In June 2014, the International Auditing and Assurance Standards Board (IAASB), belonging to the International Federation of Accountants (IFAC), issued the final draft of the new audit report, as a result of the revisions and / or new international auditing standards, as follows:
- Proposed ISA 700 (Revised), Formation of Opinion and Issuance of the Auditor's Report on the Financial Statements Proposed New ISA 701, Proposal Communication of Significant Audit Matters in the Independent Auditor's Report Proposed ISA 260 (Revised), Communication with responsible for the governance of the entity ISA 570 (Revised) Proposal, Going Concern ISA 705 (Revised) Proposal, Amended Opinion in the report issued by an independent auditor ISA 706 (Revised) Proposal, Emphasis paragraphs and paragraphs on other issues in the report issued by an independent auditor.
Since the last amendment to ISA 700 in 2009, the IAASB continued to work with users of financial information (authorities, regulators, analysts, investors, etc.) in seeking to improve the audit report that would respond to the needs of the users and to describe in a more informative way the relevant facts of the audit process. In the process, there were questions regarding the responsibility of the auditors to report, aspects such as the evaluation of the ongoing business, given that in recent years, there were very high-profile cases of audited companies that went bankrupt, and the audit report above I do not reveal anything about it. The new ISA 700 requires an explicit statement of the auditor's independence and disclosing the source (s) of the relevant ethical requirements.
The final version of the auditor's report regulations is expected to be issued by December 2014, the IAASB normally provides a period of 12 months after the issuance of any final ISA, to allow time for translation, adoption and application, therefore It is estimated to be applied to audits of financial statements for periods beginning on December 15, 2015 and later; In the case of Mexico, it would be applicable for audits in 2016. The example auditor's report is for the scenario of an unmodified opinion, issued on an audit of consolidated financial statements of a listed entity, prepared in accordance with with the International Financial Reporting Standards (IFRS);of which no material uncertainties have been identified related to events or conditions that may cast doubt on the entity's ability to continue as a going concern, in accordance with ISA 570.
Independent Auditor's Report
To the Shareholders of ABC Company
Report on the Audit of the Consolidated Financial Statements
Opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the ABC Company and its subsidiaries (the Group) as of December 31, 20X1, as well as their consolidated results, and their consolidated cash flows for the year ended on that date in accordance with International Financial Reporting Standards (IFRS).
We have audited the Group's consolidated financial statements, which comprise the consolidated statement of financial position as of December 31, 20X1, and the consolidated statement of income, the consolidated statement of changes in equity and the statement of cash flows consolidated by the year ended on that date, and the notes to the consolidated financial statements, including a summary of significant accounting policies.
Basis for Opinion
We have conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further explained in the Auditor's Responsibilities for the Audit of Consolidated Financial Statements section of our report. We are independent of the Group in the sense of and have fulfilled our other responsibilities under these ethical requirements. We believe that the audit evidence obtained is sufficient and appropriate to provide the basis for our opinion.
Important audit matters
Significant audit matters are those matters that, in our professional judgment, were most important in our audit of the consolidated financial statements. The important audit matters were selected from those communicated to, but are not intended to represent all matters discussed with them. Our procedures regarding these matters were designed in the context of our audit of the consolidated financial statements as a whole. Our opinion on the consolidated financial statements is unchanged with respect to any of the significant audit matters described below, and we do not express an opinion on these matters individually.
Capital gain
Under IFRS, the Group is required to annually test the amount of its goodwill to determine its impairment. This annual impairment test was significant for our audit because the evaluation process is complex and highly critical and is based on assumptions that are affected by future market expectations or by economic conditions, particularly in. As a result, our audit procedures included, among others, using an expert valuation to help us evaluate the assumptions and methodologies used by the Group, in particular those related to expected revenue growth and profit margin for. We also focus on the appropriateness of the Group's disclosures on these assumptions for which the result of the impairment test is more sensitive, that is,those that have a more significant effect in determining the recoverable amount of goodwill. The Group's disclosures on goodwill are included in Note 3, which specifically explains that small changes in the important assumptions used may lead to a deterioration in the amount of goodwill in the future.
Ongoing business
The Group's consolidated financial statements have been prepared using the going concern accounting bases. The use of these accounting bases is appropriate unless management intends to liquidate the Group or stop operations, or has no realistic alternative but to do so. As part of our audit of the consolidated financial statements, we have concluded that management's use of the going concern accounting bases in the preparation of the Group's consolidated financial statements is appropriate.
Management has not identified a material uncertainty that could give rise to significant doubt about the Group's ability to continue as a going concern, and therefore it is not disclosed in the Group's financial statements. Based on our audit of the consolidated financial statements, we have also not identified such material uncertainty. However, neither management nor the auditor can guarantee the Group's ability to continue as a going concern.
Other information
Responsibilities of the administration and those charged with the governance of the entity over the consolidated financial statements.
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with IFRS, and for the internal control that management determines necessary to allow the preparation of the consolidated financial statements free of material misstatements, due to fraud or error. They are responsible for supervising the Group's financial information process.
Auditor's responsibility for the audit of the financial statements
The objectives of our audit is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatements, derived from fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but it is no guarantee that an audit carried out in accordance with the ISAs will always detect a material deviation where it exists. Deviations may arise from fraud or error and are considered material when, individually or as a whole, they are reasonably expected to influence the economic decisions of users, taken on the basis of these consolidated financial statements.
As part of an audit in accordance with the ISAs, we exercise professional judgment and maintain professional skepticism throughout the planning and conduct of the audit. Too:
- We identify and evaluate the risks of material misstatement of the financial statements, derived from fraud or error, designing and applying audit procedures that respond to those risks, and obtaining audit evidence that is sufficient and appropriate to provide the basis for our opinion. The risk of not detecting material misstatements resulting from fraud is greater than those resulting from error, as fraud may involve conspiracy, falsification, willful omission, misrepresentation, or the override of an internal control. Obtain an understanding of the control. relevant to the audit in order to design the appropriate audit procedures in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.Evaluate the appropriateness of the accounting policies used and the reasonableness of the accounting estimates and their corresponding disclosures made by management Evaluate the general presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements present the transactions and underlying events in a way that achieves a fair presentation Obtain sufficient and appropriate audit evidence regarding the financial information of the entities and business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit group. We remain solely responsible for our opinion on the audit.
We are required to communicate regarding, among other matters, the planned focus and timing of the audit, including any significant deficiencies in internal control that we identify during our audit.
We are also required to provide a statement about our compliance with relevant ethical requirements regarding independence and communicate to them any relationships and other matters that may reasonably be thought to affect our independence, and where applicable, the safeguards. relative.
Report on other legal or regulatory requirements.
……….
The engagement partner responsible for the audit resulting in this independent auditor's report is
conclusion
Improvements to the audit report seek to increase user confidence, which is the essence of financial statement audit work.
Footnotes:
1. The topic presented is for illustrative purposes only, regarding important audit matters.
2. The sample wording for this section is subject to the IAASB finalizing ISA 720 (Revised). The content of this section may include, among other matters: (a) a description of the auditor's responsibilities with respect to other information; (b) identification of the document or documents available at the date of the auditor's report that contain other information to which the auditor's responsibilities apply; (c) a statement indicating the result of the auditor's work on the other information; and (d) a statement that the auditor has not audited or reviewed the other information and, therefore, does not express an audit opinion or a review conclusion thereon.
3. The form and content of this section may vary depending on the nature of the auditor's other reporting responsibilities established by law, regulation or national auditing standards. Depending on the matters addressed by another law, regulation, or national auditing standards, national standard setters may choose to combine reporting on these matters with information required by the ISAs, with wording in the auditor's report, that clearly distinguish between the report required by the ISAs and the other report required by law or regulation
