a) True and fair view as used in audit report
True and fair view means the accounts presented comply with the requirements of international
financial reporting standards, the company's Act and other relevant legislation.
Types of audit opinions which the auditor may express in his/her audit report.
- Unqualified opinion
When the auditor is satisfied in all material respects that enables him to express the required
opinion on the financial statements without any reservations. This is sometimes called a clean
opinion. This is expressed when the auditor concludes that the financial statements give a true
and fair view in accordance with the relevant financial reporting framework.
- Qualified audit opinion (except for opinion)
This is expressed when the auditor concludes that an unqualified opinion cannot be expressed but
that the effect of any disagreement with management or limitation on scope is not so material
and pervasive as to require an adverse opinion or disclaimer of opinion. A qualified report
implies that all other aspects of the financial statements are okay except for the effects of the
matter to which the qualification relates.
- Disclaimer of opinion
This is issued when the possible effect of a limitation on scope or uncertainty is so material and
pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and as
a result he is unable to express an opinion on the financial statements. A disclaimer of opinion
implies that the auditor is unable to form an opinion because sufficient audit evidence could not
be obtained.
- Adverse opinion
This is expressed when the effects of a disagreement is so material and pervasive to the financial
statements that the auditor concludes that a qualification of the report is not adequate to disclose
the misleading or incomplete nature of the financial statements. The auditor states that due to the
nature of the disagreement in his opinion the financial statements do not show a true and fair
view.
b) Matters an auditor should include in the scope paragraph of his/her report.
• Responsibilities of client to give/maintain proper record ()I' account and prepare financial
statements showing true and fair view.
• A description of the work to be carried out
• Accounting principles used in the preparation of financial statements
• A description of the audit work and the fact that the audit was carried out on a test basis
• Statement that the audit was planned and performed to obtain reasonable assurance about
the financial statements and are free from material misstatements.
• The statement that the audit was conducted in accordance with international standards on
auditing
• The statement that auditing is a limited exercise and cannot guarantee 100% accuracy and
completeness.
Kavungya answered the question on May 15, 2019 at 09:02
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