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Questions and Answers
What does the Philippine Standard on Auditing (PSA) discussed in the text primarily focus on?
What does the Philippine Standard on Auditing (PSA) discussed in the text primarily focus on?
- Investment strategies in the Philippine market
- Taxation laws in the Philippines
- Auditor's responsibilities regarding comparative information in financial statements (correct)
- Corporate governance practices in Philippine companies
How does the nature of comparative information in an entity's financial statements vary?
How does the nature of comparative information in an entity's financial statements vary?
- Based on the auditor's personal preferences
- Based on the country's GDP growth rate
- Based on the requirements of the applicable financial reporting framework (correct)
- Based on the company's marketing strategy
What is included as an integral part of the current period financial statements?
What is included as an integral part of the current period financial statements?
- Completely new financial data unrelated to prior periods
- Corresponding figures from one or more prior periods (correct)
- Historical data from a different industry sector
- Future projections of financial performance
What dictates the level of detail presented in the comparative information?
What dictates the level of detail presented in the comparative information?
If an auditor identifies a possible material misstatement in the comparative information, what must they do?
If an auditor identifies a possible material misstatement in the comparative information, what must they do?
According to PSA 580, what is required regarding written representations for all periods referred to in the auditor's opinion?
According to PSA 580, what is required regarding written representations for all periods referred to in the auditor's opinion?
What is the primary purpose of audit procedures?
What is the primary purpose of audit procedures?
In the given text, who is responsible for the preparation and fair presentation of financial statements?
In the given text, who is responsible for the preparation and fair presentation of financial statements?
What did the other auditor express about the financial statements of ABC Company for the year ended December 31, 20X0?
What did the other auditor express about the financial statements of ABC Company for the year ended December 31, 20X0?
Which auditing standard were the audits conducted in accordance with?
Which auditing standard were the audits conducted in accordance with?
What was a basis for a qualified opinion mentioned in the text?
What was a basis for a qualified opinion mentioned in the text?
Why are audit procedures selected based on the auditor's judgment?
Why are audit procedures selected based on the auditor's judgment?
Why does the auditor request written representations for all periods referred to in the auditor's opinion?
Why does the auditor request written representations for all periods referred to in the auditor's opinion?
In what scenario does the auditor's report on current period financial statements include an Emphasis of Matter paragraph?
In what scenario does the auditor's report on current period financial statements include an Emphasis of Matter paragraph?
When does the auditor's opinion on the current period need to refer to a modification in the opinion on the prior period?
When does the auditor's opinion on the current period need to refer to a modification in the opinion on the prior period?
What options does an auditor have when expressing an opinion on comparative financial statements?
What options does an auditor have when expressing an opinion on comparative financial statements?
Under what circumstances may the opinion expressed on prior period financial statements change during the current period's audit?
Under what circumstances may the opinion expressed on prior period financial statements change during the current period's audit?
When is it necessary for an auditor to express a qualified opinion on financial statements?
When is it necessary for an auditor to express a qualified opinion on financial statements?
In the context of the text provided, what is the auditor's responsibility?
In the context of the text provided, what is the auditor's responsibility?
What is the major difference between PSA 710 (Redrafted) and ISA 710 (Redrafted)?
What is the major difference between PSA 710 (Redrafted) and ISA 710 (Redrafted)?
Why did the auditor qualify their opinion on the financial statements?
Why did the auditor qualify their opinion on the financial statements?
What is the primary responsibility of management as stated in the text?
What is the primary responsibility of management as stated in the text?
What action might an auditor take if the predecessor auditor is unwilling to reissue the report on prior period financial statements?
What action might an auditor take if the predecessor auditor is unwilling to reissue the report on prior period financial statements?
Based on the text, what is the auditor's responsibility?
Based on the text, what is the auditor's responsibility?
Which standard emphasizes management's responsibility for the preparation of financial statements?
Which standard emphasizes management's responsibility for the preparation of financial statements?
Why was the audit opinion modified to a Qualified Opinion in this case?
Why was the audit opinion modified to a Qualified Opinion in this case?
What aspect did the auditor evaluate as part of their audit procedures?
What aspect did the auditor evaluate as part of their audit procedures?
What was the main challenge faced by the auditors regarding physical inventories?
What was the main challenge faced by the auditors regarding physical inventories?
In this scenario, what does a Qualified Opinion mean for the financial statements?
In this scenario, what does a Qualified Opinion mean for the financial statements?
What aspect of internal control is highlighted as management's responsibility in the text?
What aspect of internal control is highlighted as management's responsibility in the text?
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Study Notes
Comparative Information in Financial Statements
- Comparative information includes amounts and disclosures for one or more prior periods in accordance with the applicable financial reporting framework.
- Corresponding figures are included as an integral part of the current period financial statements, and the level of detail presented is dictated primarily by its relevance to the current period figures.
Auditor's Responsibilities
- The auditor shall determine whether the financial statements include the comparative information required by the applicable financial reporting framework and whether such information is appropriately classified.
- If the auditor becomes aware of a possible material misstatement in the comparative information, the auditor must perform additional audit procedures to determine if a material misstatement exists.
Written Representations
- The auditor shall obtain written representations for all periods referred to in the auditor's opinion.
- The auditor requests written representations for all periods referred to in the auditor's opinion, even if the prior period financial statements were not audited, because the auditor needs to reaffirm that the written representations it previously made with respect to the prior period remain appropriate.
Audit Procedures
- Audit procedures are designed to obtain audit evidence about the amounts and disclosures in the financial statements, and to evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management.
- The procedures are selected based on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
Reporting Modifications
- If the prior period financial statements are misstated, the auditor's report may include an Emphasis of Matter paragraph describing the circumstances.
- The auditor may express a qualified opinion, an adverse opinion, disclaim an opinion, or include an Emphasis of Matter paragraph in his/her report on comparative financial statements if the matter giving rise to the opinion modification is unresolved.
- The opinion expressed on the prior period financial statements may change if the auditor becomes aware of circumstances or events that materially affect the prior period financial statements during the current period's audit.
Philippine Standard on Auditing (PSA) 710
- There are no significant differences between PSA 710 (Redrafted) and ISA 710 (Redrafted), except for the deletion of the phrase "give a true and fair view".
- PSA 710 deals with the auditor's responsibilities regarding comparative information in an audit of financial statements.
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