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ISA 705 Modification To The Opinion

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ISA 705 Modifications to the Opinion in the Independent Auditor's Report

ISA 700, Forming an Opinion and Reporting on Financial Statement determines the standards and provides support on the method and substance of the auditor’s report. It requires the auditor to provide an opinion about whether the financial statements reflect a true and fair view. In order to support the opinion expressed, the auditors are required to carry out the necessary auditing measures.

ISA 700 has been revised to reflect how the content and form of the auditor’s report is affected when the auditor states a modified opinion. ISA 705 Modifications to the Opinion in the Independent Auditor's Report was, therefore, introduced to correspond to the enhanced auditor reporting …show more content…

• The inability to gather satisfactory suitable audit evidence to determine that the financial statement entirely are fee from material errors.

Qualified Opinion:
The auditor expresses a qualified view when the auditor after considering all the appropriate evidence concludes that the misstatements are material, but not pervasive, to the financial statements. When the auditor is unable to attain sufficient audit proof on which to express an opinion, they give a qualified opinion concluding that the impact of the undetected errors on the financial statements, if any, could be material but not pervasive.

Adverse Opinion:
The auditor expresses an adverse opinion when the auditor after considering all the appropriate evidence concludes that the misstatements are both material and pervasive to the financial statements.

Disclaimer of …show more content…

The Sarbanes-Oxley Act and the New York Stock Exchange (NYSE) listing requirements have specific provisions to deal with issues related to audit committees, elaborating their roles and responsibilities. In order to be listed, companies must have an audit committee comprised of independent directors with a minimum of three members. Independent directors should form the majority of a corporate board.

Independent director is one who the board affirmatively determines has no material relationship with the company. Requirements also include the audit committee to be responsible for the appointment, compensation, and oversight of a company’s external auditor. Non-management directors are required to meet at executive sessions on a regular basis without the involvement of management. Listed companies are required to have an internal audit function. Companies must also adopt and disclose the code of business conduct and governance guidelines.

6. The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB), requiring auditors of U.S. public companies to be subject to external and independent oversight. The goal of PCAOB is to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit

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