[19:15:25] balbina: P7 STUDY SESSION NUMBER 6 [19:15:32] Ansi: omg [19:15:41] geoklean: balbina had bd [19:15:46] Ansi: oh [19:15:47]

balbina: F Reporting 1. Auditors reports 2.Reports to those charged with governance and management 3. Other report [19:16:44] balbina: Reporting [19:16:56] balbina: we have Auditor Report for today [19:17:12] balbina: its crucial to be familiar with this part [19:17:32] balbina: you cannot pass without knowlege about auditor report [19:17:46] balbina: at exam we may be asked to prepare one [19:17:48] geoklean: yea..:( i noticed [19:18:25] balbina: OK so how auditor report looks like? which paragraph are there? [19:19:26] balbina: very general [19:19:34] hellohowlowlo: {balbina} no [19:19:37] hellohowlowlo: we won't be asked that [19:19:45] hellohowlowlo: we will be given one [19:19:47] hellohowlowlo: and analyse it [19:19:49] hellohowlowlo: but not prepare [19:19:57] balbina: r u sure? [19:19:59] hellohowlowlo: yes [19:20:05] Ansi: take care all! [19:20:07] balbina: so only to correct mistakes [19:20:25] hellohowlowlo: {balbina} yes [19:20:25] balbina: {Ansi} take care Ansi, talk to you later

[19:20:30] balbina: ok [19:20:38] balbina: i dont know what is more difficult [19:21:14] hellohowlowlo: {balbina} do you know difference between emotions and feelings [19:21:30] geoklean: {hellohowlowlo} irrelevant :p [19:21:49] balbina: LOL [19:21:56] balbina: nope [19:21:58] hellohowlowlo: ok [19:22:04] hellohowlowlo: am googling on it [19:22:05] hellohowlowlo: ok carry on [19:22:51] balbina: so in Auditor REport we have intro, Management Responsibility, Auditor Responsibility, [19:22:59] tusharacca: Title..Addressee...Introduction..Respective responsibilities of Directors & auditor...Basis of opinion...opinion..signature & date [19:22:59] balbina: Auditor Opinion [19:23:08] balbina: yep [19:23:22] balbina: ok so what kind of opinion do we have? [19:23:35] hellohowlowlo: we have [19:23:39] hellohowlowlo: 6 kinds [19:23:45] hellohowlowlo: unmodified [19:23:48] balbina: yep [19:23:54] hellohowlowlo: 2 except for [19:23:58] hellohowlowlo: 1 adverse [19:24:01] hellohowlowlo: 1 disclaimer [19:24:15] balbina: what about pervasive/ [19:24:16] balbina: ? [19:24:25] hellohowlowlo: adverse and disclaimer [19:24:26] hellohowlowlo: are pervasive [19:24:37] hellohowlowlo: then we have Emphasis of matter

[19:24:39] balbina: :) [19:24:50] hellohowlowlo: or Other matter paragraph [19:25:05] hellohowlowlo: i think [19:25:11] hellohowlowlo: EOM and OMP [19:25:21] balbina: ok other patter of paragraph which opinion is that unmodified or modified? [19:25:30] hellohowlowlo: unmodified i think [19:25:43] balbina: yep [19:25:54] tusharacca: modified report -_[19:25:55] balbina: because fs shows true and fair view [19:26:06] balbina: and we just want to draw attention [19:26:26] balbina: such as going concern issue [19:27:22] balbina: edan do you want to share with us? [19:29:04] balbina: go on dont be shy [19:29:23] edaan: hey [19:29:29] edaan: how are you all ? [19:29:29] balbina: :) [19:29:52] balbina: do you know any mnemonic about audit report? [19:29:54] edaan: i was telling you the contents of audit report [19:30:10] edaan: ADMIT O2 [19:31:09] balbina: what does it mean? [19:31:19] edaan: A is 4 times [19:31:37] balbina: 4 times? what is it related to? [19:31:44] edaan: A= AUDITORS RESPONSIBILTY [19:31:57] edaan: A= AUDITORS ADDRESS [19:32:04] edaan: AUDITORS SIGNATURE [19:32:14] edaan: A=ADDRESSEEE [19:32:19] balbina: nice :)

[19:32:35] edaan: D= DATE OD THE AUDITORS REPORT [19:32:39] edaan: OF* [19:32:57] edaan: M=MANAGEMENT RSPON.. PARA [19:33:08] edaan: I= INTERODUCTION PARA [19:33:14] edaan: T=TITLE [19:33:23] edaan: O= OPNINION [19:33:28] edaan: O = OPTION [19:33:36] balbina: option? [19:33:48] edaan: OPTIONAL [19:33:56] balbina: aaa [19:34:00] balbina: nice mnemonic [19:34:10] balbina: thanks edaan for shareing it with us [19:34:13] balbina: :) [19:34:17] edaan: ANYTIME [19:34:35] balbina: hello you mentnioned EMP [19:34:49] balbina: other matter paragraph what can it be about? [19:35:27] balbina: any ideas anyone? [19:35:37] edaan: EOM PARA AFTER OPNION PARA [19:35:49] balbina: yep [19:36:48] balbina: OMP relates to matters outside financial statement [19:36:54] edaan: ya [19:36:56] fgassita: eom e.g if a customer sues the company [19:37:04] balbina: it can be disclosure about law regulations [19:37:08] balbina: yess [19:37:16] balbina: thank you fgassita [19:37:31] fgassita: e.g we couldnt assist inventory count.....provided it is not pervasive [19:38:27] balbina: OMP is just ater opinion and EMP

[19:38:48] balbina: emphasis of matter paragraph i mean [19:39:05] balbina: what about emphasis of matter pargraph? [19:39:15] balbina: what we write there about? [19:39:22] geoklean: em..i think i lost something...what is OMP? [19:39:31] balbina: Other matter paragraph [19:39:43] geoklean: aa ok!! thanks [19:39:52] edaan: emp contain info [19:39:52] balbina: matter outside fin stats [19:40:10] edaan: when the matter is significant to the user understanding [19:40:30] edaan: & the matter has been perperly prsnted & disclosed [19:40:38] fgassita: when do u give adverse opinion? [19:40:47] edaan: no [19:41:07] edaan: EOM IS NOTHING TO DO WITH QULIFIED OPINION [19:41:13] balbina: EOM when going conren issuer, new accounting standards [19:41:20] edaan: EOM IS NOT A MODIFICAITON [19:41:28] balbina: {edaan} yep [19:41:29] edaan: BALBINA WAIT [19:42:07] edaan: I WILL TELL YOU WHERE EOM CAN BE GIVEN [19:42:37] edaan: 1) IN CASE OF SUBSEQUENT EVENT [19:42:50] hellohowlowlo: {edaan} balbina waits [19:42:58] edaan: 2) EARLY APPLICATION OF IFRS [19:43:42] edaan: 3) MAJOR CATASTROPHIC EVENT THAT HAS HAD OR CONTINOUS TO HAVE A SIGNIFACNT EFFECT ON THE ENTITY' F.S [19:43:57] edaan: 4) IN CASE OF GOING CONCERN [19:44:13] balbina: {edaan} please use small letters [19:44:23] balbina: its better to read this way [19:44:50] edaan: 5) when auditors considers it appropriate [19:44:56] balbina: :)

[19:44:59] edaan: cant remember the last one [19:45:01] edaan: :( [19:45:11] balbina: u remember a lot [19:45:24] balbina: i knew gc, subseq events [19:45:50] balbina: and accounting changes [19:46:20] balbina: ok lets talk about modified report [19:46:33] balbina: there are two issues [19:46:43] balbina: do u know them? [19:47:00] edaan: remmber one thing, if catastrophic event is regular then EOM [19:47:16] edaan: if its one offf , then qualified it [19:47:24] balbina: well smth stronger [19:47:27] balbina: MM [19:47:46] balbina: and insuficient/inappropriate audit evidence [19:47:56] balbina: MM - material misstatement [19:48:27] balbina: do you remember when you write "except for"? [19:48:32] edaan: what? [19:49:10] edaan: ya [19:49:17] tusharacca: qualification due to a material misstatement [19:49:53] geoklean: when there is a single material mistatement or a small number of individuals mistakes in FS [19:50:07] balbina: {geoklean} yep [19:50:25] balbina: when is single MM [19:50:32] geoklean: and the overall image of FS remains true and fair [19:50:33] edaan: no blabina [19:50:46] edaan: when its material but not pervasive [19:51:00] edaan: then we give except for [19:51:12] balbina: {edaan} i agree too [19:51:16] balbina: u both are right

[19:51:35] tusharacca: both are saying the same thing :D [19:51:38] balbina: when we have pervasive opinion [19:51:38] edaan: its not necsarry to have a single MM [19:51:48] edaan: I CANT BE DOUBLE OR TRIPLE [19:51:49] geoklean: yeap :) different words :) [19:52:08] geoklean: {edaan} please dont shout! [19:52:21] tusharacca: the main idea is the overall FS remain true and fair... [19:52:44] edaan: teachers doo shout , they have to speak louder :p [19:52:56] geoklean: {edaan} that's why i wrote "or a small number of individuals mistakes in FS" [19:52:57] tusharacca: if not then it is pervasive [19:53:00] balbina: pervasive may be when there is fundamental error for example [19:53:48] tusharacca: {balbina} that affects the fairness of FS [19:54:05] edaan: miss cyprus you are right [19:54:28] balbina: do you know the difference between discaimer and advers opinion? [19:54:30] geoklean: I know :p [19:55:04] balbina: {geoklean} you need to send us ur picture after the session :) [19:55:14] geoklean: lol [19:55:15] geoklean: nop [19:55:16] geoklean: :p [19:55:22] balbina: ok just me :) [19:55:42] geoklean: dont worry am nothing much :) [19:56:14] balbina: so ltes continue what is the difference between disclaimer and adverse opinion? [19:56:31] edaan: hmm [19:57:02] geoklean: disclaimer opinion is when the auditors are unable to give an opinion at all because of the limitation being to large [19:57:09] tusharacca: disclaimer means where limitation of scope is so large that the auditors are unable to give an opinion at all [19:57:28] balbina: {tusharacca} {geoklean} :star:

[19:58:09] balbina: and sdverse? [19:58:09] geoklean: adverse is where the auditors disagree with the truth and fairness of the FS overall [19:58:21] edaan: disclaimer is given when auditor caant obatin SAAE [19:58:27] balbina: the strongest one [19:58:32] balbina: yep both tight [19:58:42] edaan: sufficient appropiate adit evidence [19:58:42] geoklean: {edaan} SAAE? [19:58:52] geoklean: oh ok [19:59:01] balbina: with adverse opinion we write "do not give a true and fair view" [19:59:41] edaan: 2) manage. is unwilling to make or extent its assesment [20:00:22] edaan: #) unable to requst confirmation & no other means of gatingger sufficent dudi evidence [20:01:01] edaan: gathering audit evidence * :P [20:01:55] balbina: guys are you ok with auditors report now? [20:02:21] geoklean: yea..some things are clearer now :) [20:02:40] tusharacca: yea [20:03:02] balbina: geo arent you confident with any particular area? [20:03:24] balbina: smth to explain? [20:03:29] geoklean: not really [20:03:40] balbina: maybe in other words [20:03:49] balbina: so we have maerial matter issue [20:04:05] balbina: what kind of opinion can we have? [20:04:48] geoklean: does it affect the overall FS? [20:04:59] balbina: yep [20:05:08] balbina: and second answer no [20:05:11] balbina: :D [20:05:21] balbina: what opinion can we state?

[20:05:29] balbina: in both cases? [20:05:47] geoklean: qualified audit opinion [20:06:04] balbina: ok and then? [20:06:06] geoklean: with emphasis on matter [20:06:16] balbina: hmmm [20:06:31] balbina: EOM is when there is unqualified opinion [20:06:36] geoklean: and on first qn, adverse opinion [20:06:45] geoklean: hm :/ [20:06:54] tusharacca: {balbina} but the report will be modified [20:07:35] balbina: {tusharacca} with EOM? you mean? [20:07:40] tusharacca: yea [20:07:48] balbina: its unmodifeid [20:08:04] tusharacca: just checked it in bpp passcard :D [20:08:53] balbina: and? [20:09:05] balbina: ok once again, material misstatement [20:09:22] balbina: we modify our opinion because there are MM [20:09:48] balbina: and we can choose qualifed or adverse opinion [20:09:59] balbina: quialified we write "except for" [20:10:13] tusharacca: hmmm [20:10:22] balbina: adverse " do not give true and fair view" - so material [20:10:41] balbina: agree? [20:10:49] tusharacca: pervasive [20:11:09] balbina: pervasive is discaimer or adverse [20:11:43] balbina: pervasive is when we cannot obtain sufficient evidence or its so material [20:12:36] balbina: more clear? [20:12:50] geoklean: yes [20:13:07] tusharacca: yes

[20:13:13] balbina: :) [20:13:32] balbina: ok now more about reporting [20:13:49] balbina: ISA 260 states communication with those charged with governane [20:14:13] balbina: to whom auditors can communicate? [20:14:23] balbina: i know its again the same topic [20:14:28] balbina: we were going through [20:15:24] geoklean: to shareholders [20:15:37] balbina: yes [20:15:43] balbina: to who else? [20:15:59] tusharacca: audit committee [20:16:01] balbina: i will give you hint - management letter for example [20:16:07] balbina: {tusharacca} yes [20:16:14] hellohowlowlo: mgt [20:16:19] balbina: yep [20:16:27] hellohowlowlo: management [20:16:28] hellohowlowlo: :p [20:16:35] balbina: what do we communicate to them? [20:16:42] hellohowlowlo: internal control failures [20:16:45] hellohowlowlo: deficiencies [20:16:47] hellohowlowlo: along with recommendations [20:16:50] hellohowlowlo: if possible [20:17:06] tusharacca: yes [20:17:16] balbina: yep [20:17:18] balbina: what else? [20:17:27] hellohowlowlo: non-compliance [20:17:37] balbina: responsibility of auditor? [20:17:52] geoklean: yep

[20:17:54] hellohowlowlo: but u need to be careful who to report to [20:17:56] hellohowlowlo: non compliance [20:17:59] hellohowlowlo: if mgt is involved [20:18:02] hellohowlowlo: u report to higher level [20:18:08] hellohowlowlo: if highest level involved [20:18:10] balbina: yep :) [20:18:13] hellohowlowlo: you get legal advice [20:18:22] balbina: responsibility of who else? [20:18:37] hellohowlowlo: mgt is primarily responsible [20:18:43] balbina: yesssss [20:18:46] balbina: :) [20:18:54] balbina: :):):):) [20:19:07] balbina: ok guys [20:19:17] balbina: we are clear with auditor report [20:19:24] balbina: thank you very much for this session [20:19:25] tusharacca: yea [20:19:37] hellohowlowlo: {balbina} where u going [20:19:39] hellohowlowlo: ur b/f called? [20:19:42] balbina: we have just one topic left for next MOnday part F [20:19:59] balbina: :) [20:20:17] balbina: sorry it was part F today, next Monday we have part G [20:20:25] balbina: and we are over with theory [20:20:25] hellohowlowlo: {balbina} ur b/f called? [20:20:32] balbina: {hellohowlowlo} NO [20:20:36] tusharacca: :P [20:20:39] hellohowlowlo: where is he [20:20:51] balbina: dont know

[20:20:52] hellohowlowlo: anyway [20:20:54] hellohowlowlo: ok [20:20:58] hellohowlowlo: am available [20:21:00] hellohowlowlo: letting u know [20:21:04] geoklean: lowlo!! [20:21:06] geoklean: be nice!! [20:21:10] balbina: G Current Issues and Developments 1. Professional and ethical 2. Information technology 3.Transnational audits 4. Social and environmental auditing 5. Other current issues