F8: Answer for Audit Report

Dear Hard-working ACCA F8 Candidates,

Pleased to provide the answer below for your good reference.

Work HardER,
Marcus

Answer E for Question on Audit report
ISA 260: Reports to Management requires auditors to communicate with management over the following matters namely:
• Ethical threats discovered during the audit engagement that may question the Professional due care, independence, objectivity and integrity of the audit team members and/or engagement partner.
• Stating the overall scope of audit and its limitation especially highlighting reliance on client’s internal controls and the limitations of using sampling when performing Test of Details substantive test.
• Highlight the significance of accounting policies change impact on client’s presentation of accounts.
• Requiring significant audit adjustments. This means the item misstatements have exceeded AUDIT THRESHOLD.
• Significant disagreement with management on Financial Statements and/or Disclosures.
• Expected Audit Report Modification if management continue to REFUSE to make adjustments.
• Material uncertainties affecting the entity’s ability to continue as a going concern. Auditors require SOFP to be valued as a BREAK UP Basis.
• Highlighting the material weaknesses in entity’s internal controls.
• Highlighting the failure of entity to comply with laws, local regulations or stock market requirements.