Definitions
A1. Law, regulation or custom may define the content of an annual report, and the name by which it is to be referred, for entities in a particular jurisdiction; however, the content and the name may vary within a jurisdiction and from one jurisdiction to another.
A2. An annual report is typically prepared on an annual basis. However, when the financial statements being audited are prepared for a period less than or more than a year, an annual report may also be prepared that covers the same period as the financial statements.
A3. In some cases, an entity’s annual report may be a single document and referred to by the title “annual report” or by some other title. In other cases, law, regulation or custom may require the entity to report to owners (or similar stakeholders) information on the entity’s operations and the entity’s financial results and financial position as set out in the financial statements (i.e., an annual report) by way of a single document, or by way of two or more separate documents that in combination serve the same purpose. For example, depending on law, regulation or custom in a particular jurisdiction, one or more of the following documents may form part of the annual report:
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Management report, management commentary, or operating and financial review or similar reports by those charged with governance (for example, a directors’ report).
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Chairman’s statement.
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Corporate governance statement.
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Internal control and risk assessment reports.
A4. An annual report may be made available to users in printed form, or electronically, including on the entity’s website. A document (or combination of documents) may meet the definition of an annual report, irrespective of the manner in which it is made available to users.
A5. An annual report is different in nature, purpose and content from other reports, such as a report prepared to meet the information needs of a specific stakeholder group or a report prepared to comply with a specific regulatory reporting objective (even when such a report is required to be publicly available). Examples of reports that, when issued as standalone documents, are not typically part of the combination of documents that comprise an annual report (subject to law, regulation or custom), and that, therefore, are not other information within the scope of this ISA (NZ), include:
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Separate industry or regulatory reports (for example, capital adequacy reports), such as may be prepared in the banking, insurance, and pension industries.
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Corporate social responsibility reports.
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Sustainability reports.
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Diversity and equal opportunity reports.
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Product responsibility reports.
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Labour practices and working conditions reports.
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Human rights reports.
Misstatement of the Other Information (Ref: Para. 12(b))
A6. When a particular matter is disclosed in the other information, the other information may omit or obscure information that is necessary for a proper understanding of that matter. For example, if the other information purports to address the key performance indicators used by management, then omission of a key performance indicator used by management could indicate that the other information is misleading.
A7. The concept of materiality may be discussed in a framework applicable to the other information and, if so, such a framework may provide a frame of reference for the auditor in making judgements about materiality under this ISA (NZ). In many cases, however, there may be no applicable framework that includes a discussion of the concept of materiality as it applies to the other information. In such circumstances, the following characteristics provide the auditor with a frame of reference in determining if a misstatement of the other information is material:
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Materiality is considered in the context of the common information needs of users as a group. The users of the other information are expected to be the same as the users of the financial statements as such users may be expected to read the other information to provide context to the financial statements.
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Judgements about materiality take into account the specific circumstances of the misstatement, considering whether users would be influenced by the effect of the uncorrected misstatement. Not all misstatements will influence the economic decisions of users.
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Judgements about materiality involve both qualitative and quantitative considerations. Accordingly, such judgements may take into account the nature or magnitude of the items that the other information addresses in the context of the entity’s annual report.
Other Information (Ref: Para. 12(c))
A8. Appendix 1 contains examples of amounts or other items that may be included in the other information.
A9. In some cases, the applicable financial reporting framework may require specific disclosures but permit them to be located outside of the financial statements.5 As such disclosures are required by the applicable financial reporting framework, they form part of the financial statements. Accordingly, they do not constitute other information for the purpose of this ISA (NZ).
A10. eXtensible Business Reporting Language (XBRL) tags do not represent other information as defined in this ISA (NZ).
Obtaining the Other Information (Ref: Para. 13)
A11. Determining the document(s) that is or comprises the annual report is often clear based on law, regulation or custom. In many cases, management or those charged with governance may have customarily issued a package of documents that together comprise the annual report, or may have committed to do so. In some cases, however, it may not be clear which document(s) is or comprises the annual report. In such cases, the timing and purpose of the documents (and for whom they are intended) are matters that may be relevant to the auditor’s determination of which document(s) is or comprises the annual report.
A12. When the annual report is translated into other languages pursuant to law or regulation (such as may occur when a jurisdiction has more than one official language), or when multiple “annual reports” are prepared under different legislation (for example, when an entity is listed in more than one jurisdiction), consideration may need to be given as to whether one, or more than one of the “annual reports” form part of the other information. Local law or regulation may provide further guidance in this respect.
A13. Management, or those charged with governance, is responsible for preparing the annual report. The auditor may communicate with management or those charged with governance:
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The auditor’s expectations in relation to obtaining the final version of the annual report (including a combination of documents that together comprise the annual report) in a timely manner prior to the date of the auditor’s report such that the auditor can complete the procedures required by this ISA (NZ) before the date of the auditor’s report, or if that is not possible, as soon as practicable and in any case prior to the entity’s issuance of such information.
- The possible implications when the other information is obtained after the date of the auditor’s report.
A14. The communications referred to in paragraph A13 may be particularly appropriate for example:
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In an initial audit engagement.
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When there has been a change in management or those charged with governance.
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When other information is expected to be obtained after the date of the auditor’s report.
A15. Where those charged with governance are to approve the other information prior to its issuance by the entity, the final version of such other information is the one that has been approved by those charged with governance for issuance.
A16. In some cases, the entity’s annual report may be a single document to be released, in accordance with law or regulation or the entity’s reporting practice, shortly after the entity’s financial reporting period such that it is available to the auditor prior to the date of the auditor’s report. In other cases, such a document may not be required to be released until a later time, or at a time of the entity’s choosing. There may also be circumstances when the entity’s annual report is a combination of documents, each subject to different requirements or reporting practice by the entity with respect to the timing of their release.
A17. There may be circumstances when, at the date of the auditor’s report, the entity is considering the development of a document that may be part of the entity’s annual report (for example, a voluntary report to stakeholders) but management is unable to confirm to the auditor the purpose or timing of such a document. If the auditor is unable to ascertain the purpose or timing of such a document, the document is not considered other information for purposes of this ISA (NZ).
A18. [Amended by the NZAuASB].
NZA18.1 Obtaining the other information in a timely manner prior to the date of the auditor’s report enables any revisions that are found to be necessary to be made to the financial statements, the auditor’s report, or the other information prior to their issuance. The audit engagement letter6 may make reference to an agreement with those charged with governance to make available to the auditor the other information in a timely manner, and if possible prior to the date of the auditor’s report.
A19. When other information is only made available to users via the entity’s website, the version of the other information obtained from the entity, rather than directly from the entity’s website, is the relevant document on which the auditor would perform procedures in accordance with this ISA (NZ). The auditor has no responsibility under this ISA (NZ) to search for other information, including other information that may be on the entity’s website, nor to perform any procedures to confirm that other information is appropriately displayed on the entity’s website or otherwise has been appropriately transmitted or displayed electronically.
A20. The auditor is not precluded from dating or issuing the auditor’s report if the auditor has not obtained some or all of the other information.
A21. When the other information is obtained after the date of the auditor’s report, the auditor is not required to update the procedures performed in accordance with paragraphs 6 and 7 of ISA (NZ) 560.7
A22. [Amended by the NZAuASB].
NZA22.1 ISA (NZ) 5808 establishes requirements and provides guidance on the use of written representations. The written representation required to be requested by paragraph 13(c) regarding other information that will be available only after the date of the auditor’s report is intended to support the auditor’s ability to complete the procedures required by this ISA (NZ) with respect to such information. In addition, the auditor may find it useful to request other written representations, for example, that:
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Those charged with governance have informed the auditor of all the documents that they expect to issue that may comprise other information;
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The financial statements and any other information obtained by the auditor prior to the date of the auditor’s report are consistent with one another, and the other information does not contain any material misstatements; and
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With regard to other information that has not been obtained by the auditor prior to the date of the auditor’s report, that those charged with governance intend to prepare and issue such other information and the expected timing of such issuance.
Reading and Considering the Other Information (Ref: Para. 14–15)
A23. The auditor is required by ISA (NZ) 2009 to plan and perform the audit with professional scepticism. Maintaining professional scepticism when reading and considering the other information includes, for example, recognising that management may be overly optimistic about the success of its plans, and being alert to information that may be inconsistent with:
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The financial statements; or
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The auditor’s knowledge obtained in the audit.
A24. In accordance with ISA (NZ) 220 (Revised), the engagement partner is required to take responsibility for the direction and supervision of the members of the engagement team and the review of their work,10 and determine that the nature, timing and extent of supervision, direction and review is planned and performed in accordance with the firm’s policies and procedures, professional standards and applicable legal and regulatory requirements.11 In the context of this ISA (NZ), factors that may be taken into account when determining the appropriate engagement team members to address the requirements of paragraphs 14–15, include:
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The relative experience of engagement team members.
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Whether the engagement team members to be assigned the tasks have the relevant knowledge obtained in the audit to identify inconsistencies between the other information and that knowledge.
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The degree of judgement involved in addressing the requirements of paragraph 14–15. For example, performing procedures to evaluate the consistency of amounts in the other information that are intended to be the same as amounts in the financial statements may be carried out by less experienced engagement team members.
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Whether, in the case of a group audit, it is necessary to make enquiries of a component auditor in addressing the other information related to that component.
Considering Whether There is a Material Inconsistency between the Other Information and the Financial Statements (Ref: Para. 14(a))
A25. Other information may include amounts or other items that are intended to be the same as, to summarise, or to provide greater detail about, the amounts or other items in the financial statements. Examples of such amounts or other items may include:
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Tables, charts or graphs containing extracts of the financial statements.
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A disclosure providing greater detail about a balance or account shown in the financial statements, such as “Revenue for 20X1 comprised XXX million from product X and YYY million from product Y.”
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Descriptions of the financial results, such as “Total research and development expense was XXX in 20X1.”
A26. In evaluating the consistency of selected amounts or other items in the other information with the financial statements, the auditor is not required to compare all amounts or other items in the other information that are intended to be the same as, to summarise, or to provide greater detail about, the amounts or other items in the financial statements, with such amounts or other items in the financial statements.
A27. Selecting the amounts or other items to compare is a matter of professional judgement. Factors relevant to this judgement include:
The significance of the amount or other item in the context in which it is presented, which may affect the importance that users would attach to the amount or other item (for example, a key ratio or amount).
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If quantitative, the relative size of the amount compared with accounts or items in the financial statements or the other information to which they relate.
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The sensitivity of the particular amount or other item in the other information, for example, share based payments for senior management.
A28. Determining the nature and extent of procedures to address the requirement in paragraph 14(a) is a matter of professional judgement, recognising that the auditor’s responsibilities under this ISA (NZ) do not constitute an assurance engagement on the other information or impose an obligation to obtain assurance about the other information. Examples of such procedures include:
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For information that is intended to be the same as information in the financial statements, comparing the information to the financial statements.
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For information intended to convey the same meaning as disclosures in the financial statements, comparing the words used and considering the significance of differences in wording used and whether such differences imply different meanings.
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Obtaining a reconciliation between an amount within the other information and the financial statements from management and:
A29. Evaluating the consistency of selected amounts or other items in the other information with the financial statements includes, when relevant given the nature of the other information, the manner of their presentation compared to the financial statements.
Considering Whether There Is a Material Inconsistency between the Other Information and the Auditor’s Knowledge Obtained in the Audit (Ref: Para. 14(b))
A30. Other information may include amounts or items that are related to the auditor’s knowledge obtained in the audit (other than those in paragraph 14(a)). Examples of such amounts or items may include:
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A disclosure of the units produced, or a table summarising such production by geographical region.
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A statement that “The company introduced product X and product Y during the year.”
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A summary of the locations of the entity’s major operations, such as “the entity’s major centre of operation is in country X, and there are also operations in countries Y and Z.”
A31. The auditor’s knowledge obtained in the audit includes the auditor’s understanding of the entity and its environment, the applicable financial reporting framework, and the entity’s system of internal control, obtained in accordance with ISA (NZ) 315 (Revised 2019).12 ISA (NZ) 315 (Revised 2019) sets out the auditor’s required understanding, which includes such matters as obtaining an understanding of:
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The entity’s organisational structure, ownership and governance, and its business model, including the extent to which the business model integrates the use of IT;
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Relevant industry, regulatory, and other external factors;
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The relevant measures used, internally and externally, to assess the entity’s financial performance; and
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The entity’s internal control.
A32. The auditor’s knowledge obtained in the audit may also include matters that are prospective in nature. Such matters may include, for example, business prospects and future cash flows that the auditor considered when evaluating the assumptions used by management in performing impairment tests on intangible assets such as goodwill, or when evaluating management’s assessment of the entity’s ability to continue as a going concern.
A33. In considering whether there is a material inconsistency between the other information and the auditor’s knowledge obtained in the audit, the auditor may focus on those matters in the other information that are of sufficient importance that a misstatement of the other information in relation to that matter could be material.
A34. In relation to many matters in the other information, the auditor’s recollection of the audit evidence obtained and conclusions reached in the audit may be sufficient to enable the auditor to consider whether there is a material inconsistency between the other information and the auditor’s knowledge obtained in the audit. The more experienced and the more familiar with the key aspects of the audit the auditor is, the more likely it is that the auditor’s recollection of relevant matters will be sufficient. For example, the auditor may be able to consider whether there is a material inconsistency between the other information and the auditor’s knowledge obtained in the audit in light of the auditor’s recollection of discussions held with management or those charged with governance or findings from procedures carried out during the audit such as the reading of board minutes, without the need to take further action.
A35. The auditor may determine that referring to relevant audit documentation or making enquiries of relevant members of the engagement team, including relevant component auditors, is appropriate as a basis for the auditor’s consideration of whether a material inconsistency exists. For example:
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When the other information describes the planned cessation of a major product line and, although the auditor is aware of the planned cessation, the auditor may make enquiries of the relevant engagement team member who performed the audit procedures in this area to support the auditor’s consideration of whether the description is materially inconsistent with the auditor’s knowledge obtained during the audit.
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When the other information describes important details of a lawsuit addressed in the audit, but the auditor cannot recall them adequately, it may be necessary to refer to the audit documentation where such details are summarised to support the auditor’s recollection.
A36. Whether, and if so the extent to which, the auditor refers to relevant audit documentation, or makes enquiries of relevant members of the engagement team, including relevant component auditors, is a matter of professional judgement. However, it may not be necessary for the auditor to refer to relevant audit documentation, or to make enquiries of relevant members of the engagement team, including relevant component auditors, about any matter included in the other information.
Remaining Alert for Other Indications that the Other Information Appears to Be Materially Misstated (Ref: Para. 15)
A37. Other information may include discussion of matters that are not related to the financial statements and may also extend beyond the auditor’s knowledge obtained in the audit. For example, the other information may include statements about the entity’s greenhouse gas emissions.
A38. Remaining alert for other indications that the other information not related to the financial statements or the auditor’s knowledge obtained in the audit appears to be materially misstated assists the auditor in complying with relevant ethical requirements that require the auditor to avoid being knowingly associated with other information that the auditor believes contains a materially false or misleading statement, a statement provided recklessly, or omits or obscures necessary information such that the other information is misleading.13 Remaining alert for other indications that the other information appears to be materially misstated could potentially result in the auditor identifying such matters as:
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Differences between the other information and the general knowledge, apart from the knowledge obtained in the audit, of the engagement team member reading the other information that lead the auditor to believe that the other information appears to be materially misstated; or
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An internal inconsistency in the other information that leads the auditor to believe that the other information appears to be materially misstated.
Responding When a Material Inconsistency Appears to Exist or Other Information Appears to Be Materially Misstated (Ref: Para. 16)
A39. The auditor’s discussion with management about a material inconsistency (or other information that appears to be materially misstated) may include requesting management to provide support for the basis of management’s statements in the other information. Based on management’s further information or explanations, the auditor may be satisfied that the other information is not materially misstated. For example, management explanations may indicate reasonable and sufficient grounds for valid differences of judgement.
A40. Conversely, the discussion with management may provide further information that supports the auditor’s conclusion that a material misstatement of the other information exists.
A41. It may be more difficult for the auditor to challenge management on matters of judgement than on those of a more factual nature. However, there may be circumstances where the auditor concludes that the other information contains a statement that is not consistent with the financial statements or the auditor’s knowledge obtained in the audit. These circumstances may raise doubt about the other information, the financial statements, or the auditor’s knowledge obtained in the audit.
A42. As there is a wide range of possible material misstatements of the other information, the nature and extent of other procedures the auditor may perform to conclude whether a material misstatement of the other information exists are matters of the auditor’s professional judgement in the circumstances.
A43. When a matter is unrelated to the financial statements or the auditor’s knowledge obtained in the audit, the auditor may not be able to fully assess management’s responses to the auditor’s enquiries. Nevertheless, based on management’s further information or explanations, or following changes made by management to the other information, the auditor may be satisfied that a material inconsistency no longer appears to exist or that the other information no longer appears to be materially misstated. When the auditor is unable to conclude that a material inconsistency no longer appears to exist or that the other information no longer appears to be materially misstated, the auditor may request management to consult with a qualified third party (for example, a management’s expert or legal counsel). In certain cases, after considering the responses from management’s consultation, the auditor may not be able to conclude whether or not a material misstatement of the other information exists. Actions the auditor may then take include one or more of the following:
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Obtaining advice from the auditor’s legal counsel;
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Considering the implications for the auditor’s report for example, whether to describe the circumstances when there is a limitation imposed by management; or
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Withdrawing from the audit, where withdrawal is possible under applicable law or regulation.
Responding When the Auditor Concludes That a Material Misstatement of the Other Information Exists
Responding When the Auditor Concludes That a Material Misstatement Exists in Other Information Obtained prior to the Date of the Auditor’s Report (Ref: Para. 18)
A44. The actions the auditor takes if the other information is not corrected after communicating with those charged with governance are a matter of the auditor’s professional judgement. The auditor may take into account whether the rationale given by management and those charged with governance for not making the correction raises doubt about the integrity or honesty of management or those charged with governance, such as when the auditor suspects an intention to mislead. The auditor may also consider it appropriate to seek legal advice. In some cases, the auditor may be required by law, regulation or other professional standards to communicate the matter to a regulator or relevant professional body.
Reporting Implications (Ref: Para. 18(a))
A45. In rare circumstances, a disclaimer of opinion on the financial statements may be appropriate when the refusal to correct the material misstatement of the other information casts such doubt on the integrity of management and those charged with governance as to call into question the reliability of audit evidence in general.
Withdrawal from the Engagement (Ref: Para. 18(b))
A46. Withdrawal from the engagement, where withdrawal is possible under applicable law or regulation, may be appropriate when the circumstances surrounding the refusal to correct the material misstatement of the other information cast such doubt on the integrity of management and those charged with governance as to call into question the reliability of representations obtained from them during the audit.
Considerations specific to public sector entities (Ref: Para. 18(b))
A47. In the public sector, withdrawal from the engagement may not be possible. In such cases, the auditor may issue a report to the legislature providing details of the matter or may take other appropriate actions.
Responding When the Auditor Concludes That a Material Misstatement Exists in Other Information Obtained after the Date of the Auditor’s Report (Ref: Para. 19)
A48. If the auditor concludes that a material misstatement exists in other information obtained after the date of the auditor’s report, and such a material misstatement has been corrected, the auditor’s procedures necessary in the circumstances include determining that the correction has been made (in accordance with paragraph 17(a)) and may include reviewing the steps taken by management to communicate with those in receipt of the other information, if previously issued, to inform them of the revision.
A49. If those charged with governance do not agree to revise the other information, taking appropriate action to seek to have the uncorrected misstatement appropriately brought to the attention of users for whom the auditor’s report is prepared requires the exercise of professional judgement, and may be affected by relevant law or regulation in the jurisdiction. Accordingly, the auditor may consider it appropriate to seek legal advice about the auditor’s legal rights and obligations.
A50. When a material misstatement of the other information remains uncorrected, appropriate actions that the auditor may take to seek to have the uncorrected material misstatement appropriately brought to the attention of users for whom the auditor’s report is prepared, when permitted by law or regulation, include, for example:
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Providing a new or amended auditor’s report to management including a modified section in accordance with paragraph 22, and requesting management to provide this new or amended auditor’s report to users for whom the auditor’s report is prepared. In doing so, the auditor may need to consider the effect, if any, on the date of the new or amended auditor’s report, in view of the requirements of the ISAs (NZ) or applicable law or regulation. The auditor may also review the steps taken by management to provide the new or amended auditor’s report to such users;
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Bringing the material misstatement of the other information to the attention of the users for whom the auditor’s report is prepared (for example, by addressing the matter in a general meeting of shareholders);
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Communicating with a regulator or relevant professional body about the uncorrected material misstatement; or
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Considering the implications for engagement continuance (see also paragraph A46).
Responding When a Material Misstatement in the Financial Statements Exists or the Auditor’s Understanding of the Entity and Its Environment Needs to Be Updated (Ref: Para. 20)
A51. In reading the other information, the auditor may become aware of new information that has implications for:
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The auditor’s understanding of the entity and its environment , the financial reporting framework and the entity’s system of internal control and, accordingly, may indicate the need to revise the auditor’s risk assessment.14
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The auditor’s responsibility to evaluate the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements.15
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The auditor’s responsibilities relating to subsequent events.16
Reporting (Ref: Para. 21–24)
A52. [Amended by the NZAuASB].
NZA52.1 For an audit of financial statements of an entity other than a FMC reporting entity considered to have a higher level of public accountability, the auditor may consider that the identification in the auditor’s report of other information that the auditor expects to obtain after the date of the auditor’s report would be appropriate in order to provide additional transparency about the other information that is subject to the auditor’s responsibilities under this ISA (NZ). The auditor may consider it appropriate to do so, for example, when management is able to represent to the auditor that such other information will be issued after the date of the auditor’s report.
Illustrative Statements (Ref: Para. 21–22)
A53. Illustrative examples of the “Other Information” section of the auditor's report are included in Appendix 2.
Reporting Implications When the Auditor’s Opinion on the Financial Statements Is Qualified or Adverse (Ref: Para. 23)
A54. A qualified or adverse auditor’s opinion on the financial statements may not have an impact on the statement required by paragraph 22(e) if the matter in respect of which the auditor’s opinion has been modified is not included or otherwise addressed in the other information and the matter does not affect any part of the other information. For example, a qualified opinion on the financial statements because of non-disclosure of directors’ remuneration as required by the applicable financial reporting framework may have no implications for the reporting required under this ISA (NZ). In other circumstances, there may be implications for such reporting as described in paragraphs A55–A58.
Qualified Opinion Due to a Material Misstatement in the Financial Statements
A55. In circumstances when the auditor’s opinion is qualified, consideration may be given as to whether the other information is also materially misstated for the same matter as, or a related matter to, the matter giving rise to the qualified opinion on the financial statements.
Qualified Opinion Due to Limitation of Scope
A56. When there is a limitation of scope with respect to a material item in the financial statements, the auditor will not have obtained sufficient appropriate audit evidence about that matter. In these circumstances, the auditor may be unable to conclude whether or not the amounts or other items in the other information related to this matter result in a material misstatement of the other information. Accordingly, the auditor may need to modify the statement required by paragraph 22(e) to refer to the auditor’s inability to consider management’s description of the matter in the other information in respect of which the auditor’s opinion on the financial statements has been qualified as explained in the Basis for Qualified Opinion paragraph. The auditor is nevertheless required to report any other uncorrected material misstatements of the other information that have been identified.
Adverse Opinion
A57. An adverse opinion on the financial statements relating to a specific matter(s) described in the Basis for Adverse Opinion paragraph does not justify the omission of reporting of material misstatements of the other information that the auditor has identified in the auditor’s report in accordance with paragraph 22(e)(ii). When an adverse opinion has been expressed on the financial statements, the auditor may need to appropriately modify the statement required by paragraph 22(e) for example, to indicate that amounts or items in the other information is materially misstated for the same matter as, or a related matter to, the matter giving rise to the adverse opinion on the financial statements.
Disclaimer of Opinion
A58. When the auditor disclaims an opinion on the financial statements, providing further details about the audit, including a section to address other information may overshadow the disclaimer of opinion on the financial statements as a whole. Accordingly, in those circumstances, as required by ISA (NZ) 705 (Revised), the auditor’s report does not include a section addressing the reporting requirements under this ISA (NZ).
Reporting Prescribed by Law or Regulation (Ref: Para. 24)
A59. ISA (NZ) 20017 explains that the auditor may be required to comply with legal or regulatory requirements in addition to the ISAs (NZ). Where this is the case, the auditor may be obliged to use a specific layout or wording in the auditor’s report that differs from that described in this ISA (NZ). Consistency in the auditor’s report, when the audit has been conducted in accordance with ISAs (NZ), promotes credibility in the global marketplace by making more readily identifiable those audits that have been conducted in accordance with globally recognised standards. When the differences between the legal or regulatory requirements to report with respect to the other information and this ISA (NZ) relate only to the layout and wording in the auditor’s report and, at a minimum, each of the elements identified in paragraph 24 is included in the auditor’s report, the auditor’s report may refer to International Standards on Auditing (New Zealand). Accordingly, in such circumstances the auditor is considered to have complied with the requirements of this ISA (NZ), even when the layout and wording used in the auditor’s report are specified by legal or regulatory reporting requirements.
(Ref: Para. 21‒22, A53)
Illustrations of Auditor’s Reports Relating to Other Information
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[NZ] Illustration 1: An auditor’s report of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, containing an unmodified opinion when the auditor has obtained all of the other information prior to the date of the auditor's report and has not identified a material misstatement of the other information.
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[NZ] Illustration 2: An auditor’s report of a FMC reporting entity considered to have a higher level of public accountability containing an unmodified opinion when the auditor has obtained part of the other information prior to the date of the auditor’s report, has not identified a material misstatement of the other information, and expects to obtain other information after the date of the auditor’s report.
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[NZ] Illustration 3: An auditor’s report of an entity other than a FMC reporting entity considered to have a higher level of public accountability containing an unmodified opinion when the auditor has obtained part of the other information prior to the date of the auditor’s report, has not identified a material misstatement of the other information, and expects to obtain other information after the date of the auditor’s report.
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[NZ] Illustration 4: An auditor’s report of a FMC reporting entity considered to have a higher level of public accountability containing an unmodified opinion when the auditor has obtained no other information prior to the date of the auditor’s report but expects to obtain other information after the date of the auditor’s report.
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[NZ] Illustration 5: An auditor’s report of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, containing an unmodified opinion when the auditor has obtained all of the other information prior to the date of the auditor's report and has concluded that a material misstatement of the other information exists.
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[NZ] Illustration 6: An auditor’s report of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, containing a qualified opinion when the auditor has obtained all of the other information prior to the date of the auditor's report and there is a limitation of scope with respect to a material item in the consolidated financial statements which also affects the other information.
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[NZ] Illustration 7: An auditor’s report of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, containing an adverse opinion when the auditor has obtained all of the other information prior to the date of the auditor's report and the adverse opinion on the consolidated financial statements also affects the other information.
[NZ] Illustration 1 – An auditor’s report of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, containing an unmodified opinion when the auditor has obtained all of the other information prior to the date of the auditor's report and has not identified a material misstatement of the other information.
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For purposes of this illustrative auditor’s report, the following circumstances are assumed:
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Audit of a complete set of financial statements of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, using a fair presentation framework. The audit is not a group audit (i.e., ISA (NZ) 600 (Revised)1 does not apply).
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The financial statements are prepared by management of the entity in accordance with NZ IFRS (a general purpose framework).
-
The terms of the audit engagement reflect the description of the responsibilities of those charged with governance for the financial statements in ISA (NZ) 210.
-
The auditor has concluded an unmodified (i.e., “clean”) opinion is appropriate based on the audit evidence obtained.
-
The relevant ethical requirements that apply to the audit comprise Professional and Ethical Standard 1International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand).
-
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA (NZ) 570 (Revised).2
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Key audit matters have been communicated in accordance with ISA (NZ) 701.3
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The auditor has obtained all of the other information prior to the date of the auditor's report and has not identified a material misstatement of the other information.
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In addition to the audit of the financial statements, the auditor has other reporting responsibilities required under local law.
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements4
Opinion
We have audited the financial statements of ABC Company (the Company), which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of the Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Company.
[Key Audit Matters5 ]
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with ISA (NZ) 701.]]
Other Information [or another title if appropriate, such as “Information Other than the Financial Statements and Auditor’s Report Thereon”]
The directors6 are responsible for the other information. The other information comprises the [information included in the X report,7 but does not include the financial statements and our auditor’s report thereon.]
Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Directors’ Responsibilities for the Financial Statements8
[Reporting in accordance with ISA (NZ) 700 (Revised)9 – see Illustration 1 in ISA (NZ) 700 (Revised).]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
[The engagement partner on the audit resulting in this independent auditor’s report is [name].10]
[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate]
[Auditor Address]
[Date]
Illustration 2 – An auditor’s report of a FMC reporting entity considered to have a higher level of public accountability containing an unmodified opinion when the auditor has obtained part of the other information prior to the date of the auditor’s report, has not identified a material misstatement of the other information, and expects to obtain other information after the date of the auditor’s report.
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For purposes of this illustrative auditor’s report, the following circumstances are assumed:
-
Audit of a complete set of financial statements of a FMC reporting entity considered to have a higher level of public accountability using a fair presentation framework. The audit is not a group audit (i.e., ISA (NZ) 600 (Revised) does not apply).
-
The financial statements are prepared by management of the entity in accordance with NZ IFRS (a general purpose framework).
-
The terms of the audit engagement reflect the description of the responsibilities of those charged with governance for the financial statements in ISA (NZ) 210.
-
The auditor has concluded an unmodified (i.e., “clean”) opinion is appropriate based on the audit evidence obtained.
-
The relevant ethical requirements that apply to the audit comprise Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand). Professional and Ethical Standard 1 includes independence requirements that are applicable to audits of financial statements of public interest entities and requires the auditor to publicly disclose that the independence requirements applicable to audits of financial statements of public interest entities were applied.
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Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA (NZ) 570 (Revised).
-
Key audit matters have been communicated in accordance with ISA (NZ) 701.
-
The auditor has obtained part of the other information prior to the date of the auditor’s report, has not identified a material misstatement of the other information, and expects to obtain other information after the date of the auditor’s report.
-
In addition to the audit of the financial statements, the auditor has other reporting responsibilities required under local law.
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements11
Opinion
We have audited the financial statements of ABC Company (the Company), which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of the Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board, as applicable to audits of financial statements of public interest entities. We have also fulfilled our other ethical responsibilities in accordance with Professional and Ethical Standard 1. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Company.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with ISA (NZ) 701.]
Other Information [or another title if appropriate, such as “Information Other than the Financial Statements and Auditor’s Report Thereon”]
The directors12 are responsible for the other information. The other information comprises the X report13 (but does not include the financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the Y report, which is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
[When we read the Y report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and [describe actions applicable]]14
Directors’ Responsibilities for the Financial Statements15
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
The engagement partner on the audit resulting in this independent auditor’s report is [name].16
[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate]
[Auditor Address]
[Date]
Illustration 3 – An auditor’s report of an entity other than a FMC reporting entity considered to have a higher level of public accountability containing an unmodified opinion when the auditor has obtained part of the other information prior to the date of the auditor’s report, has not identified a material misstatement of the other information, and expects to obtain other information after the date of the auditor’s report.
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For purposes of this illustrative auditor’s report, the following circumstances are assumed:
-
Audit of a complete set of financial statements of an entity other than a FMC reporting entity considered to have a higher level of public accountability using a fair presentation framework. The audit is not a group audit (i.e., ISA (NZ) 600 (Revised) does not apply).
-
The financial statements are prepared by management of the entity in accordance with NZ IFRS (a general purpose framework).
-
The terms of the audit engagement reflect the description of the responsibilities of those charged with governance for the financial statements in ISA (NZ) 210.
-
The auditor has concluded an unmodified (i.e., “clean”) opinion is appropriate based on the audit evidence obtained.
-
The relevant ethical requirements that apply to the audit comprise Professional and Ethical Standard 1International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand).
-
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA (NZ) 570 (Revised).
-
The auditor is not required, and has otherwise not decided, to communicate key audit matters in accordance with ISA (NZ) 701.
-
The auditor has obtained part of the other information prior to the date of the auditor’s report, has not identified a material misstatement of the other information, and expects to obtain other information after the date of the auditor’s report.
-
The auditor has no other reporting responsibilities required under law or regulation.
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Opinion
We have audited the financial statements of ABC Company (the Company), which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of the Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Company.
Other Information [or another title if appropriate, such as “Information Other than the Financial Statements and Auditor’s Report Thereon”]
The directors17 are responsible for the other information. The other information obtained at the date of this auditor’s report is [information included in the X report,18 but does not include the financial statements and our auditor’s report thereon].
Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Directors’ Responsibilities for the Financial Statements19
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate]
[Auditor Address]
[Date]
Illustration 4 – An auditor’s report of a FMC reporting entity considered to have a higher level of public accountability containing an unmodified opinion when the auditor has obtained no other information prior to the date of the auditor’s report but expects to obtain other information after the date of the auditor’s report.
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For purposes of this illustrative auditor’s report, the following circumstances are assumed:
-
Audit of a complete set of financial statements of a FMC reporting entity considered to have a higher level of public accountability using a fair presentation framework. The audit is not a group audit (i.e., ISA (NZ) 600 (Revised) does not apply).
-
The financial statements are prepared by management of the entity in accordance with NZ IFRS (a general purpose framework).
-
The terms of the audit engagement reflect the description of the responsibilities of those charged with governance for the financial statements in ISA (NZ) 210.
-
The auditor has concluded an unmodified (i.e., “clean”) opinion is appropriate based on the audit evidence obtained.
-
The relevant ethical requirements that apply to the audit comprise Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand). Professional and Ethical Standard 1 includes independence requirements that are applicable to audits of financial statements of public interest entities and requires the auditor to publicly disclose that the independence requirements applicable to audits of financial statements of public interest entities were applied.
-
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA (NZ) 570 (Revised).
-
Key audit matters have been communicated in accordance with ISA (NZ) 701.
-
The auditor has obtained no other information prior to the date of the auditor’s report but expects to obtain other information after the date of the auditor’s report.
-
In addition to the audit of the financial statements, the auditor has other reporting responsibilities required under local law.
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements20
Opinion
We have audited the financial statements of ABC Company (the Company), which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of the Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand), as applicable to audits of financial statements of public interest entities. We have also fulfilled our other ethical responsibilities in accordance with Professional and Ethical Standard 1. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Company.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with ISA (NZ) 701.]
Other Information [or another title if appropriate, such as “Information Other than the Financial Statements and Auditor’s Report Thereon”]
The directors21 are responsible for the other information. The other information comprises the [information included in the X report,22 but does not include the financial statements and our auditor’s report thereon]. The X report is expected to be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we will not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
[When we read the X report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and [describe actions applicable].]23
Directors’ Responsibilities for the Financial Statements24
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
The engagement partner on the audit resulting in this independent auditor’s report is [name].
[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate]
[Auditor Address]
[Date]
Illustration 5 – An auditor’s report of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, containing an unmodified opinion when the auditor has obtained all of the other information prior to the date of the auditor's report and has concluded that a material misstatement of the other information exists.
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For purposes of this illustrative auditor’s report, the following circumstances are assumed:
-
Audit of a complete set of financial statements of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, using a fair presentation framework. The audit is not a group audit (i.e., ISA (NZ) 600 (Revised) does not apply).
-
The financial statements are prepared by management of the entity in accordance with NZ IFRS (a general purpose framework).
-
The terms of the audit engagement reflect the description of the responsibilities of those charged with governance for the financial statements in ISA (NZ) 210.
-
The auditor has concluded an unmodified (i.e., “clean”) opinion is appropriate based on the audit evidence obtained.
-
The relevant ethical requirements that apply to the audit comprise Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand).
-
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA (NZ) 570 (Revised).
-
Key audit matters have been communicated in accordance with ISA (NZ) 701.
-
The auditor has obtained all of the other information prior to the date of the auditor's report and has concluded that a material misstatement of the other information exists
-
The auditor has no other reporting responsibilities required under law or regulation.
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Opinion
We have audited the financial statements of ABC Company (the Company), which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of the Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Company.
Other Information [or another title if appropriate, such as “Information Other than the Financial Statements and Auditor’s Report Thereon”]
The directors25 are responsible for the other information. The other information comprises the [information included in the X report,26 but does not include the financial statements and our auditor’s report thereon.]
Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. As described below, we have concluded that such a material misstatement of the other information exists.
[Description of material misstatement of the other information]
[Key Audit Matters27]
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with ISA (NZ) 701.]
Directors’ Responsibilities for the Financial Statements28
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 1 in ISA (NZ) 700 (Revised).]
The engagement partner on the audit resulting in this independent auditor’s report is [name].29
[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate]
[Auditor Address]
[Date]
Illustration 6 – An auditor’s report of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, containing an qualified opinion when the auditor has obtained all of the other information prior to the date of the auditor's report and there is a limitation of scope with respect to a material item in the consolidated financial statements which also affects the other information.
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For purposes of this illustrative auditor’s report, the following circumstances are assumed:
-
Audit of a complete set of consolidated financial statements of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, using a fair presentation framework. The audit is a group audit (i.e., ISA (NZ) 600 (Revised) applies).
-
The consolidated financial statements are prepared by management of the entity in accordance with NZ IFRS (a general purpose framework).
-
The terms of the audit engagement reflect the description of the responsibilities of those charged with governance for the consolidated financial statements in ISA (NZ) 210.
-
The auditor was unable to obtain sufficient appropriate audit evidence regarding an investment in a foreign associate. The possible effects of the inability to obtain sufficient appropriate audit evidence are deemed to be material but not pervasive to the consolidated financial statements (i.e., a qualified opinion is appropriate).
-
The relevant ethical requirements that apply to the audit comprise Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand).
-
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA (NZ) 570 (Revised).
-
Key audit matters have been communicated in accordance with ISA (NZ) 701.
-
The auditor has obtained all of the other information prior to the date of the auditor’s report and the matter giving rise to the qualified opinion on the consolidated financial statements also affects the other information.
-
The auditor has no other reporting responsibilities required under law or regulation.
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Qualified Opinion
We have audited the consolidated financial statements of ABC Company and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 20X1, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying consolidated financial statements present fairly, in all material respects, (or give a true and fair view of) the financial position of the Group as at December 31, 20X1, and (of) its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
Basis for Qualified Opinion
The Group’s investment in XYZ Company, a foreign associate acquired during the year and accounted for by the equity method, is carried at xxx on the consolidated statement of financial position as at December 31, 20X1, and ABC’s share of XYZ’s net income of xxx is included in ABC’s income for the year then ended. We were unable to obtain sufficient appropriate audit evidence about the carrying amount of ABC’s investment in XYZ as at December 31, 20X1 and ABC’s share of XYZ’s net income for the year because we were denied access to the financial information, management, and the auditors of XYZ. Consequently, we were unable to determine whether any adjustments to these amounts were necessary.
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, ABC Company or any of its subsidiaries.
Other Information [or another title if appropriate, such as “Information Other than the Financial Statements and Auditor’s Report Thereon”]
The directors30 are responsible for the other information. The other information comprises the [information included in the X report,31 but does not include the consolidated financial statements and our auditor’s report thereon.]
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. As described in the Basis for Qualified Opinion section above, we were unable to obtain sufficient appropriate evidence about the carrying amount of ABC’s investment in XYZ as at December 31, 20X1 and ABC’s share of XYZ’s net income for the year. Accordingly, we are unable to conclude whether or not the other information is materially misstated with respect to this matter.
[Key Audit Matters32]
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section we have determined the matters described below to be the key audit matters to be communicated in our report.
[Description of each key audit matter in accordance with ISA (NZ) 701.]]
Directors’ Responsibilities for the Financial Statements33
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 2 in ISA (NZ) 700 (Revised).]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 2 in ISA (NZ) 700 (Revised).]
The engagement partner on the audit resulting in this independent auditor’s report is [name].34
[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate]
[Auditor Address]
[Date]
Illustration 7 – An auditor’s report of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, containing an adverse opinion when the auditor has obtained all of the other information prior to the date of the auditor's report and the adverse opinion on the consolidated financial statements also affects the other information.
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For purposes of this illustrative auditor’s report, the following circumstances are assumed:
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Audit of a complete set of consolidated financial statements of any entity, whether a FMC reporting entity considered to have a higher level of public accountability or not, using a fair presentation framework. The audit is a group audit (i.e., ISA (NZ) 600 (Revised) applies).
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The consolidated financial statements are prepared by management of the entity in accordance with NZ IFRS (a general purpose framework).
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The terms of the audit engagement reflect the description of the responsibilities of those charged with governance for the consolidated financial statements in ISA (NZ) 210.
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The consolidated financial statements are materially misstated due to the non-consolidation of a subsidiary. The material misstatement is deemed to be pervasive to the consolidated financial statements. The effects of the misstatement on the consolidated financial statements have not been determined because it was not practicable to do so (i.e., an adverse opinion is appropriate).
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The relevant ethical requirements that apply to the audit comprise Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand).
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Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA (NZ) 570 (Revised).
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Key audit matters have been communicated in accordance with ISA (NZ) 701.
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The auditor has obtained all of the other information prior to the date of the auditor’s report and the matter giving rise to the adverse opinion on the consolidated financial statements also affects the other information
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The auditor has no other reporting responsibilities required under law or regulation.
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Adverse Opinion
We have audited the consolidated financial statements of ABC Company and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 20X1, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of our report, the accompanying consolidated financial statements do not present fairly (or do not give a true and fair view of) the consolidated financial position of the Group as at December 31, 20X1, and (of) its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
Basis for Adverse Opinion
As explained in Note X, the Group has not consolidated subsidiary XYZ Company that the Group acquired during 20X1 because it has not yet been able to determine the fair values of certain of the subsidiary’s material assets and liabilities at the acquisition date. This investment is therefore accounted for on a cost basis. Under NZ IFRS, the Group should have consolidated this subsidiary and accounted for the acquisition based on provisional amounts. Had XYZ Company been consolidated, many elements in the accompanying consolidated financial statements would have been materially affected. The effects on the consolidated financial statements of the failure to consolidate have not been determined.
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in [jurisdiction], and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, ABC Company or any of its subsidiaries.
Other Information [or another title if appropriate, such as “Information Other than the Financial Statements and Auditor’s Report Thereon”]
The directors35 are responsible for the other information. The other information comprises the [information included in the X report,36 but does not include the consolidated financial statements and our auditor’s report thereon.]
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. As described in the Basis for Adverse Opinion section above, the Group should have consolidated XYZ Company and accounted for the acquisition based on provisional amounts. We have concluded that the other information is materially misstated for the same reason with respect to the amounts or other items in the X report affected by the failure to consolidate XYZ Company.
[Key Audit Matters37]
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Adverse Opinion section we have determined the matters described below to be the key audit matters to be communicated in our report.
[Description of each key audit matter in accordance with ISA (NZ) 701.]
Directors’ Responsibilities for the Financial Statements38
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 2 in ISA (NZ) 700 (Revised).]
Auditor’s Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA (NZ) 700 (Revised) – see Illustration 2 in ISA (NZ) 700 (Revised).]
The engagement partner on the audit resulting in this independent auditor’s report is [name].39
[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate]
[Auditor Address]
[Date]
