The auditor’s report includes the following basic elements, ordinarily in the following layout:

(a) Title;

(b) Addressee;

(c) Opening or introductory paragraph

(i) Identification of the financial statements audited;

(ii) A statement of the responsibility of the entity’s management and the responsibility of the auditor;

(d) Scope paragraph (describing the nature of an audit)

(i) A reference to the ISAs or relevant national standards or practices;

(ii) A description of the work the auditor performed;

(e) Opinion paragraph containing:

(i) A reference to the financial reporting framework used to prepare the financial statements (including identifying the country of origin3 of the financial reporting framework when the framework used is not International Accounting Standards);

and

(ii) An expression of opinion on the financial statements;

(f) Date of the report;

(g) Auditor’s address; and

(h) Auditor’s signature.

A measure of uniformity in the form and content of the auditor’s report is desirable because it helps to promote the reader’s understanding and to identify unusual circumstances when they occur.

(a) Title

The auditor’s report should have an appropriate title. It may be appropriate

to use the term “Independent Auditor” in the title to distinguish the auditor’s report from reports that might be issued by others, such as by officers of the entity, the board of directors, or from the reports of other auditors who may not have to abide by the same ethical requirements as the independent auditor.

(b) Addressee

The auditor’s report should be appropriately addressed as required by the circumstances of the engagement and local regulations. The report is ordinarily addressed either to the shareholders or the board of directors of the entity whose financial statements are being audited.

(c) Opening or Introductory Paragraph

The auditor’s report should identify the financial statements of the entity that have been audited, including the date of and period covered by the financial statements.

The report should include a statement that the financial statements are the responsibility of the entity’s management4 and a statement that the responsibility of the auditor is to express an opinion on the financial statements based on the audit.

Financial statements are the representations of management. The preparation of such statements requires management to make significant accounting estimates and judgments, as well as to determine the appropriate accounting principles and methods used in preparation of the financial statements. This determination will be made in the context of the financial reporting framework that management chooses, or is required, to use. In contrast, the auditor’s responsibility is to audit these financial statements in order to express an opinion thereon.

(d) Scope Paragraph

The auditor’s report should describe the scope of the audit by stating that the audit was conducted in accordance with ISAs or in accordance with relevant national standards or practices as appropriate. “Scope” refers to the auditor’s ability to perform audit procedures deemed necessary in the circumstances. The reader needs this as an assurance that the audit has been accordance with established standards or practices. Unless otherwise stated, the auditing standards or practices followed are presumed to be those of the country indicated by the auditor’s address.

The report should include a statement that the audit was planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement.

 (e) The auditor’s report should describe the audit as including:

(a) Examining, on a test basis, evidence to support the financial

statement amounts and disclosures;

(b) Assessing the accounting principles used in the preparation of the

financial statements;

(c) Assessing the significant estimates made by management in the preparation of the financial statements; and

(d) Evaluating the overall financial statement presentation.

 (f) The report should include a statement by the auditor that the audit provides a reasonable basis for the opinion.

An illustration of these matters in a scope paragraph is:

 “We conducted our audit in accordance with International Standards on Auditing (or refer to relevant national standards or practices). Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.”

 (g) Opinion Paragraph

The opinion paragraph of the auditor’s report should clearly indicate the financial reporting framework used to prepare the financial statements (including identifying the country of origin of the financial reporting framework when the framework used is not International Accounting Standards) and state the auditor’s opinion as to whether the financial statements give a true and fair view (or are presented fairly, in all material respects) in accordance with that financial reporting framework and, where appropriate, whether the financial statements comply with statutory requirements.

The financial reporting framework is determined by IASs, rules issued by recognized standard setting bodies, and the development of general practice within a country, with an appropriate consideration of fairness and with due regard to local legislation. To advise the reader of the context in which the auditor’s opinion is expressed, the auditor’s opinion indicates the framework upon which the financial statements are based. The auditor refers to the financial reporting framework in such terms as: “… in accordance with International Accounting Standards (or [title of financial reporting framework with reference to the country of origin]) ….”

In addition to an opinion on the true and fair view (or fair presentation, in all material respects), the auditor’s report may need to include an opinion as to whether the financial statements comply with other requirements specified by relevant statutes or law.

An illustration of these matters in an opinion paragraph is:

“In our opinion, the financial statements give a true and fair view of (or present fairly, in all material respects) the financial position of the Company as of December 31, 20X1, and of the

results of its operations and its cash flows for the year then ended in accordance with International Accounting Standards (or [title of financial reporting framework with reference to the country of origin]) (and comply with ...).”

(h) Date of Report

The auditor should date the report as of the completion date of the audit. This informs the reader that the auditor has considered the effect on the financial statements and on the report of events and transactions of which the auditor became aware and that occurred up to that date.

Since the auditor’s responsibility is to report on the financial statements as prepared and presented by management, the auditor should not date the report earlier than the date on which the financial statements are signed or approved by management.

(i) Auditor’s Address

The report should name a specific location, which is ordinarily the city where the auditor maintains the office that has responsibility for the audit.

(j) Auditor’s Signature

The report should be signed in the name of the audit firm, the personal name of the auditor or both, as appropriate. The auditor’s report is ordinarily signed in the name of the firm because the firm assumes responsibility for the audit.