IMPLICATION
ON SA 700 (REVISED) AUDITORS REPORT
SA
700 (REVISED) – FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS
SA
700 (Revised) deals with the auditor’s responsibility to form an opinion on the
financial statements and also with the form and content of the auditor’s report
issued as a result of an audit of financial statements. The main highlights of
this SA are:
• The
Auditors report shall be in writing – hard Copy or report using electronic
format.
• It
shall have a title that clearly indicates that it is the report of an
independent auditor.
• The
introductory paragraph of the report shall contain the name of the entity, name
and period of each statement that comprises the financial statements, refer to
the summary of significant accounting policies and other explanatory
information and state that the financial statements have been audited.
• The
auditor’s report shall include sections and headings as under:
Report
on the Financial Statements (if other reporting responsibilities have been
addressed)
-
Management’s [or other appropriate term] Responsibility for the Financial
Statements
-
Auditor’s Responsibility
-
Opinion
Report
on Other Legal and Regulatory Requirements [or otherwise as appropriate]
(wherever applicable)
The
auditor’s report shall be signed and dated and shall also contain the place of
signature along with membership number of the auditor signing the report and
the FRN of the firm, as applicable.
COMPARATIVE
ILLUSTRATION OF FORMAT OF AUDITOR’S REPORT (NON-MODIFIED) BEFORE AND AFTER
APPLICABILITY OF SA 700 (REVISED) – AUDIT OF FINANCIAL STATEMENTS PREPARED
UNDER COMPANIES ACT, 1956
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Illustrative format of Audit Report
applicable till 31.03.2012
[Before application of SA 700
(revised)]
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Illustrative format of Audit Report
applicable from 01.04.2012
[After application of SA 700
(Revised)]
|
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AUDITORS’ REPORT
To the Members of ABC Company Limited
We have audited the attached balance
sheet of ABC Company Limited (“the Company”) as at 31 March 20XX and the
statement of profit and loss for the period ….. annexed thereto.
These financial statements are the
responsibility of the Company’s management.
Our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in India.
Those Standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement.
An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements.
An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.
We believe that our audit
provides a reasonable basis for our opinion.
As required by the Companies
(Auditor’s Report) Order, 2003, as amended, issued by the Central Government
of India in terms of sub-section (4A) of Section 227 of the Companies Act,
1956, (“the Act”) we enclose in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said Order.
Further to our comments in the
annexure referred to above, we report that:
(a) we have obtained all the
information and explanations which to the best of our knowledge and belief
were necessary for the purpose of our audit;
(b) in our opinion proper books
of account as required by law have been kept by the Company so far as appears
from our examination of those books [and proper returns adequate for the
purposes of our audit have been received from branches not visited by us];
(c) the Balance Sheet, Statement
of Profit and Loss, and Cash Flow Statement dealt with by this Report are in
agreement with the books of account [and with the returns received from
branches not visited by us;
(d) in our opinion, the
Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply
with the Accounting Standards referred to in subsection (3C) of section 211
of the Companies Act, 1956;
(e) on the basis of written
representations received from the directors as on March 31, 20XX, and taken
on record by the Board of Directors, none of the directors is disqualified as
on March 31, 20XX, from being appointed as a director in terms of clause (g)
of sub-section (1) of section 274 of the Companies Act, 1956.
(f) in our opinion and to the
best of our information and according to the explanations given to us, the
said accounts give the information required by the Act in the manner so
required, and give a true and fair view, in conformity with the
accounting principles generally accepted in India:
(a) in the case of the Balance Sheet,
of the state of affairs of the Company as at March 31, 20XX;
(b) in the case of the Profit and
Loss Account, of the profit/ loss for the year ended on that date; and
(c) in the case of the Cash Flow
Statement, of the cash flows for the year ended on that date.
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INDEPENDENT AUDITOR’S
REPORT
To the Members of ABC Company Limited
Report on the Financial Statements
We have audited the accompanying
financial statements of ABC Company Limited (“the Company”), which comprise
the Balance Sheet as at March 31, 20XX, and the Statement of Profit and Loss and Cash Flow Statement for
the year then ended, and a summary of significant accounting policies
and other explanatory information.
Management’s Responsibility for the Financial
Statements
Management
is responsible for the preparation of these financial statements that
give a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the Accounting Standards
referred to in sub-section (3C) of section 211 of the Companies Act, 1956
(“the Act”). This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and fair view and
are free from material misstatement, whether due to fraud or error.
Auditor’s
Responsibility
Our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit in accordance with the Standards on Auditing issued by the Institute of
Chartered Accountants of India. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company’s preparation and fair
presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances. An audit also includes
evaluating the
appropriateness of accounting policies used and the reasonableness of the accounting estimates
made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion and to the best of our
information and according to the explanations given to us, the financial
statements give the information required by the Act in the manner so required
and give a true and fair view in conformity with the accounting principles
generally accepted in India:
(a) in the case of the Balance Sheet,
of the state of affairs of the Company as at March 31, 20XX;
(b) in the case of the Profit and
Loss Account, of the profit/ loss for the year ended on that date; and
(c) in the case of the Cash Flow
Statement, of the cash flows for the year ended on that date.
Report on Other
Legal and Regulatory Requirements
1. As required by the Companies
(Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government
of India in terms of sub-section (4A) of section 227 of the Act, we give in
the Annexure a statement on the matters specified in paragraphs 4 and 5 of
the Order.
2.
As required by section 227(3) of the Act, we report that:
a. we have obtained all the
information and explanations which to the best of our knowledge and belief
were necessary for the purpose of our audit;
b. in our opinion proper books of
account as required by law have been kept by the Company so far as appears
from our examination of those books [and proper returns adequate for the
purposes of our audit have been received from branches not visited by us];
c. the Balance Sheet, Statement of
Profit and Loss, and Cash Flow Statement dealt with by this Report are in
agreement with the books of account [and with the returns received from
branches not visited by us;
d. in our opinion, the Balance Sheet,
Statement of Profit and Loss, and Cash Flow Statement comply with the
Accounting Standards referred to in subsection (3C) of section 211 of the
Companies Act, 1956;
e. on the basis of written
representations received from the directors as on March 31, 20XX, and taken
on record by the Board of Directors, none of the directors is disqualified as
on March 31, 20XX, from being appointed as a director in terms of clause (g)
of sub-section (1) of section 274 of the Companies Act, 1956.
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Thank to CA Vinay Parmar
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