Slide 1

Reported by:Ian Cristopher B. Piloto

When the auditor expresses qualified or adverse opinionDIFFERENCE:

QUALIFIED OPINION (material but not pervasive)ADVERSE OPINION (material and pervasive)

The auditor shall amend the description of the auditors responsibility to state that the auditor believes that the audit evidence the auditor has obtained is sufficient and appropriate to provide a basis for the auditors modified audit opinion.

When the auditor disclaims an opinionThe auditor shall amend also the description of the auditors responsibility and the description of the scope of the audit to state only the following:Our responsibility is to express an opinion on the financial statements based on conducting the audit in accordance with International Standards on Auditing. Because of the matter(s) described in the Basis for Disclaimer of Opinion paragraph, however we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion

EMPHASIS OF MATTER PARAGRAPHS and OTHER MATTER PARAGRAPHS in the INDEPENDENT AUDITORS REPORT

(a) A matter, although appropriately presented or disclosed in the financial statements

(b) As appropriate, any other matter that is relevant to users understanding of the audit, the auditors responsibilities or the auditors report.

PSA 706 (Clarified) deals with additional communication in the auditors report when the auditors considers it necessary to:

Draw users attention to a matter or matters presented or disclosed in the financial statements

Draw users attention to any matter or matters other than those presented or disclosed in the financial statements

Emphasis of matter paragraphs IN THE auditors reportThe auditor shall include an Emphasis of Matter paragraph in the auditors report provided the auditor has obtained sufficient appropriate audit evidence that the matter is not materially misstated in the financial statements.Examples of circumstances where the auditor may consider it necessary to include an Emphasis of Matter paragraph are:

An uncertainty relating to the future outcome of exceptional litigation or regulatory action. Early application of a new accounting standard a major catastrophe that has a significant effect on the entitys financial position

Emphasis of matter paragraphs IN THE auditors reportWhen the auditor includes an Emphasis of Matter paragraph in the auditors report, the auditor shall:

Include it immediately after the Opinion paragraph in the auditors report;Use the heading Emphasis of Matter. or other appropriate heading;Include in the paragraph a clear reference to the matter being emphasizedIndicate that the auditors opinion is not modified in respect of the matter emphasized