The auditor shall form an opinion on whether the financial report is prepared, in all material respects, in accordance with the applicable financial reporting framework.^[9],^[10]

In order to form that opinion, the auditor shall conclude as to whether the auditor has obtained reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error. That conclusion shall take into account:

1. The auditor’s conclusion, in accordance with ASA 330, whether sufficient appropriate audit evidence has been obtained;^[11]
2. The auditor’s conclusion, in accordance with ASA 450, whether uncorrected misstatements are material, individually or in aggregate;^[12] and
3. The evaluations required by paragraphs 12–15 of this Auditing Standard.

The auditor shall evaluate whether the financial report is prepared, in all material respects, in accordance with the requirements of the applicable financial reporting framework.  This evaluation shall include consideration of the qualitative aspects of the entity’s accounting practices, including indicators of possible bias in management’s judgements. (Ref: Para. A1–A3)

In particular, the auditor shall evaluate whether, in view of the requirements of the applicable financial reporting framework:

1. The financial report appropriately discloses the significant accounting policies selected and applied. In making this evaluation, the auditor shall consider the relevance of the accounting policies to the entity, and whether they have been presented in an understandable manner; (Ref: Para. A4)
2. The accounting policies selected and applied are consistent with the applicable financial reporting framework and are appropriate;
3. The accounting estimates and related disclosures made by management are reasonable;
4. The information presented in the financial report is relevant, reliable, comparable, and understandable. In making this evaluation, the auditor shall consider whether:
   • The information that should have been included has been included, and whether such information is appropriately classified, aggregated or disaggregated, and characterised.
   • The overall presentation of the financial report have been undermined by including information that is not relevant or that obscures a proper understanding of the matters disclosed. (Ref: Para. A5);
5. The financial report provides adequate disclosures to enable the intended users to understand the effect of material transactions and events on the information conveyed in the financial report; and (Ref: Para. A6)
6. The terminology used in the financial report, including the title of each financial statement, is appropriate.

When the financial report is prepared in accordance with a fair presentation framework, the evaluation required by paragraphs 12–13 of this Auditing Standard shall also include whether the financial report achieves fair presentation. The auditor’s evaluation as to whether the financial report achieves fair presentation shall include consideration of: (Ref: Para A7-A9)

1. The overall presentation, structure and content of the financial report; and
2. Whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

The auditor shall evaluate whether the financial report adequately refers to or describes the applicable financial reporting framework.  (Ref: Para. A10–A15)

The auditor shall express an unmodified opinion when the auditor concludes that the financial report is prepared, in all material respects, in accordance with the applicable financial reporting framework.

If the auditor:

1. concludes that, based on the audit evidence obtained, the financial report as a whole is not free from material misstatement; or
2. is unable to obtain sufficient appropriate audit evidence to conclude that the financial report as a whole is free from material misstatement,

the auditor shall modify the opinion in the auditor’s report in accordance with ASA 705.

If the financial report prepared in accordance with the requirements of a fair presentation framework does not achieve fair presentation, the auditor shall discuss the matter with management and, depending on the requirements of the applicable financial reporting framework and how the matter is resolved, shall determine whether it is necessary to modify the opinion in the auditor’s report in accordance with ASA 705. (Ref: Para. A16)

When the financial report is prepared in accordance with a compliance framework, the auditor is not required to evaluate whether the financial report achieves fair presentation.  However, if in extremely rare circumstances the auditor concludes that such a financial report is misleading, the auditor shall discuss the matter with management and, depending on how it is resolved, shall determine whether, and how, to communicate it in the auditor’s report.  (Ref: Para. A17)

The auditor’s report shall be in writing.  (Ref: Para. A18–A19)

Auditor’s Report for Audits Conducted in Accordance with Australian Auditing Standards

Title

The auditor’s report shall have a title that clearly indicates that it is the report of an independent auditor. (Ref: Para. A20)

Addressee

The auditor’s report shall be addressed, as appropriate, based on the circumstances of the engagement. (Ref: Para. A21)

Auditor’s Opinion

The first section of the auditor’s report shall include the auditor’s opinion, and shall have the heading “Opinion.”

The Opinion section of the auditor’s report shall also:

1. Identify the entity whose financial report has been audited;
2. State that the financial report has been audited;
3. Identify the title of each statement comprising the financial report;
4. Refer to the notes, including the summary of significant accounting policies; and
5. Specify the date of, or period covered by, each financial statement comprising the financial report. (Ref: Para. A22–A23)

When expressing an unmodified opinion on a financial report prepared in accordance with a fair presentation framework, the auditor’s opinion shall, unless otherwise required by law or regulation, use one of the following phrases, which are regarded as being equivalent:

1. In our opinion, the accompanying financial report presents fairly, in all material respects, […] in accordance with [the applicable financial reporting framework]; or
2. In our opinion, the accompanying financial report gives a true and fair view of […] in accordance with [the applicable financial reporting framework]. (Ref: Para. A24–A31)

When expressing an unmodified opinion on a financial report prepared in accordance with a compliance framework, the auditor’s opinion shall be that the accompanying financial report is prepared, in all material respects, in accordance with [the applicable financial reporting framework].  (Ref: Para. A26–A31)

If the reference to the applicable financial reporting framework in the auditor’s opinion is not to the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board or International Public Sector Accounting Standards (IPSASs) issued by the International Public Sector Accounting Standards Board, the auditor’s opinion shall identify the jurisdiction of origin of the framework. 

Basis for Opinion

The auditor’s report shall include a section, directly following the Opinion section, with the heading “Basis for Opinion”, that: (Ref: Para. A32)

1. States that the audit was conducted in accordance with Australian Auditing Standards; (Ref: Para. A33)
2. Refers to the section of the auditor’s report that describes the auditor’s responsibilities under the Australian Auditing Standards;
3. [Deleted by the AUASB. Refer Aus 28.1(c)]
4. Aus 28.1(c) - Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements. The statement shall identify the relevant ethical requirements applicable within Australia; and (Ref: Para. Aus A34.1–A39)
4. States whether the auditor believes that the audit evidence the auditor has obtained is sufficient and appropriate to provide a basis for the auditor’s opinion.

Going Concern

Where applicable, the auditor shall report in accordance with ASA 570.^[13]

Key Audit Matters

For audits of financial reports of listed entities, the auditor shall communicate key audit matters in the auditor’s report in accordance with ASA 701.

When the auditor is otherwise required by law or regulation or decides to communicate key audit matters in the auditor’s report, the auditor shall do so in accordance with ASA 701.  (Ref: Para. A40–A43)

Other Information

Where applicable, the auditor shall report in accordance with ASA 720.^[14]

Responsibilities for the Financial Report

The auditor’s report shall include a section with a heading “Responsibilities of Management for the Financial Report.”  The auditor’s report shall use the term that is appropriate in the context of the legal framework in the particular jurisdiction and need not refer specifically to “management”.  In some jurisdictions, the appropriate reference may be to those charged with governance.  (Ref: Para. A44)

This section of the auditor’s report shall describe management’s responsibility for: (Ref: Para. A45–A48)

1. Preparing the financial report in accordance with the applicable financial reporting framework, and for such internal control as management determines is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error; and
2. Assessing the entity’s ability to continue as a going concern^[15] and whether the use of the going concern basis of accounting is appropriate as well as disclosing, if applicable, matters relating to going concern. The explanation of management’s responsibility for this assessment shall include a description of when the use of the going concern basis of accounting is appropriate. (Ref: Para. A48)

This section of the auditor’s report shall also identify those responsible for the oversight of the financial reporting process, when those responsible for such oversight are different from those who fulfill the responsibilities described in paragraph 34 of this Auditing Standard.  In this case, the heading of this section shall also refer to “Those Charged with Governance” or such term that is appropriate in the context of the legal framework in the particular jurisdiction.  (Ref: Para. A49)

When the financial report is prepared in accordance with a fair presentation framework, the description of responsibilities for the financial report in the auditor’s report shall refer to “the preparation and fair presentation of this financial report” or “the preparation of the financial report that gives a true and fair view,” as appropriate in the circumstances.

Auditor’s Responsibilities for the Audit of the Financial Report

The auditor’s report shall include a section with the heading “Auditor’s Responsibilities for the Audit of the Financial Report.”

This section of the auditor’s report shall: (Ref: Para. A50)

1. State that the objectives of the auditor are to:
   1. Obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error; and
   2. Issue an auditor’s report that includes the auditor’s opinion. (Ref: Para. A51)
2. State that reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists; and
3. State that misstatements can arise from fraud or error, and either:
   1. Describe that they are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report; or ^[16]
   2. Provide a definition or description of materiality in accordance with the applicable financial reporting framework. (Ref: Para. A52)

The Auditor’s Responsibilities for the Audit of the Financial Report section of the auditor’s report shall further: (Ref: Para. A50)

1. State that, as part of an audit in accordance with Australian Auditing Standards, the auditor exercises professional judgement and maintains professional scepticism throughout the audit.
2. Describe an audit by stating that the auditor’s responsibilities are:
   1. To identify and assess the risks of material misstatement of the financial report, whether due to fraud or error; to design and perform audit procedures responsive to those risks; and to obtain audit evidence that is sufficient and appropriate to provide a basis for the auditor’s opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
   2. To obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. In circumstances when the auditor also has a responsibility to express an opinion on the effectiveness of internal control in conjunction with the audit of the financial report, the auditor shall omit the phrase that the auditor’s consideration of internal control is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control;
   3. To evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
   4. To conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If the auditor concludes that a material uncertainty exists, the auditor is required to draw attention in the auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify the opinion. The auditor’s conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause an entity to cease to continue as a going concern; and
   5. When the financial report is prepared in accordance with a fair presentation framework, to evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
3. When ASA 600^[17] applies, further describe the auditor’s responsibilities in a group audit engagement by stating that:
   1. The auditor’s responsibilities are to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the group financial report;
   2. The auditor is responsible for the direction, supervision and performance of the group audit; and
   3. The auditor remains solely responsible for the auditor’s opinion.

The Auditor’s Responsibilities for the Audit of the Financial Report section of the auditor’s report also shall: (Ref: Para. A50)

1. State that the auditor communicates with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit;
2. For audits of the financial report of listed entities, state that the auditor provides those charged with governance with a statement that the auditor has complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on the auditor’s independence, and where applicable, actions taken to eliminate threats or safeguards applied; and
3. For audits of the financial report of listed entities and any other entities for which key audit matters are communicated in accordance with ASA 701, state that, from the matters communicated with those charged with governance, the auditor determines those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. The auditor describes these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, the auditor determines that a matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. (Ref: Para. A53)

Location of the description of the auditor’s responsibilities for the audit of the financial report

The description of the auditor’s responsibilities for the audit of the financial report required by paragraphs 39–40 of this Auditing Standard shall be included: (Ref: Para. A54)

1. Within the body of the auditor’s report;
2. Within an appendix to the auditor’s report, in which case the auditor’s report shall include a reference to the location of the appendix; or (Ref: Para. A54–A55)
3. By a specific reference within the auditor’s report to the location of such a description on a website of an appropriate authority, where law, regulation or Australian Auditing Standards expressly permit the auditor to do so. (Ref: Para. A54, A56–A57)

When the auditor refers to a description of the auditor’s responsibilities on a website of an appropriate authority, the auditor shall determine that such description addresses, and is not inconsistent with, the requirements in paragraphs 39–40 of this Auditing Standard.  (Ref: Para. A56)

Other Reporting Responsibilities

If the auditor addresses other reporting responsibilities in the auditor’s report on the financial report that are in addition to the auditor’s responsibilities under the Australian Auditing Standards, these other reporting responsibilities shall be addressed in a separate section in the auditor’s report with a heading titled “Report on Other Legal and Regulatory Requirements” or otherwise as appropriate to the content of the section, unless these other reporting responsibilities address the same topics as those presented under the reporting responsibilities required by the Australian Auditing Standards in which case the other reporting responsibilities may be presented in the same section as the related report elements required by the Australian Auditing Standards.  (Ref: Para. A58–A60)

If other reporting responsibilities are presented in the same section as the related report elements required by the Australian Auditing Standards, the auditor’s report shall clearly differentiate the other reporting responsibilities from the reporting that is required by the Australian Auditing Standards.  (Ref: Para. A60)

If the auditor’s report contains a separate section that addresses other reporting responsibilities, the requirements of paragraphs 20–40 of this Auditing Standard shall be included under a section with a heading “Report on the Audit of the Financial Report.”  The “Report on Other Legal and Regulatory Requirements” shall follow the “Report on the Audit of the Financial Report.” (Ref: Para. A60)

Name of the Engagement Partner

[Deleted by the AUASB.  Refer Aus 46.1] 

The name of the engagement partner shall be included in the auditor’s report where required by law or regulation.  (Ref: Para. Aus A61.1–A62)

Signature of the Auditor

The auditor’s report shall be signed.  (Ref: Para. A64–A65)

Auditor’s Address

The auditor’s report shall name the location in the jurisdiction where the auditor practices.

Date of the Auditor’s Report

The auditor’s report shall be dated no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence on which to base the auditor’s opinion on the financial report, including evidence that: (Ref: Para. A66–A69)

1. All the statements and disclosures that comprise the financial report have been prepared; and
2. Those with the recognised authority have asserted that they have taken responsibility for the financial report.

The auditor’s report shall be dated as of the date the auditor signs that report.

Auditor’s Report Prescribed by Law or Regulation

If the auditor is required by law or regulation of a specific jurisdiction to use a specific layout, or wording of the auditor’s report, the auditor’s report shall refer to Australian Auditing Standards only if the auditor’s report includes, at a minimum, each of the following elements: (Ref: Para. A70–A71)

1. A title.
2. An addressee, as required by the circumstances of the engagement.
3. An Opinion section containing an expression of opinion on the financial report and a reference to the applicable financial reporting framework used to prepare the financial report (including identifying the jurisdiction of origin of the financial reporting framework that is not International Financial Reporting Standards or International Public Sector Accounting Standards, see paragraph 26 of this Auditing Standard).
4. An identification of the entity’s financial report that has been audited.
5. [Deleted by the AUASB. Refer Aus 50.1(e)]
6. Aus 50.1(e) - A statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical requirements in accordance with these requirements. The statement shall identify the relevant ethical requirements applicable within Australia.
6. Where applicable, a section that addresses, and is not inconsistent with, the reporting requirements in paragraph 22 of ASA 570.
7. Where applicable, a Basis for Qualified (or Adverse) Opinion section that addresses, and is not inconsistent with, the reporting requirements in paragraph 23 of ASA 570.
8. Where applicable, a section that includes the information required by ASA 701, or additional information about the audit that is prescribed by law or regulation and that addresses, and is not inconsistent with, the reporting requirements in that Auditing Standard.^[18] (Ref: Para. A71–A72)
9. Where applicable, a section that addresses the reporting requirements in paragraph 24 of ASA 720.
10. A description of management’s responsibilities for the preparation of the financial report and an identification of those responsible for the oversight of the financial reporting process that addresses, and is not inconsistent with, the requirements in paragraphs 33–36 of this Auditing Standard.
11. A reference to Australian Auditing Standards and the law or regulation, and a description of the auditor’s responsibilities for an audit of the financial report that addresses, and is not inconsistent with, the requirements in paragraphs 37–40 of this Auditing Standard. (Ref: Para. A54–A55)
12. [Deleted by the AUASB. Refer Aus 50.1(l)]
13. Aus 50.1(l) - The name of the engagement partner where required by law or regulation.
13. The auditor’s signature.
14. The auditor’s address.
15. The date of the auditor’s report.

Auditor’s Report for Audits Conducted in Accordance with Both Auditing Standards of a Specific Jurisdiction and Australian Auditing Standards

An auditor may be required to conduct an audit in accordance with the auditing standards of a specific jurisdiction (the “other auditing standards”), but may additionally comply with the Australian Auditing Standards in the conduct of the audit. If this is the case, the auditor’s report may refer to Australian Auditing Standards in addition to the other auditing standards, but the auditor shall do so only if: (Ref: Para. A76–A77)

1. There is no conflict between the requirements in the other auditing standards and those in the Australian Auditing Standards that would lead the auditor (i) to form a different opinion, or (ii) not to include an Emphasis of Matter paragraph or Other Matter paragraph that, in the particular circumstances, is required by the Australian Auditing Standards; and
2. The auditor’s report includes, at a minimum, each of the elements set out in paragraphs 50(a)–(o) of this Auditing Standard when the auditor uses the layout or wording specified by the other auditing standards. However, reference to “law or regulation” in paragraph 50(k) of this Auditing Standard shall be read as reference to the other auditing standards. The auditor’s report shall thereby identify such other auditing standards.

When the auditor’s report refers to both the other auditing standards and Australian Auditing Standards, the auditor’s report shall identify the jurisdiction of origin of the other auditing standards. 

(Ref: Para. A78–A84)

If supplementary information that is not required by the applicable financial reporting framework is presented with the audited financial report, the auditor shall evaluate whether, in the auditor’s professional judgement, supplementary information is nevertheless an integral part of the financial report due to its nature or how it is presented.  When it is an integral part of the financial report, the supplementary information shall be covered by the auditor’s opinion.

If supplementary information that is not required by the applicable financial reporting framework is not considered an integral part of the audited financial report, the auditor shall evaluate whether such supplementary information is presented in a way that sufficiently and clearly differentiates it from the audited financial report.  If this is not the case, then the auditor shall ask management to change how the unaudited supplementary information is presented.  If management refuses to do so, the auditor shall identify the unaudited supplementary information and explain in the auditor’s report that such supplementary information has not been audited.