whole are free from material misstatement. Which of the following must that conclusion take into account, as stated in SA 700 (Revised)?

The auditor's conclusion on reasonable assurance must consider whether sufficient appropriate audit evidence was obtained, whether uncorrected misstatements are material individually or in aggregate, and the evaluations required by the standard on framework compliance, policies, estimates and disclosures.

  1. AOnly the conclusion on whether sufficient appropriate audit evidence has been obtained
  2. BOnly the management's own assessment of materiality
  3. CThe conclusion on sufficiency and appropriateness of audit evidence, the conclusion on whether uncorrected misstatements are material individually or in aggregate, and the evaluations required by the standardCorrect
  4. DThe number of audit hours spent compared with the budget

Explanation

SA 700 (Revised) says the conclusion on reasonable assurance takes into account three things: the SA 330 conclusion on sufficient appropriate audit evidence, the SA 450 conclusion on whether uncorrected misstatements are material individually or in aggregate, and the evaluations required by paragraphs 12-15. Taking evidence alone is incomplete, and management's view or hours spent are not part of the list.

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