1.1 The Standards on Auditing and Quality Control are divided into two groups: Standards on Quality Control (which apply to quality control at the firm level) and the Standards on Auditing (SAs) which apply to audits of historical financial information.
The latter are further categorised into: Standards dealing with (a) general principles and responsibilities (200-series), (b) risk assessment and response to assessed risks (300 and 400-series), (c) audit evidence (500- series), (d) using the work of others (600- series), (e) audit conclusions and reporting (700-series); and (f) specialised areas (800-series).
Scope of the Implementation Guide
1.2 The scope of this Implementation Guide is limited to SA 700 (Revised), “Forming and Opinion and Reporting on Financial Statements”, SA 705 (Revised), “Modifications to the Opinion in the Independent Auditor’s Report” and SA 706 (Revised), “Emphasis of Matter Paragraph and Other Matter Paragraph in the Independent Auditor’s Report” that deal with how to form an audit opinion, reach audit conclusions and issue different types of auditor’s reports.
1.3 These Standards are arguably the most important ones because they deal with processes that culminate into the end product of an auditor’s work i.e. the auditor’s report. They are crucial from an auditor’s risk perspective because they lay down the principles and procedures on how an auditor forms his opinion and the manner in which he communicates the opinion, which determines how the society in general or specific stakeholders will make important economic decisions. In other words, the opinions and conclusions stated in an auditor’s report and how those were reached will be what regulators and investigative IG on Reporting Standards (Revised 2018) 2 agencies challenge in the event that something goes wrong subsequently. It is therefore of great professional concern that the practitioners appropriately understand and carefully implement the Standards relating to these areas that are broadly referred to in this Implementation Guide as “the Reporting Standards”.
1.4 It should, however, be noted that this Implementation Guide is not a replacement of or a substitute for the original Standard(s) and must not, therefore, be read on a stand-alone basis. It is meant to clarify and augment a practitioner’s understanding of the Standards and provide guidance where appropriate. Practitioners are therefore urged to first read the relevant Standard(s) and refer to them as they use this Implementation Guide. For ease of usage, the various issues in reporting standards (revised SA 700, revised SA 705 and revised SA 706) have been dealt with in an easy-to-follow “Question-Answer” format.
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