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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 decide whether to express an opinion. Under SA 700 (Revised), which set of considerations must the auditor's conclusion on reasonable assurance take into account?

The auditor's conclusion must consider whether sufficient appropriate audit evidence has been obtained, whether uncorrected misstatements are material individually or in aggregate, and the required evaluations of the financial statements. These are the three inputs SA 700 (Revised) prescribes for concluding on reasonable assurance.

  1. AOnly whether the management has signed the financial statements and the representation letter
  2. BWhether sufficient appropriate audit evidence has been obtained, whether uncorrected misstatements are material individually or in aggregate, and the evaluations on the financial statements required by the standardCorrect
  3. COnly the total number of misstatements found, regardless of their size
  4. DWhether the entity earned a profit during the year and paid its dividends

Explanation

SA 700 (Revised) says the conclusion on reasonable assurance must take into account the SA 330 conclusion on sufficiency and appropriateness of evidence, the SA 450 conclusion on whether uncorrected misstatements are material, and the evaluations in paragraphs 12-15. Signatures, profitability or the mere count of misstatements are not the stated criteria.

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