Chapter 13 - The auditor’s reporting obligations. After studying this chapter you should be able to: understand the nature and significance of the auditor’s reporting obligations; understand the structure and qualitative characteristics of the auditor’s report; explain the differences between the concepts of ‘true and fair’ and ‘presents fairly in accordance with’, and between a fair presentation framework and a compliance framework;. | CHAPTER 13 THE AUDITOR’S REPORTING OBLIGATIONS THE OBLIGATION TO REPORT Reporting requirements for the auditor arise as a result of: Professional obligations Legislative obligations PROFESSIONAL REPORTING OBLIGATIONS Arise from membership of professional accounting bodies Require auditor to meet requirements of AUSs and form a conclusion that financial reports have been prepared in accordance with an identified financial reporting framework LEGISLATIVE REPORTING OBLIGATIONS Are contained in statutes that govern the audit Reporting requirements for Corporations Act 2001 audits are contained in ss 307-313 of the Corporations Act 2001. WHO THE AUDITOR IS OBLIGED TO REPORT TO The governing body and members Management and the board of directors Australian Securities and Investments Commission (ASIC) TRUE AND FAIR VIEW AND PRESENTS FAIRLY Differences in terminology for: AUS 702 (ISA 700) — whether financial report presents fairly in accordance with applicable accounting standards and other mandatory professional reporting requirements Corporations Act 2001 audits — whether the accounts are drawn up so as to give a true and fair view INTERPRETATIONS OF TRUE AND FAIR Technical interpretation Literal interpretation TECHNICAL INTERPRETATION Financial report will constitute a true and fair view when prepared in accordance with generally accepted accounting principles (GAAP) Thus, where an accounting standard has not been complied with, financial reports will not present a true and fair view LITERAL INTERPRETATION View presented by financial information is consistent with auditor’s knowledge of the entity Allows for non-compliance with GAAP where compliance would result in view presented by financial report inconsistent with auditor’s knowledge of the entity STRUCTURE OF AUDIT REPORT Title Addressee Scope paragraph Qualification paragraph, where required Opinion paragraph Emphasis of matter section, where required Auditor’s signature Address | CHAPTER 13 THE AUDITOR’S REPORTING OBLIGATIONS THE OBLIGATION TO REPORT Reporting requirements for the auditor arise as a result of: Professional obligations Legislative obligations PROFESSIONAL REPORTING OBLIGATIONS Arise from membership of professional accounting bodies Require auditor to meet requirements of AUSs and form a conclusion that financial reports have been prepared in accordance with an identified financial reporting framework LEGISLATIVE REPORTING OBLIGATIONS Are contained in statutes that govern the audit Reporting requirements for Corporations Act 2001 audits are contained in ss 307-313 of the Corporations Act 2001. WHO THE AUDITOR IS OBLIGED TO REPORT TO The governing body and members Management and the board of directors Australian Securities and Investments Commission (ASIC) TRUE AND FAIR VIEW AND PRESENTS FAIRLY Differences in terminology for: AUS 702 (ISA 700) — whether financial report presents fairly in accordance with applicable accounting
