GD Law - Comparison Corporation Code vs. Revised Corporation Code 2.20.19 Web Version

PHILIPPINE STANDARD ON AUDITING 700 (REVISED)
PHILIPPINE STANDARD ON AUDITING 700 (REVISED)

FORMING AN OPINION AND REPORTING ON FINANCIAL
FORMING AN OPINION AND REPORTING ON FINANCIAL
STATEMENTS
STATEMENTS
(Effective for audits
(Effective of financial
for audits statements
of financial for periods
statements ending
for periods on or
ending onafter December
or after 15, 15,
December 2016)
2016)
CONTENTS
CONTENTS
_____________________________________________________________________________________
_____________________________________________________________________________________
Paragraph
Introduction
Scope of this PSA .................................................................................................................. 1-4
Effective Date ....................................................................................................................... Paragraph
5
Objectives ........................................................................................................................... 6
Introduction
Definitions ........................................................................................................................... 7–9
Scope of this PSA ..................................................................................................................
Requirements 1-4
Effective
Forming Date .......................................................................................................................
an Opinion on the Financial Statements ................................................................ 10-155
Form of Opinion ................................................................................................................... 16-19
Objectives
Auditor’s Report ...........................................................................................................................
................................................................................................................... 20-516
Definitions Information
Supplementary ...........................................................................................................................
Presented with the Financial Statements ................................ 52-537–9
Application and Other Explanatory Material
Requirements
Qualitative Aspects of the Entity’s Accounting Practices ..................................................... A1-A3
Forming an Opinion on the Financial Statements ................................................................ 10-15
Disclosure of the Effect of Material Transactions and Events on the Information Conveyed
Form of Opinion ...................................................................................................................
in the Financial Statements ...........................................................................................
16-19
A4
Auditor’s Report ...................................................................................................................
Description of the Applicable Financial Reporting Framework ............................................
20-51
A5-A10
(Effective for audits of financial statements for periods ending on or after December 15, 2016)
CONTENTS
PHILIPPINE STANDARD ON AUDITIG 700 (REVISED)

_____________________________________________________________________________________
FORMING AN OPINION & REPORTING ON FINANCIAL STATEMENTS
Effec%ve for audits of financial statements for periods ending on or a7er December 15, 2016
Paragraph
Introduction
Scope of this PSA .................................................................................................................. 1-4
Effective Date ....................................................................................................................... 5
Objectives ........................................................................................................................... 6
Definitions ........................................................................................................................... 7–9
Requirements
Forming an Opinion on the Financial Statements ................................................................ 10-15
Form of Opinion ................................................................................................................... 16-19
Auditor’s Report ................................................................................................................... 20-51
Supplementary Information Presented with the Financial Statements ................................ 52-53
Qualitative Aspects of the Entity’s Accounting Practices ..................................................... A1-A3
Disclosure of the Effect of Material Transactions and Events on the Information Conveyed
in the Financial Statements ........................................................................................... A4
Description of the Applicable Financial Reporting Framework ............................................ A5-A10
Form of Opinion ................................................................................................................... A11-A12
(Ref: Para. A14)
Illustrations of Independent
Illustra?ons Auditor’s
of Independent ReportsRon
Auditor’s Financial
eports on FStatements
inancial Statements
Illustration 1: An auditor’s report on financial statements of a listed entity prepared in accordance with a
fair presentation framework
Illustration 2: An auditor’s report on consolidated financial statements of a listed entity prepared in
accordance with a fair presentation framework
Illustration 3: An auditor’s report on financial statements of an entity other than a listed entity prepared in
accordance with a fair presentation framework (where reference is made to material that is located on a
website of an appropriate authority)
Illustration 4: An auditor’s report on financial statements of an entity other than a listed entity prepared in
accordance with a general purpose compliance framework
Overview of Forming the Auditor’s Opinion and Report
Has the auditor obtained
reasonable assurance
F/S Are F/S free from material
misstatements?
Consider/Evaluate Consider/Evaluate
SAAE obtained from sa?sfactory Quan?ta?ve & qualita?ve

performance of audit factors of misstatements
If applicable, has the required EQCR been performed?
Has required communica?on with TCWG, management,

and other par?es have been made?
Form the auditor’s opinion
Formulate the auditor’s report

PSA 700 (REVISED), FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS
PHILIPPINE STANDARD ON AUDITIG 700 (REVISED)

Introduction
FORMING AN OPINION & REPORTING ON FINANCIAL STATEMENTS
Scope of this PSA
1. This Philippine Standard on Auditing (PSA) deals with the auditor’s responsibility to form an opinion on
the financial statements. It also deals with the form and content of the auditor’s report issued as a result
of an audit of financial statements.
2. PSA 7011 deals with the auditor’s responsibility to communicate key audit matters in the auditor’s
2 3
report. PSA 705 (Revised) and PSA 706 (Revised) deal with how the form and content of the
auditor’s report are affected when the auditor expresses a modified opinion or includes an
Emphasis of Matter paragraph or an Other Matter paragraph in the auditor’s report. Other PSAs also
contain reporting requirements that are applicable when issuing an auditor’s report.
3. This PSA applies to an audit of a complete set of general purpose financial statements and is written in
4
that context. PSA 800 deals with special considerations when financial statements are prepared in
Forms of
Scope of this PSA PSA 700 (REVISED), FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS
1. Introduction
This Philippine Standard on Auditing (PSA) deals with the auditor’s responsibility to form an opinion on
the financial statements. It also deals with the form and content of the auditor’s report issued as a result
of anofaudit
Scope thisofPSA
financial statements.
1
2. 1. PSAThis 701Philippine deals withStandard the auditor’s responsibility
on Auditing (PSA) deals to communicate
with the auditor’skey audit matters toin form
responsibility the auditor’s
an opinion on
2 3
the financial
report. PSA 705 (Revised) and PSA 706 (Revised) statements. It also deals with the form anddealcontent
with howof the theauditor’s
form andreport issued
content of theas a result
auditor’s of an report audit ofarefinancial affectedstatements.
when the auditor expresses a modified opinion or includes an
Emphasis of1Matter paragraph or an Other Matter paragraph in the auditor’s report. Other PSAs also
contain reporting requirements 2
that are applicable 3
when issuing an auditor’s report.
3. Thisauditor’s PSA applies reporttoareanaffected audit of when the auditor
a complete set ofexpresses
general purposea modified opinionstatements
financial or includesandan is written in
2 PSA Emphasis 701: Cofommunica%ng Matter4 paragraph orKey an Other
Audit Matter paragraph
MaIers in theIndependent
in the auditor’s report.AOther PSAsRalso
uditor’s eport
that
PSA context.
contain 705: reporting PSA 800requirements
Modifica%ons deals withto special
thatthe
are Oconsiderations
pinion in
applicable when
the
when financial
Independent
issuing an statements
auditor’s Areport.are prepared
uditor’s Report in
0 5
PSA 706: Emphasis of MaIer Paragraphs (EOM) & other MaIer Paragraphs (OM)
1 in the Independent Auditor’s Report with special considerations
accordance with a special purpose framework. PSA 805 deals
6 3. relevant
PSA This720: to anAapplies
PSA audit oftoaansingle
uditors auditfinancial statement
of a complete
Responsibili%es rset oforgeneral
of tao specific
ela%ng other element,
purpose Ifinancial account or item
statements
nforma%on and ofis written
a in
financial statement. This 4PSA also applies to audits for which PSA 800 or PSA 805 apply.
5
accordance with a special purpose framework. PSA 805 deals with special considerations
4. Therelevant requirements to an audit of thisof PSA arefinancial
a single aimed atstatement
addressingor ofanaappropriate balance
specific element, between
account the ofneed
or item a for
consistency and comparability in auditor reporting globally and the need to increase the value of auditor
1
2 PSA 700 (REVISED), FORMING
3 AN OPINION AND REPORTING ON FINANCIAL STATEMENTS
auditor’s report are affected when the auditor expresses a modified opinion or includes an
Introduction
Emphasis of Matter paragraph or an Other Matter paragraph in the auditor’s report. Other PSAs also
contain reporting requirements that are applicable when issuing an auditor’s report.
Scope of this PSA
3. 1. ThisThisPSAPhilippine appliesStandard
to an auditon ofAuditing
a complete
(PSA)set dealsof general purpose responsibility
with the auditor’s financial statements to form anandopinion
is written
on in
4
thatthecontext. financialPSA 800 deals
statements. withdeals
It also special
with considerations
the form and content whenoffinancial
the auditor’sstatements are prepared
report issued as a resultin
5
accordance of an auditwith of financial
a specialstatements.
purpose framework. PSA 805 deals with special considerations
relevant to 1an audit of a single financial statement or of a specific element, account or item of a
financial statement.2 This PSA also applies3 to audits for which PSA 800 or PSA 805 apply.
4. PSA Theauditor’s requirements report areof affected
this PSA when
are the auditor
aimed at expressesana modified
addressing appropriate
800: Special Considera%ons – Audits of F/S Prepared in Accordance with Special
opinion or includes
balance betweenan the need for
consistency Emphasis of Matter
and paragraphinorauditor
comparability
Purpose Framework an Other Matter paragraph
reporting globally andin the
the auditor’s report. Other
need to increase PSAs ofalsoauditor
the value
PSA contain 805: Sreporting
reporting makingCrequirements
bypecial onsidera%ons
the informationthat provided
are
– Aapplicable
udits of Swhen
Accounts or Items of F/S
in theingle issuing an auditor’s
F/S and
auditor’s report report.
Specific Elements,
more relevant to users. This PSA
promotes consistency in the auditor’s report, but recognizes the need for flexibility to accommodate
3. particular
This PSAcircumstances
applies to an audit of a complete
of individual set of general
jurisdictions. purposeinfinancial
Consistency statements
the auditor’s andwhen
report, is written in
the audit
4
hasthat
been conducted
context. PSA 800in accordance with PSAs,
deals with special promoteswhen
considerations credibility in thestatements
financial global marketplace
are preparedbyinmaking
5
more readily identifiable
accordance with a specialthose auditsframework.
purpose that have been conducted
PSA 805 in accordance
deals with with globally recognized
special considerations
standards.
relevant toIt also helpsof atosingle
an audit promote the user’s
financial understanding
statement andelement,
or of a specific to identify unusual
account circumstances
or item of a
3. This PSA applies to an audit of a complete set of general purpose financial statements and is written in
4
that context. PSA 800 deals PSAwith special considerations
700 (REVISED), when financial
FORMING AN OPINION statements
AND REPORTING are prepared
ON FINANCIAL in
STATEMENTS
5
Introduction
relevant to an audit of a single financial statement or of a specific element, account or item of a
financial statement. This PSA also applies to audits for which PSA 800 or PSA 805 apply.
Scope of this PSA
4. 1. TheThis
requirements
Philippine ofStandard
this PSAonare aimed(PSA)
Auditing at addressing
deals withantheappropriate balance between
auditor’s responsibility to formtheanneed
opinionfor on
consistency andstatements.
the financial comparability in auditor
It also reporting
deals with globally
the form and theofneed
and content to increase
the auditor’s theissued
report value ofasauditor
a result
reporting by making
of an audit the information
of financial statements.provided in the auditor’s report more relevant to users. This PSA
promotes consistency
1
in the auditor’s report, but recognizes the need for flexibility to accommodate
2. particular
PSA 701 deals with theof individual
circumstances auditor’s responsibility
jurisdictions.toConsistency
communicatein the keyauditor’s
audit matters
report,in the
whenauditor’s
the audit
2 3
hasreport.
been conducted in accordance
PSA 705 (Revised) with PSAs,
and PSA promotesdeal
706 (Revised) credibility
with howin the global
form andmarketplace
content ofbythemaking
moreauditor’s
readilyreport are affected
identifiable when the
those audits thatauditor expresses
have been a modified
conducted opinion orwith
in accordance includes
globallyanrecognized
EmphasisIt also
standards. of Matter
helpsparagraph
to promoteorthean user’s
Other Matter paragraphandin totheidentify
understanding auditor’sunusual
report.circumstances
Other PSAs also
whencontain reporting requirements that are applicable when issuing an auditor’s report.
they occur.
Effective
3. ThisDatePSA applies to an audit of a complete set of general purpose financial statements and is written in
4
5. This PSA is effective for audits of financial statements for periods
5 ending on or after December 15,
2016.
relevant to an audit of a single financial statement or of a specific element, account or item of a
Effective Date
5. This PSA is effective for audits of financial statements for periods ending on or after December 15,
2016.
Objectives
6. The objectives of the auditor are:
(a) To form an opinion on the financial statements based on an evaluation of the conclusions drawn
from the audit evidence obtained; and
(b) To express clearly that opinion through a written report.
______________________________
1
PSA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
2
PSA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report
3
PSA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report
4
PSA 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
5
PSA 805, Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial
Statement
Definitions
7. For purposes of the PSAs, the following terms have the meanings attributed below:
(a) General purpose financial statements – Financial statements prepared in accordance with a
general purpose framework.
(b) General purpose framework – A financial reporting framework designed to meet the common
financial information needs of a wide range of users. The financial reporting framework may be a
fair presentation framework or a compliance framework.
The term “fair presentation framework” is used to refer to a financial reporting framework that
requires compliance with the requirements of the framework and:
(i) Acknowledges explicitly or implicitly that, to achieve fair presentation of the financial
statements, it may be necessary for management to provide disclosures beyond those
specifically required by the framework; or
(ii) Acknowledges explicitly that it may be necessary for management to depart from a
requirement of the framework to achieve fair presentation of the financial statements. Such
(a) General purpose financial statements – Financial statements prepared in accordance with a
(b) General purpose framework – A financial reporting framework designed to meet the common
financial information needs of a wide range of users. The financial reporting framework may be a
The term “fair presentation framework” is used to refer to a financial reporting framework that
requires compliance with the requirements of the framework and:
specifically required by the framework; or
(ii) Acknowledges explicitly that it may be necessary for management to depart from a
departures are expected to be necessary only in extremely rare circumstances.
The term “compliance framework” is used to refer to a financial reporting framework that
requires compliance with the requirements of the framework, but does not contain the
6
acknowledgements in (i) or (ii) above.
(c) Unmodified opinion – The opinion expressed by the auditor when the auditor concludes that
7. For purposesspecifically
of the PSAs,required
the following
by theterms have the
framework; or meanings attributed below:
(a) General purpose financial
(ii) Acknowledges statements
explicitly that it–may
Financial statements
be necessary forprepared in accordance
management to depart with
fromaa
generalrequirement
purpose framework.
of the framework to achieve fair presentation of the financial statements. Such
(b) Generaldepartures are expected
purpose framework to be necessary
– A financial reportingonly in extremely
framework raretocircumstances.
designed meet the common
financial
The terminformation needs
“compliance of a wide range
framework” is usedoftousers.
referThe
to afinancial
financialreporting
reportingframework
frameworkmay
thatbe a
The term “fair presentation framework” is6 used to refer to a financial reporting framework that
acknowledgements
requires in (i)theor requirements
compliance with (ii) above. of the framework and:
(c) Unmodified opinion –it may
statements, The opinion
be necessaryexpressed by the auditor
for management when thedisclosures
to provide auditor concludes that
beyond those
specifically
the financial requiredare
statements by the framework;
prepared, in allormaterial respects, in accordance with the
(ii)applicable
Acknowledges explicitly that it may
financial reporting framework. be
7 necessary for management to depart from a
8. Reference todepartures
“financialare expected toin be
statements” thisnecessary
PSA meansonly“aincomplete
extremelysetrareof circumstances.
general purpose financial
statements,
The term including the related
“compliance notes.”isThe
framework” usedrelated
to refernotes
to a ordinarily compriseframework
financial reporting a summarythatof significant
requirespolicies
accounting compliance with explanatory
and other the requirements of the framework,
information. but doesofnotthecontain
The requirements the financial
applicable
reporting framework determine the form
acknowledgements in (i) or (ii) above. and
6 content of the financial statements, and what constitutes a
complete set of financial statements.

The term “compliance framework” is used to refer to a financial reporting framework that
6
acknowledgements in (i) or (ii) above.
(c) Unmodified opinion – The opinion expressed by the auditor when the auditor concludes that
the financial statements are prepared, in all material respects, in accordance with the
7
applicable financial reporting framework.
8. Reference to “financial statements” in this PSA means “a complete set of general purpose financial
statements, including the related notes.” The related notes ordinarily comprise a summary of significant
accounting policies and other explanatory information. The requirements of the applicable financial
reporting framework determine the form and content of the financial statements, and what constitutes a
complete set of financial statements.
9. Reference to “Philippine Financial Reporting Standards” in this PSA means the Philippine Financial
Reporting Standards (PFRSs) issued by the Financial Reporting Standards Council.
6
acknowledgements
(c) Unmodified in (i)opinion
opinion – The or (ii) above.
expressed by the auditor when the auditor concludes that
the financial
(c) Unmodified statements
opinion are prepared,
– The opinion in allbymaterial
expressed respects,
the auditor whenintheaccordance with the that
auditor concludes
7
applicable financial reporting framework. all material respects, in accordance with the
the financial statements are prepared, in
7
applicable financial reporting framework.
8. Reference to “financial statements” in this PSA means “a complete set of general purpose financial
8. statements,
Reference toincluding
“financialthestatements”
related notes.”
in thisThePSA
related notes
means ordinarily set
“a complete comprise a summary
of general purposeoffinancial
significant
accounting
statements,policies
includingandtheother explanatory
related notes.” Theinformation. Theordinarily
related notes requirements of theaapplicable
comprise summary offinancial
significant
reporting
accountingframework determine
policies and the form andinformation.
other explanatory content of the
Thefinancial statements,
requirements of the and what constitutes
applicable financial a
complete
reporting set of financial
framework statements.
determine the form and content of the financial statements, and what constitutes a
complete set
9. Reference of financialFinancial
to “Philippine statements.
Reporting Standards” in this PSA means the Philippine Financial
9. Reporting
ReferenceStandards (PFRSs)
to “Philippine issued
Financial by the Financial
Reporting Standards”Reporting Standards
in this PSA means Council.
the Philippine Financial
Reporting Standards (PFRSs) issued by the Financial Reporting Standards Council.
Requirements
Forming an Opinion on the
Requirements: Financial Statements
Forming an Opinion on Financial Statements
10. The auditor shall form an opinion on whether the financial statements are prepared, in all material
8, 9
respects, in accordance with the applicable financial reporting framework.
11. In order to form that opinion, the auditor shall conclude as to whether the auditor has obtained
reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error. That conclusion shall take into account:
(a) The auditor’s conclusion, in accordance with PSA 330, whether sufficient appropriate audit
10
evidence has been obtained;
(b) The auditor’s conclusion, in accordance with PSA 450, whether uncorrected misstatements are
11
material, individually or in aggregate; and
(c) The evaluations required by paragraphs 12–15.
Forming an Opinion on the Financial Statements
10. The auditor shall form an opinion on whether the financial statements are prepared, in all material
8, 9
respects, in accordance
Requirements: with the
Forming an applicable financial
Opinion on Freporting framework.
inancial Statements
11. In order to form that opinion, the auditor shall conclude as to whether the auditor has obtained
reasonable assurance about whether the financial statements as a whole are free from material
(a) The auditor’s conclusion, in accordance with PSA 330, whether sufficient appropriate audit
10
11
12. The auditor shall evaluate whether the financial statements are prepared, in all material respects, in
accordance with the requirements of the applicable financial reporting framework. This evaluation shall
include consideration of the qualitative aspects of the entity’s accounting practices, including indicators
of possible bias in management’s judgments. (Ref: Para. A1–A3)
11
(c) The evaluations requi Fredorming
REQUIREMENTS: by paragraphs
an O12–15.
pinion on the Financial Statements
of possible bias in management’s judgments. (Ref: Para. A1–A3)
13. Reference:
In particular, the audi
tor shall evaluate whether, in view of the requirements of the applicable financial
reporting
PSA framework:
260 – Communica%on to TCWG
PSA 540 – Audi%ng Accoun%ng Es%mates, including FV
(a)
The
fi n anci
Aaccoun%ng
l statements adequately disclose& theRelated
Es%mates significantDaccounting policies selected and
isclosures
PSA appl 450 ied;– Evalua%on of Misstatements Iden%fied During the Audit
(b) The accounting policies selected and applied are consistent with the applicable financial reporting
framework and are appropriate;
***

Qualitative Aspects of the Entity’s Accounting Practices (Ref: Para. 12)
A1. Management makes a number of judgments about the amounts and disclosures in the financial
statements.
A2. PSA 260 (Revised) contains a discussion of the qualitative aspects of accounting practices.17 In
considering the qualitative aspects of the entity’s accounting practices, the auditor may become aware
of possible bias in management’s judgments. The auditor may conclude that the cumulative effect of a
lack of neutrality, together with the effect of uncorrected misstatements, causes the financial statements
as a whole to be materially misstated. Indicators of a lack of neutrality that may affect the auditor’s
evaluation of whether the financial statements as a whole are materially misstated include the following:
The selective correction of misstatements brought to management’s attention during the audit
(e.g., correcting misstatements with the effect of increasing reported earnings, but not correcting
misstatements that have the effect of decreasing reported earnings).
Possible management bias in the making of accounting estimates.
***
Qualitativestatements.
Aspects of the Entity’s Accounting Practices (Ref: PSA 260:
Para. 12) Communica?on to TCWG
A2. PSA 260 (Revised) contains a discussion of the qualitative aspects of accounting practices.17 In
considering the qualitative aspects of the entity’s accounting practices, the auditor may become aware
statements.
of possible bias in management’s judgments. The auditor may conclude that the cumulative 17
effect of a
A2. PSA lack
260 of(Revised)
neutrality,contains
togethera discussion
with the effectof the qualitative aspects
of uncorrected of accounting
misstatements, causespractices.
the financialIn statements
considering the qualitative
as a whole aspects
to be materially of the entity’s
misstated. accounting
Indicators of a lackpractices, the auditor
of neutrality that maymay become
affect aware
the auditor’s
of possible bias ofin whether
evaluation management’s judgments.
the financial The auditor
statements mayare
as a whole conclude
materiallythatmisstated
the cumulative
includeeffect of a
the following:
lack of neutrality, together with the effect of uncorrected misstatements, causes the financial statements
as a whole The
to beselective
materiallycorrection
misstated.of misstatements
Indicators of a lackbrought to management’s
of neutrality attention
that may affect theduring the audit
auditor’s
evaluation of(e.g., correcting
whether misstatements
the financial statements withasthea whole
effect are
of increasing
materiallyreported
misstatedearnings,
include thebutfollowing:
not correcting
misstatements that have the effect of decreasing reported earnings).
The selective correction of misstatements brought to management’s attention during the audit
(e.g.,Possible
correctingmanagement
misstatementsbiaswith
in thethemaking
effect ofofincreasing
accountingreported
estimates. earnings, but not correcting
A3. PSA misstatements that have the effect of decreasing reported earnings).
540 addresses possible management bias in making accounting estimates. Indicators of
18
possible
Possiblemanagement
managementbias biasdoinnottheconstitute
making ofmisstatements for purposes of drawing conclusions on the
accounting estimates.
reasonableness of individual accounting estimates. They may, however, affect the auditor’s evaluation
A3. PSA 540 addresses possible management bias in making accounting estimates.18 Indicators of
of whether the financial statements as a whole are free from material misstatement.
*** of a lack of neutrality that may affect the auditor’s
as a whole to be materially misstated. Indicators
evaluation of whether the financial statements as a whole are materially misstated include the following:
ApplicationThe
andselective
Othercorrection of misstatements
Explanatory Material brought to management’s attention during the audit
(e.g., correcting misstatements with the effect of increasing reported earnings, but not correcting
misstatements
Qualitative Aspects that haveAccounting
of the Entity’s the effect ofPractices
decreasing reported
(Ref: earnings).
Para. 12)
Possible management bias in the making of accounting estimates.
A1.A3. Management makes a number of judgments about the amounts and disclosures in18the financial
PSA 540 addresses possible management bias in making accounting estimates. Indicators of
statements.
possible management bias do not constitute misstatements for purposes of drawing conclusions on the
17
A2. PSA
reasonableness
260 (Revised) contains a discussion of the qualitative aspects of accounting practices. Inevaluation
of individual accounting estimates. They may, however, affect the auditor’s
of whetherthe
considering thequalitative
financial statements
aspects of as
theaentity’s
whole are free frompractices,
accounting material the
misstatement.
auditor may become aware
of possibleofbias
Disclosures in management’s
the Effect of Materialjudgments.
TransactionsTheand
auditor may on
Events conclude that the cumulative
the Information Conveyedeffect of a
in the
lack ofStatements
Financial neutrality, together with the
(Ref: Para. effect of uncorrected misstatements, causes the financial statements
13(e))
as a whole to be materially misstated. Indicators of a lack of neutrality that may affect the auditor’s
A4. evaluation
It is common for financial
of whether statements
the financial prepared
statements as ainwhole
accordance with a general
are materially misstatedpurpose
includeframework to
the following:
present an entity’s financial position, financial performance and cash flows. In such circumstances, the
PSA The 540: selective correction
Audi?ng of misstatements
Accoun?ng brought
Es?mates, to management’s
Including attentiontoduring
FV Accoun?ng the audit
auditor evaluates whether the financial statements provide
Es?mates and Related Disclosures adequate disclosures enable the intended
users(e.g., correcting misstatements
to understand with thetransactions
the effect of material effect of increasing reported
and events on theearnings, but not position,
entity’s financial correcting
misstatements
financial performance thatand
havecashtheflows.
effect of decreasing reported earnings).
Possible
Description of the management bias in theReporting
Applicable Financial making ofFramework
accounting estimates.
(Ref: Para. 15)
A3.A5. As explained in PSA 200, the preparation of the financial statements by management
18 and, where
PSA 540 addresses possible management bias in making accounting estimates. Indicators of
11
(c) The evaluations required by paragraphs
PSA 700 (REVISED), 12–15.
FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS
Requirements
Forming an Opinion
of possible bias inonmanagement’s
the Financial judgments.
Statements (Ref: Para. A1–A3)
13. 10.In particular,

The auditorthe
shallauditor
form anshall evaluate
opinion whether,
on whether the infinancial
view ofstatements
the requirements of theinapplicable
are prepared, all materialfinancial
reporting framework:
8, 9
11.(a) In order
The financial statements
to form that opinion, theadequately
auditor shalldisclose theassignificant
conclude to whetheraccounting
the auditor policies selected and
has obtained
applied;assurance about whether the financial statements as a whole are free from material
reasonable
(a) framework
The auditor’s
andconclusion, in accordance with PSA 330, whether sufficient appropriate audit
are appropriate;
10
(c) The accounting estimates made by management are reasonable;
(d) The information presented in the financial11 statements is relevant, reliable, comparable, and
understandable;
(e) The financial statements provide adequate disclosures to enable the intended users to
12. Theunderstand
auditor shallthe
evaluate
effectwhether the financial
of material statements
transactions are prepared,
and events in all materialconveyed
on the information respects, inin the
accordance
financialwith the requirements
statements; and (Ref:of the applicable
Para. A4) financial reporting framework. This evaluation shall
reporting framework:
(a) The financial statements adequately disclose the significant accounting policies selected and
applied;
Requirements
framework and are appropriate;
Forming
(c) anThe
Opinion on the estimates
accounting Financial Statements
made by management are reasonable;
10. (d) The information
The auditor shall form anpresented
opinion oninwhether
the financial statements
the financial is relevant,
statements reliable,incomparable,
are prepared, all material and
understandable;
8, 9
11. (e) Theto financial

In order form that statements provideshall
opinion, the auditor adequate
concludedisclosures to enable
as to whether the intended
the auditor users to
has obtained
understand
reasonable the effect
assurance of material
about whether the transactions and events
financial statements on theareinformation
as a whole conveyed in the
free from material
misstatement,
financialwhether due toand
statements; fraud or error.
(Ref: Para.That
A4) conclusion shall take into account:
(f)(a) The
The terminology
auditor’s conclusion,
used in intheaccordance
financial
10
with PSA 330,including
statements, whetherthe
sufficient
title ofappropriate
each auditstatement, is
financial
evidence has
appropriate. been obtained;
11
____________________________
A3. PSA 540 addresses possible management bias in making accounting estimates.18 Indicators of
possible management bias do not constitute misstatements for purposes of drawing conclusions on the
reasonableness of individual accounting estimates. They may, however, affect the auditor’s evaluation
of whether the financial statements as a whole are free from material misstatement.
Disclosures of the Effect of Material Transactions and Events on the Information Conveyed in the
Financial Statements (Ref: Para. 13(e))
A4. It is common for financial statements prepared in accordance with a general purpose framework to
auditor evaluates whether the financial statements provide adequate disclosures to enable the intended
users to understand the effect of material transactions and events on the entity’s financial position,
financial performance and cash flows.
Description of the Applicable Financial Reporting Framework (Ref: Para. 15)
A5. As explained in PSA 200, the preparation of the financial statements by management and, where
appropriate, those charged with governance requires the inclusion of an adequate description of
19
the applicable financial reporting framework in the financial statements. That description advises
Requirements: Forming an Opinion on Financial Statements
14. When the financial statements are prepared in accordance with a fair presentation framework, the
evaluation required by paragraphs 12–13 shall also include whether the financial statements achieve
fair presentation. The auditor’s evaluation as to whether the financial statements achieve fair
presentation shall include consideration of:
(a) The overall presentation, structure and content of the financial statements; and
(b) Whether the financial statements, including the related notes, represent the underlying
transactions and events in a manner that achieves fair presentation.
15. The auditor shall evaluate whether the financial statements adequately refer to or describe the
applicable financial reporting framework. (Ref: Para. A5–A10)
Form of Opinion
16. The auditor shall express an unmodified opinion when the auditor concludes that the financial
Disclosures of the Effect of Material Transactions and Events on the Information Conveyed in the
Financial(a)Statements
The overall
(Ref:presentation,
Para. 13(e)) structure and content of the financial statements; and
(b) Whether the financial statements, including the related notes, represent the underlying
A4. It is common for financial statements prepared in accordance with a general purpose framework to
15. auditor evaluates
The auditor shallwhether the financial
evaluate whetherstatements
the financialprovide adequateadequately
statements disclosuresrefer
to enable
to or the intended
describe the
users to understand
applicable financialthereporting
effect of material transactions
framework. andA5–A10)
(Ref: Para. events on the entity’s financial position,
financial performance and cash flows.
Form of Opinion
Description of the Applicable Financial Reporting Framework (Ref: Para. 15)
A5. As explained in PSA 200, the preparation of the financial statements by management and, where
16. appropriate,
The auditorthose
shallcharged
express an(REVISED),
PSA 700
with unmodified opinion
FORMING
governance when
AN OPINION
requires the the auditor
AND concludes
REPORTING
inclusion that STATEMENTS
ON FINANCIAL
of an adequate the financial
description of
statements are prepared, in all material respects, in accordance with
19 the applicable financial reporting
the applicable financial reporting framework in the financial statements. That description advises
framework.
users of the financial statements of the framework on which the financial statements are based.
_________________________
17.PSA
17 If the260auditor:
(Revised), Communication with Those Charged with Governance, Appendix 2
A6. A description that the financial statements are prepared in accordance with a particular applicable
18 PSA 200: Overall Objec?ves of the Independent Auditors & the
PSAfinancial 540, Auditing reporting framework
Accounting Estimates,is Including
appropriate only
Fair Value if the financial
Accounting statements
Estimates, comply
and Related with allparagraph
Disclosures, theas a21whole are not
(a) concludes that, based on the audit evidence obtained,
19 Conduct of an Audit in Accordance with ISA
PSArequirements 200, paragraphsofA2–A3
the financial statements
that framework that are effective during the period covered by the financial statements.
free from material misstatement; or
A7. A description of the applicable financial reporting framework that contains imprecise qualifying or
(b) is unable to obtain sufficient appropriate audit evidence to conclude that the financial statements
limiting language (e.g., “the financial statements are in substantial compliance with Philippine Financial
Reportingas Standards”)
a whole areisfree
not anfrom materialdescription
adequate misstatement, the auditorasshall
of that framework it maymodify theusers
mislead opinion
of thein the
15. The auditor shall evaluate whether the financial statements adequately refer to or describe the
applicable financial reporting framework. (Ref: Para. A5–A10)
Requirements:
Form of Opinion Form of Opinion
statements are prepared, in all material respects, in accordance with the applicable financial reporting
framework.
17. If the auditor:
(a) concludes that, based on the audit evidence obtained, the financial statements as a whole are not
as a whole are free from material misstatement, the auditor shall modify the opinion in the
auditor’s report in accordance with PSA 705 (Revised).
18. If financial statements prepared in accordance with the requirements of a fair presentation framework
do not achieve fair presentation, the auditor shall discuss the matter with management and, depending
on the requirements of the applicable financial reporting framework and how the matter is resolved,
shall determine whether it is necessary to modify the opinion in the auditor’s report in accordance with
statements are prepared, in all material respects, in accordance with the applicable financial reporting
framework.
Requirements: Form of Opinion
17. If the auditor:
as a whole are free from material misstatement, the auditor shall modify the opinion in the
PSA 705: Modifica?ons to Opinions of Independent Auditor’s Report
PSA 705 (Revised). (Ref: Para. A11)
19. When the financial statements are prepared in accordance with a compliance framework, the auditor is
as a whole are free
Requirements: from material
Form misstatement,
of Opinion the auditor
– Fair shall modify theFopinion
Presenta?on in the
ramework
not required to evaluate whether the financial statements achieve fair presentation. However, if in
extremely rare circumstances the auditor concludes that such financial statements are misleading, the
auditor shall discuss the matter with management and, depending on how it is resolved, shall determine
whether, and how, to communicate it in the auditor’s report. (Ref: Para. A12)
Auditor’s Report
shall determine whether
Requirements: it isonecessary
Form to modify
f Opinion – Cthe opinion in the auditor’s
ompliance report in accordance with
Framework
Auditor’s Report
20. The auditor’s report shall be in writing. (Ref: Para. A13–A14)
Auditor’s Report for Audits Conducted in Accordance with Philippine Standards on Auditing
Requirements: Form of Opinion – Compliance Framework
Auditor’s Report
Auditor’s Report
20. The auditor’s report shall be in writing. (Ref: Para. A13–A14)
Auditor’s Report for Audits Conducted in Accordance with Philippine Standards on Auditing
Title
21. The auditor’s report shall have a title that clearly indicates that it is the report of an independent auditor.
(Ref: Para. A15)
Auditor’s Opinion
23. The first section of the auditor’s report shall include the auditor’s opinion, and shall have the heading
Auditor’s
“Opinion.”Report
24. The Opinion section of the auditor’s report shall also:
(a) Identify the entity whose financial statements have been audited;
(b) State that the financial statements have been audited;
(c) Identify the title of each statement comprising the financial statements;
(d) Refer to the notes, including the summary of significant accounting policies; and
(e) Specify the date of, or period covered by, each financial statement comprising the financial
statements. (Ref: Para. A17–A18)
25. When expressing an unmodified opinion on financial statements prepared in accordance with a fair
presentation framework, the auditor’s opinion shall, unless otherwise required by law or regulation, use
the following phrase:
In our opinion, the accompanying financial statements present fairly, in all material respects, [ ]
(c) Identify the title of each statement comprising the financial statements;
(d) Refer to the notes, including the summary of significant accounting policies; and
(e) Specify the date of, or period covered by, each financial statement comprising the financial
Auditor’s Report
statements. (Ref: Para. A17–A18)
25. When expressing an unmodified opinion on financial statements prepared in accordance with a fair
in accordance with [the applicable financial reporting framework].
(Ref: Para. A19–A26)
26. When expressing an unmodified opinion on financial statements prepared in accordance with a
compliance framework, the auditor’s opinion shall be that the accompanying financial statements are
prepared, in all material respects, in accordance with [the applicable financial reporting framework].
27. If the reference to the applicable financial reporting framework in the auditor’s opinion is not to PFRSs
issued by the Financial Reporting Standards Council, the auditor’s opinion shall identify the jurisdiction
in accordance with [the applicable financial reporting framework].
Auditor’s Report
26. When expressing an unmodified opinion on financial statements prepared in accordance with a
compliance framework, the auditor’s opinion shall be that the accompanying financial statements are
prepared, in all material respects, in accordance with [the applicable financial reporting framework].
of origin of the framework.
Basis for Opinion
28. The auditor’s report shall include a section, directly following the Opinion section, with the heading
“Basis for Opinion”, that: (Ref: Para. A27)
(a) States that the audit was conducted in accordance with Philippine Standards on Auditing; (Ref:
Auditor’s Report
Auditor’s Report
of origin of the framework.
Basis
Basis forfor
OpinionOpinion
28. The auditor’s report shall include a section, directly following the Opinion section, with the heading
“Basis for Opinion”, that: (Ref: Para. A27)
Para. A28)
(b) Refers to the section of the auditor’s report that describes the auditor’s responsibilities under the
PSAs;
(c) Includes a statement that the auditor is independent of the entity in accordance with the relevant
ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical
responsibilities in accordance with these requirements. The statement shall identify the
Para. A28)
(b) Refers to the section of the auditor’s report that describes the auditor’s responsibilities under the
PSAs;
Basis for Opinion
(c) Includes a statement that the auditor is independent of the entity in accordance with the relevant
ethical requirements PSArelating to the audit,
700 (REVISED), FORMINGandANhasOPINION
fulfilledAND
theREPORTING
auditor’s other ethical STATEMENTS
ON FINANCIAL
responsibilities in accordance with these requirements. The statement shall identify the
jurisdiction of origin of the relevant ethical requirements [Code of Ethics for Professional
jurisdiction ofinorigin
Accountants of the relevant
the Philippines ethicalCode
(Philippine requirements
of Ethics)][Code of Ethics
or refer to the for Professional
International Ethics
Accountants
Standards in theforPhilippines
Board Accountants’ (Philippine
Code of Code
EthicsofforEthics)] or referAccountants
Professional to the International
(IESBAEthics
Code);
Standards
and BoardA29–A34)
(Ref: Para. for Accountants’ Code of Ethics for Professional Accountants (IESBA Code);
and (Ref:
(d) States Para.the
whether A29–A34)
auditor believes that the audit evidence the auditor has obtained is sufficient
(d) and
States whether the
appropriate auditorabelieves
to provide basis forthat
thethe audit evidence
auditor’s opinion. the auditor has obtained is sufficient
and appropriate to provide a basis for the auditor’s opinion.
Going Concern
Going Concern
12
29. Where applicable, the auditor shall report in accordance with PSA 570 (Revised). 12
29. Where applicable, the auditor shall report in accordance with PSA 570 (Revised).
Key Audit Matters
Key Audit Matters
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Cod
andandappropriate to provide
(Ref: Para. a basis for the auditor’s opinion.
A29–A34)
(d) States whether the auditor believes that the audit evidence the auditor has obtained is suffic
Going Concern
and appropriate to provide a basis for the auditor’s opinion.
12
GoingWhere
29. Concern
applicable, the auditor shall report in accordance with PSA 570 (Revised).
Going Concern
12
29. Where applicable, the auditor shall report in accordance with PSA 570 (Revised).
Key Audit Matters
Key Audit Macers
Key Audit
30. Matters
For audits of complete sets of general purpose financial statements of listed entities, the auditor shall
communicate key audit matters in the auditor’s report in accordance with PSA 701.
30. For audits of complete sets of general purpose financial statements of listed entities, the auditor s
communicate
31. When the auditorkey audit matters
is otherwise requiredinbythelawauditor’s report
or regulation in accordance
or decides with PSA
to communicate key701.
audit
31. matters
When inthetheauditor
auditor’sis report, the auditor
otherwise shallbydolaw
required so inoraccordance
regulationwith PSA 701.to(Ref:
or decides Para. key audit
communicate
A35–A38)
matters in the auditor’s report, the auditor shall do so in accordance with PSA 701. (Ref: Para.
A35–A38)
Responsibilities for the Financial Statements
Responsibilities for the Financial Statements
32. The auditor’s report shall include a section with a heading “Responsibilities of Management for the
32. Financial
The auditor’s reportThe
Statements.” shallauditor’s
includereport
a section withtheaterm
shall use heading
that is“Responsibilities of Management
appropriate in the context of the for th
Financial
legal Statements.”
framework The auditor’s
in the particular jurisdictionreport shallnotuse
and need referthespecifically
term thattois“management”.
appropriate inIn the
somecontext of
legal framework
jurisdictions, in the particular
the appropriate referencejurisdiction and charged
may be to those need notwithrefer specifically
governance. (Ref:toPara.
“management”.
A39) In s
31. When the auditor is otherwise required by law or regulation or decides to communicate key audit
matters in the auditor’s report, the auditor shall do so in accordance with PSA 701. (Ref: Para.
A35–A38)
Responsibilities for the Financial
Responsibili?es Statements
for the Financial Statements
Financial Statements.” The auditor’s report shall use the term that is appropriate in the context of the
legal framework in the particular jurisdiction and need not refer specifically to “management”. In some
jurisdictions, the appropriate reference may be to those charged with governance. (Ref: Para. A39)
33. This section of the auditor’s report shall describe management’s responsibility for: (Ref: Para.
A40–A43)
(a) Preparing the financial statements in accordance with the applicable financial reporting
framework, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error; and
(b) Assessing the entity’s ability to continue as a going concern13 and whether the use of the going
Financial Statements.” The auditor’s report shall use the term that is appropriate in the context of the
legal framework in the particular jurisdiction and need not refer specifically to “management”. In some
jurisdictions, the appropriate
Responsibili?es for the reference may Sbetatements
Financial to those charged with governance. (Ref: Para. A39)
33. This section of the auditor’s report shall describe management’s responsibility for: (Ref: Para.
A40–A43)
(a) Preparing the financial statements in accordance with the applicable financial reporting
framework, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error; and
concern basis of accounting is appropriate as well as disclosing, if applicable, matters relating to
going concern. The explanation of management’s responsibility for this assessment shall include
a description of when the use of the going concern basis of accounting is appropriate. (Ref: Para.
A43)
34. This section of the auditor’s report shall also identify those responsible for the oversight of the financial
reporting process, when those responsible for such oversight are different from those who fulfill the
responsibilities described in paragraph 33 above. In this case, the heading of this section shall also
refer to “Those Charged with Governance” or such term that is appropriate in the context of the legal
or error; and
concern basis of accounting is appropriate as well as disclosing, if applicable, matters relating to
going concern. The explanation of management’s responsibility for this assessment shall include
Responsibili?es for the Financial Statements
a description of when the use of the going concern basis of accounting is appropriate. (Ref: Para.
A43)
framework in the particular jurisdiction. (Ref: Para. A44)
35. When the financial statements are prepared in accordance with a fair presentation framework, the
description of responsibilities for the financial statements in the auditor’s report shall refer to “the
preparation and fair presentation of these financial statements”.
Auditor’s
framework Responsibili?es for the
in the particular jurisdiction. (Ref:APara.
udit A44)
of Financial Statements
35. When the financial statements are prepared

PSA 700 (REVISED), in accordance
FORMING AN OPINION with a fair presentation
AND REPORTING framework,
ON FINANCIAL the
STATEMENTS
description of responsibilities for the financial statements in the auditor’s report shall refer to “the
preparation and fair presentation of these financial statements”.
Auditor’s Responsibilities for the Audit of the Financial Statements
36. The auditor’s report shall include a section with the heading “Auditor’s Responsibilities for the Audit of
the Financial Statements.”
37. This section of the auditor’s report shall: (Ref: Para. A45)
(a) State that the objectives of the auditor are to:
(i) Obtain reasonable assurance about whether the financial statements as a whole are free
________________________
12 from materi al mi s statement, whether
PSA 570 (Revised), Going Concern, paragraphs 21–23
due to fraud or error; and
Auditor’s Responsibilities for the Audit of the Financial Statements
36. The auditor’s report shall include a section with the heading “Auditor’s Responsibilities for the Audit of
Auditor’s Responsibili?es
the Financial Statements.” for the Audit of Financial Statements
37. This section of the auditor’s report shall: (Ref: Para. A45)
(a) State that the objectives of the auditor are to:
(i) Obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error; and
(ii) Issue an auditor’s report that includes the auditor’s opinion. (Ref: Para. A46)
(b) State that reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with PSAs will always detect a material misstatement when it exists;
and
(c) State that misstatements can arise from fraud or error, and either:
(i) Describe that they are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on
14
(ii) Issue an auditor’s report that includes the auditor’s opinion. (Ref: Para. A46)
(b) State that reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted
Auditor’s in accordance with PSAs
Responsibili?es for will always
the detectof a Fmaterial
Audit misstatement
inancial when it exists;
Statements
and
(c) State that misstatements can arise from fraud or error, and either:
(i) Describe that they are considered material if, individually or in the aggregate, they
14
the basis of these financial statements; or
(ii) Provide a definition or description of materiality in accordance with the applicable financial
reporting framework. (Ref: Para. A47)
38. The Auditor’s Responsibilities for the Audit of the Financial Statements section of the auditor’s report
shall further: (Ref: Para. A45)
(a) State that, as part of an audit in accordance with PSAs, the auditor exercises professional
judgment and maintains professional skepticism throughout the audit; and
14
the basis of these financial statements; or 14
the basis of these financial statements; or
reporting framework.for
Auditor’s Responsibili?es (Ref: Para.
the A47) of Financial Statements
Audit
38. The
38. The Auditor’s
Auditor’s Responsibilities
Responsibilitiesfor forthe
theAudit
Auditofofthe
theFinancial
FinancialStatements
Statementssection
sectionofofthetheauditor’s
auditor’sreport
report
shall
shall further:
further: (Ref:
(Ref: Para.
Para. A45)
A45)
(a)
(a) State
State that,
that, as
as part
part ofof an
anaudit
auditininaccordance
accordancewithwithPSAs,
PSAs,the
theauditor
auditorexercises
exercisesprofessional
professional
judgment
judgment and
and maintains
maintainsprofessional
professionalskepticism
skepticismthroughout
throughoutthe
theaudit;
audit;and
and
(b)
(b) Describe
Describe anan audit
audit by
bystating
statingthat
thatthe
theauditor’s
auditor’sresponsibilities
responsibilitiesare:
are:
(i)(i) To
To identify
identify and
andassess
assessthe therisks
risksofofmaterial
materialmisstatement
misstatementofofthethefinancial
financialstatements,
statements,
whether
whether due
due totofraud
fraudororerror;
error;totodesign
designandandperform
performaudit
auditprocedures
proceduresresponsive
responsivetotothose
those
risks; and
and toto obtain
obtainaudit
auditevidence
evidencethat thatisissufficient
sufficientand
andappropriate
appropriatetotoprovide
providea abasis
basisforfor
the auditor’s
auditor’sopinion.
opinion.The
Therisk
riskofofnot
notdetecting
detectingaamaterial
materialmisstatement
misstatementresulting
resultingfrom
fromfraud
fraud
is higher
higher than
than for
forone
oneresulting
resultingfromfromerror,
error,asasfraud
fraudmay
mayinvolve
involvecollusion,
collusion,forgery,
forgery,
intentional
intentional omissions,
omissions,misrepresentations,
misrepresentations,ororthe theoverride
overrideofofinternal
internalcontrol.
control.
(ii) To obtain
obtain an
an understanding
understandingofofinternal
internalcontrol
controlrelevant
relevanttotothetheaudit
auditininorder
ordertotodesign
designaudit
audit
proceduresthat
procedures thatare
areappropriate
appropriateininthe
thecircumstances,
circumstances,butbutnotnotforforthethepurpose
purposeofofexpressing
expressing
opinion on
an opinion on the
theeffectiveness
effectivenessofofthe
theentity’s
entity’sinternal
internalcontrol.
control.InIncircumstances
circumstanceswhen whenthethe
also has
auditor also hasaaresponsibility
responsibilitytotoexpress
expressananopinion
opinionononthetheeffectiveness
effectivenessofofinternal
internal
shall further: (Ref: Para. A45)
(a) State that, as part of an audit in accordance with PSAs, the auditor exercises professional
Auditor’s
judgment Responsibili?es for tskepticism
and maintains professional he Audit of Financial
throughout Statements
the audit; and
(b) Describe an audit by stating that the auditor’s responsibilities are:
(i) To identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error; to design and perform audit procedures responsive to those
risks; and to obtain audit evidence that is sufficient and appropriate to provide a basis for
theEauditor’s
STEPS IN opinion. TheMrisk
VALUATING of not detecting a material misstatement resulting from fraud
ISSTATEMENTS
is higher than for one resulting from error, as fraud may involve collusion, forgery,
1 Iden?fy type of misstatements
intentional omissions, misrepresentations, or the override of internal control.
2 Understand & respond to misstatements
3 (ii) Accumulate
To obtain an understanding of internal control relevant to the audit in order to design audit
misstatements
4 proceduresethat
Evaluate are oappropriate
ffect in the circumstances,
f uncorrected but not for the purpose of expressing
misstatements
an opinion on the effectiveness of the entity’s internal control. In circumstances when the
5 Communicate with Management & TCWG
auditor also has a responsibility to express an opinion on the effectiveness of internal
control in conjunction with the audit of the financial statements, the auditor shall omit the
phrase that the auditor’s consideration of internal control is not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control.
Auditor’s Responsibili?es for the Audit of Financial Statements
STEPS IN EVALUATING MISSTATEMENTS
1 Iden?fy type of misstatements
Factual – misstatements about which there is no doubt
Judgmental – misstatements rela%ng to accoun%ng es%mates or
accoun%ng policies
Projected – auditor’s best es%mate of misstatements in popula%ons
involving the projec%on of sample misstatements to
popula%on
Uncorrected
STEPS IN EVALUATING MISSTATEMENTS
2 Understand and respond to misstatements
If the misstatement exists, the auditor inves?gates its nature and cause
and evaluates its possible effect on audit such as:
-‐ Poten%al indicators of fraud
-‐ Possible existence, or uniden%fied risk,of other material misstatements
-‐ A significant deficiency or material weakness in internal control
In cases where risk of possible undetected material misstatements (ex. Audit
risk) is greater than the acceptably low, auditor’s responses may include:
-‐ Performing addi%onal procedures using a lower performance materiality.
-‐ Asking management to perform further examina%on.
3 Accumulate Misstatements during the audit
Descrip?on Circumstances of Occurrence Assets Liabili?es Pre-‐tax Inc. Equity
Tax rate=30%
Error in Factual: new clerk made some P 27,000 (P 27,000) (P18,900)
recording errors. Correct amount = overstated understated understate
inventory P396,000, recorded = P369,000 d
Prematurely Projected: From sample P22,500 P 22,500 P 15,750
recorded misstatement of P4,500 (a ra%o overstated overstated overstated
sales of 20%)
Inadequate Judgmental: Unreasonably low P 35,000 P 35,000 P 24,500
allowance allowance compared to overstated overstated overstated
for loans historical evidence
impairment
Failure to Factual: Resul%ng from (P7,500) P 7,500 P 5,250
accrue for oversight understated overstated overstated
salaries liab.
4 Evaluate Effect of Uncorrected Misstatements
In making this evalua?on, the auditor considers:

(1)  Size (quan%ta%ve) and nature (qualita%ve) of misstatements
Qualita?ve such as:
-‐ affects compliance with regulatory or other contractual requirements
-‐ relates to accoun%ng policy likely to have material effect on future
periods’ F/S
-‐ masks a change in earnings or other trends
-‐ affects important financial ra%os
-‐ affects management’s compensa%on, bonuses or other incen%ves
Quan?ta?ve. ROMM increase as misstatement approaches materiality
(2) Effect of prior periods uncorrected misstatements
5 Communicate with Management and TCWG
The auditor is required to %mely communicate all misstatements

during the audit with management, unless prohibited by law or
regula%on, and request their correc%on.
Communicate with TCWG uncorrected misstatements and their effect
on opinion, unless prohibited by law or regula%on
and request correc?on.
Request the management (and where appropriate, TCWG) wri$en
representa,on whether they believe the effects of uncorrected
are immaterial.
Timely, two-‐way ENTITY

communica?on to
obtain
External Governing Body
Auditor
Audit Other
Macers to Communicate: Commicee Commicee
1.  Auditor’s responsibili%es
2.  Overview of planned scope & %ming
3.  Significant audit findings Internal Audit
4.  Auditor’s independence
Specific Macers to Communicate •  PSA 560 p. 7(b-‐c), 10(a),

With TCWG 13(b), 14(a) & 17
• PSA 570 p.25
•  PSQC 1, p. 30 (a)
•  PSA 600 p. 49
•  PSA 240 p. 21, 38 (c)(i) & 40-‐42
•  PSA 610 p. 18, 20 & 31
•  PSA 250 p. 14, 19 & 22-‐24
•  PSA 700 p. 45
•  PSA 266 p. 9
•  PSA 701 p. 17
•  PSA 450 p. 12-‐13
•  PSA 705 p. 12, 14, 23 & 30
•  PSA 505 p. 9
•  PSA 706 p. 12
•  PSA 510 p. 9
•  PSA 710 p. 18
•  PSA 550 p. 27
•  PSA 720 p. 10, 13 & 16
March 30, 2019
Mr. Reynaldo R. Ocampo
Review Director: PRTC
20144 C.M. Recto, Manila
Dear Mr. Ocampo,

The maIers raised in this report arise from our F/S audit & relate to maIers that we
believe need to be brought to your aIen%on.
We have substan%ally completed our audit of F/S of PRTC in accordance with PSA. We
expect to release our audit report dated April 12, 2019, as soon as we obtain the
signed leIer of representa%ons.
Our audit is performed to obtain reasonable assurance whether F/S are free of
material misstatements. Absolute assurance is not possible due to inherent risk that
some material misstatements may not be detected.
In planning our audit, we consider internal control over financial repor%ng to
determine the nature, extent & %ming of audit procedures. However, a F/S audit does
not provide assurance on the effec%ve opera%on of internal control at PRTC. However,
if in the course of our audit, certain deficiencies in internal control come to our
aIen%on, these will be reported to you.
Because fraud is deliberate, there are always risks that material misstatements, fraud,
& other illegal acts may exist & not be detected by our audit of the F/S.
The following is a summary of findings resul%ng from the performance of the audit.
1.  We did not iden%fy any material maIers that need to be brought to your
aIen%on.
2.  We received good coopera%on from management & employees during our audit.
To the best of our knowledge, we also had complete access to the accoun%ng
records & other documents that we needed in order to carry out our audit. We
did not have any disagreements with management, & we have resolved all
audi%ng, accoun%ng & disclosure issues to our sa%sfac%on.
We would also like to draw the following maIers to your aIen%on:
•  Changes during the period in professional pronouncements.
•  Other maIers iden%fied that may be of interest to management.
Please note that PSAs do not require us to design procedures for the purpose of
iden%fying supplementary maIers to communicate with TCWG. Accordingly, an audit
would not usually iden%fy all such maIers.
This communica%on is prepared solely for the informa%on of management & is not
intended for any other purpose. We accept no responsibility to a third party who uses
this communica%on.
Yours, truly,
&&&&
Managing Partner, LRC & Associates, CPA
List of Communica?ons with Management and Other Par?es
Communica?ons with Management
•  Pre-‐condi%ons for an audit
•  Control deficiencies, fraud, NOCLAR, & misstatements
•  Going concern assessments
•  WriIen representa%ons
•  Facts discovered a7er the date of our audit report
Communica?ons with Other Par?es

•  Change of auditors – w/ the predecessor auditor
•  Li%ga%ons or claims – w/ the en%ty’s external legal counsel
•  Fraud & NOCLAR – w/ regulatory authori%es (SEC, BSP, BIR) if
if legally responsible to do so.
•  Communica%on w/ the component auditor in the cause of audit group F/S
Summary of Audit Memorandum
Client Name: Repor?ng Date:
Reassessment of GENERAL AUDIT STRATEGY
Nature of change Remarks
Scope of Audit
Materiality Levels
F/S Level ROMM
Changes in overall responses
Other changes
Reassessment of Further Audit Procedures
Nature of change Remarks
Accounts/Disclosures
Asser%ons
Summary of Audit Memorandum
Client Name: Repor?ng Date:
Results of CONCLUDING ANALYTICAL PROCEDURES
Iden?fied Significant Accoun?ng and Audi?ng Issues
Issue/s Resolu?on/s
Summary of Iden?fied Misstatements
Results of Communica?on with Client

Date Par%cipants:
MaIers discussed: Decisions reached:
Conclusion and Opinion
38.(b) The Auditor’s
Describe an Responsibilities for the
audit by stating that theAudit of theresponsibilities
auditor’s Financial Statements
are: section of the auditor’s report
shall
(i) further: (Ref: Para.
To identify A45) the risks of material misstatement of the financial statements,
and assess
whether due to fraud or error; to design and perform audit procedures responsive to those
(a) State
risks;that,
andasto part of an
obtain audit
audit in accordance
evidence with PSAs,
that is sufficient andthe auditor exercises
appropriate to provideprofessional
a basis for
judgment
Auditor’s and maintains
Responsibili?es
the auditor’s opinion. Theprofessional
for
risk of tnot skepticism
he Audit aothroughout
detecting the audit;
f Financial
material andresulting from fraud
Statements
misstatement
is higher than for one resulting from error, as fraud may involve collusion, forgery,
(b) Describe an audit
intentional by stating
omissions, that the auditor’sorresponsibilities
misrepresentations, the override ofare: internal control.
(ii) (i)To obtain
To identify and assess the
an understanding risks ofcontrol
of internal materialrelevant
misstatement of theinfinancial
to the audit order to statements,
design audit
procedures
whetherthat
dueareto appropriate
fraud or error;in the circumstances,
to design but not
and perform auditforprocedures
the purposeresponsive
of expressing
to those
an opinion on the effectiveness of the entity’s internal control. In circumstances when the
risks; and to obtain audit evidence that is sufficient and appropriate to provide a basis for
auditor also has a responsibility to express an opinion on the effectiveness of internal
theinauditor’s
control opinion.
conjunction withThe risk ofofnotthedetecting
the audit financialastatements,
material misstatement resulting
the auditor shall omitfrom
the fraud
is higher
phrase thethan
thatPSA for oneconsideration
auditor’s
700 resulting
(REVISED), FORMING fromAN
oferror, as control
internal
OPINION fraud may involve
is not
AND REPORTING ONcollusion,
for the purposeforgery,
FINANCIAL ofSTATEMENTS
expressing an opinion
intentional on the
omissions, effectiveness of the
misrepresentations, or entity’s internal
the override control. control.
of internal
(iii) (ii)To evaluate
To obtaintheanappropriateness
understanding ofofinternal
accountingcontrolpolicies
relevantused
to theandaudit
the inreasonableness
order to design ofaudit
accounting estimates and related disclosures made by management.
_________________________ procedures that are appropriate in the circumstances, but not for the purpose of expressing
14
(iv) Toinconclude
PSA 320, Materiality andonPerforming
an opinion
Planning onthetheappropriateness
effectiveness ofofthe2management’s
an Audit, paragraph entity’s internalusecontrol.
of theIngoing concern basis
circumstances whenofthe
accounting
auditorand,
also based on the audit toevidence
has a responsibility expressobtained,
an opinionwhether a material uncertainty
on the effectiveness of internal
exists related to events or conditions that may cast significant doubt on the entity’s ability to
control in conjunction with the audit of the financial statements, the auditor shall omit the
continue as a going concern. If the auditor concludes that a material uncertainty exists, the
phrase
auditor that thetoauditor’s
is required consideration
draw attention of internalreport
in the auditor’s controltoisthenotrelated
for the disclosures
purpose of in the
EQCR Engagement Quality Control Review is a process that provides an
objec%ve evalua%on, on or before the date of report, of the
significant judgments the engagement team made and the
conclusions it reached in formula%ng the report.
EQCR reviewer
is a partner, other person in the firm, suitably
qualified external person, or a team made up of
such individuals, none of whom is part of the
engagement team, with sufficient and
appropriate experience and authority to
objec%vely evaluate the significant judgments
the engagement team made and the conclusions
it reached in formula%ng the report.
EQCR Examples:
• Client acceptance and con%nuance decisions

• Conclusions regarding independence
• En%ty’s business and financial repor%ng issues and risks
•  Materiality, misstatements and control deficiencies
•  Management wriIen representa%ons
•  Going concern assump%on
•  Subsequent events
•  Resources (including use of experts)
•  MaIers to communicate to TCWG
•  Other significant judgments
(iii) To evaluate the

Responsibili?es appropriateness
for of accounting
the Financial policies used and the reasonableness of
Statements
accounting estimates and related disclosures made by management.
(iv) To conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the entity’s ability to
continue as a going concern. If the auditor concludes that a material uncertainty exists, the
auditor is required to draw attention in the auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify the opinion. The
auditor’s conclusions are based on the audit evidence obtained up to the date of the
auditor’s report. However, future events or conditions may cause an entity to cease to
continue as a going concern.
(v) When the financial statements are prepared in accordance with a fair presentation
framework, to evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
15
financial statements or, if such disclosures are inadequate, to modify the opinion. The
auditor’s conclusions are based on the audit evidence obtained up to the date of the
auditor’s report. However, future events or conditions may cause an entity to cease to
continue asfaor
Responsibili?es goingthe concern.
Financial Statements
underlying transactions and events in a manner that achieves fair presentation.
(c) When PSA 60015 applies, further describe the auditor’s responsibilities in a group audit
engagement by stating that:
(i) The auditor’s responsibilities are to obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business activities within the group to express an
opinion on the group financial statements;
(ii) The auditor is responsible for the direction, supervision and performance of the group
audit; and
(iii) The auditor remains solely responsible for the auditor’s opinion.
underlying transactions
Responsibili?es and events Sintatements
for the Financial a manner that achieves fair presentation.
(c) When PSA 60015 applies, further describe the auditor’s responsibilities in a group audit
engagement by stating that:
(i) The auditor’s responsibilities are to obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business activities within the group to express an
audit; and
(iii) The auditor remains solely responsible for the auditor’s opinion.
39. The PSA
Auditor’s 600: Responsibilities for the Audit of the– Financial
Special Considera%ons Audits oStatements
f Group section
F/S of the auditor’s report
also shall:
(including the Work of Component Auditors)
(Ref: Para. A45)
(a) State that the auditor communicates with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that the auditor identifies during the audit;
audit; and
(iii) The auditor
Responsibili?es for remains solely responsible
the Financial for the auditor’s opinion.
Statements
also shall: (Ref: Para. A45)
(a) State that the auditor communicates with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that the auditor identifies during the audit;
(b) For audits of financial statements of listed entities, state that the auditor provides those charged
with governance with a statement that the auditor has complied with relevant ethical
requirements regarding independence and communicate with them all relationships and other
matters that may reasonably be thought to bear on the auditor’s independence, and where
applicable, related safeguards; and
(c) For audits of financial statements of listed entities and any other entities for which key audit
matters are communicated in accordance with PSA 701, state that, from the matters
communicated with those charged with governance, the auditor determines those matters that
were of most significance in the audit of the financial statements of the current period and are
(b) For audits of financial statements of listed entities, state that the auditor provides those charged
with governance with a statement that the auditor has complied with relevant ethical
requirements regarding independence and communicate with them all relationships and other
matters that may reasonably be thought to bear on the auditor’s independence, and where
applicable, relatedfor
Responsibili?es safeguards; and
the Financial Statements
(c) For audits of financial statements of listed entities and any other entities for which key audit
matters are communicated in accordance with PSA 701, state that, from the matters
communicated with those charged with governance, the auditor determines those matters that
were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. The auditor describes these matters in the auditor’s report unless
law or regulation precludes public disclosure
PSA 700 (REVISED), FORMING AN about the matter
OPINION or when, inON FINANCIAL STATEMENTS
AND REPORTING
extremely rare circumstances, the auditor determines that a matter should not be
communicated in the auditor’s report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication. (Ref:
Para. A48)
______________________
15
PSA 600,
Location ofSpecial
PSA Considerations—Audits
the701: of Group
Communica%ng
description Financial
Key
of the auditor’s Audit Statements
for(Including
MaIers
responsibilities he Ithe
in taudit
the ofWork
the offinancial
Component
ndependent Auditors) Report
Astatements
uditor’s
40. The description of the auditor’s responsibilities for the audit of the financial statements required by
paragraphs 38–39 shall be included: (Ref: Para. A49)
(a) Within the body of the auditor’s report;
communicated in the auditor’s report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication. (Ref:
Para. A48)
Loca?on of the descrip?on of the auditor’s responsibili?es for

Location of the description of the auditor’s responsibilities for the audit of the financial statements
the audit of the financial statements
40. The description of the auditor’s responsibilities for the audit of the financial statements required by
paragraphs 38–39 shall be included: (Ref: Para. A49)
(a) Within the body of the auditor’s report;
(b) Within an appendix to the auditor’s report, in which case the auditor’s report shall include a
reference to the location of the appendix; or (Ref: Para. A49–A50)
(c) By a specific reference within the auditor’s report to the location of such a description on a
website of an appropriate authority, where law, regulation or national auditing standards
expressly permit the auditor to do so. (Ref: Para. A49, A51–A52)
41. When the auditor refers to a description of the auditor’s responsibilities on a website of an appropriate
authority, the auditor shall determine that such description addresses, and is not inconsistent with, the
requirements in paragraphs 38–39 of this PSA. (Ref: Para. A51)
Other Reporting Responsibilities
reference to the location of the appendix; or (Ref: Para. A49–A50)
(c) By a specific reference within the auditor’s report to the location of such a description on a
website of an appropriate authority, where law, regulation or national auditing standards
Loca?on of the descrip?on of the auditor’s responsibili?es for
expressly
the audit permifinancial
of the t the auditorstatements
to do so. (Ref: Para. A49, A51–A52)
Other Reporting Responsibilities
42. If the auditor addresses other reporting responsibilities in the auditor’s report on the financial
statements that are in addition to the auditor’s responsibilities under the PSAs, these other reporting
responsibilities shall be addressed in a separate section in the auditor’s report with a heading titled
“Report on Other Legal and Regulatory Requirements” or otherwise as appropriate to the content of the
section, unless these other reporting responsibilities address the same topics as those presented under
the reporting responsibilities required by the PSAs in which case the other reporting responsibilities
may be presented in the same section as the related report elements required by the PSAs. (Ref: Para.
Other Reporting
Other Responsibilities
Repor?ng Responsibili?es
42. If the auditor addresses other reporting responsibilities in the auditor’s report on the financial
statements that are in addition to the auditor’s responsibilities under the PSAs, these other reporting
responsibilities shall be addressed in a separate section in the auditor’s report with a heading titled
A53–A55)
43. If other reporting responsibilities are presented in the same section as the related report elements
required by the PSAs, the auditor’s report shall clearly differentiate the other reporting responsibilities
from the reporting that is required by the PSAs. (Ref: Para. A55)
44. If the auditor’s report contains a separate section that addresses other reporting responsibilities, the
requirements of paragraphs 20–39 of this PSA shall be included under a section with a heading “Report
on the Audit of the Financial Statements.” The “Report on Other Legal and Regulatory Requirements”
Other Repor?ng Responsibili?es
A53–A55)
43. If other reporting responsibilities are presented in the same section as the related report elements
required by the PSAs, the auditor’s report shall clearly differentiate the other reporting responsibilities
from the reporting that is required by the PSAs. (Ref: Para. A55)
44. If the auditor’s report contains a separate section that addresses other reporting responsibilities, the
requirements of paragraphs 20–39 of this PSA shall be included under a section with a heading “Report
on the Audit of the Financial Statements.” The “Report on Other Legal and Regulatory Requirements”
shall follow the “Report on the Audit of the Financial Statements.” (Ref: Para. A55)
Name of the Engagement Partner
45. The name of the engagement partner shall be included in the auditor’s report for audits of complete sets
of general purpose financial statements of listed entities unless, in rare circumstances, such disclosure
is reasonably expected to lead to a significant personal security threat. In the rare circumstances that
the auditor intends not to include the name of the engagement partner in the auditor’s report, the auditor
A53–A55)
43. IfA53–A55)
other reporting responsibilities are presented in the same section as the related report elements
43. required by the PSAs,
If other reporting the auditor’sarereport
responsibilities shall clearly
presented differentiate
in the same sectiontheasother reporting
the related responsibilities
report elements
from the reporting
required that istherequired
by the PSAs, auditor’sbyreport
the PSAs.
shall(Ref:
clearlyPara. A55) the other reporting responsibilities
differentiate
Name
from othe
f treporting
he Engagement
that is requiredPbyartner
the section
PSAs. (Ref: Para. A55)other reporting responsibilities, the
44. If the auditor’s report contains a separate that addresses
44. requirements
If the auditor’sof report
paragraphs
contains20–39 of this PSA
a separate shallthat
section be included
addressesunder othera section
reportingwith a heading “Report
responsibilities, the
onrequirements
the Audit ofoftheparagraphs
Financial Statements.”
20–39 of this The
PSA“Report
shall beonincluded
Other Legal
underand Regulatory
a section with aRequirements”
heading “Report
shall
on thefollow
Audittheof“Report on theStatements.”
the Financial Audit of the Financial
The “Report Statements.”
on Other Legal(Ref: Para. A55) Requirements”
and Regulatory
Name ofshall
thefollow the “Report
Engagement on the Audit of the Financial Statements.” (Ref: Para. A55)
Partner
Name of the Engagement Partner
45. The name of the engagement partner shall be included in the auditor’s report for audits of complete sets
45. ofThegeneral
namepurpose financial statements
of the engagement of listed
partner shall entities inunless,
be included in rare circumstances,
the auditor’s report for auditssuch disclosure
of complete sets
isofreasonably expected
general purpose to leadstatements
financial to a significant personal
of listed entitiessecurity
unless,threat.
in rareIncircumstances,
the rare circumstances that
such disclosure
the auditor intends
is reasonably not to toinclude
expected lead tothea name of thepersonal
significant engagement partner
security in the
threat. auditor’s
In the report, the auditor
rare circumstances that
shall discussintends
the auditor this intention with those
not to include charged
the name withengagement
of the governancepartner
to informin thethe auditor’s
auditor’s report,
assessment of
the auditor
the
shalllikelihood
discussand this severity
intentionofwitha significant personal
those charged withsecurity
governancethreat.to(Ref:
informPara. A56–A58)assessment of
the auditor’s
the likelihood and severity of a significant personal security threat. (Ref: Para. A56–A58)
PSA 700 (REVISED), FORMING AN OPINION AND REPORTING ON FINANCIAL STATEME
PSA 700 (REVISED), FORMING AN OPINION AND R
Signature
Signature
Signature oof
f tthe
ofAuditor
he Athe Auditor
uditor
46. TheThe
46. auditor’s
auditor’s report
report shall shall
be signed. bePara.
(Ref: signed. (Ref: Para. A59–A60)
A59–A60)
Auditor’s Address
Auditor’s Address
Signature
47. The of the Auditor report shall name the location in the jurisdiction where
auditor’s
47. The auditor’s report shall name the location in the jurisdiction where the auditor practices.
Date of the Auditor’s Report
Date
48. of the
TheAuditor’s Report report shall be dated no earlier than the date on which
auditor’s
appropriate audit evidence on which to base the auditor’s opinion on
48. Theevidence that:
auditor’s report shall(Ref: Para.
be dated A61–A64)
no earlier than the date on which the auditor has obtained suffic
appropriate
(a) All auditthe
evidence on which tothat
statements base the auditor’s opinion
comprise on the financial
the financial statements, includ
statements, inc
prepared;
evidence that: and
(b) Those with the recognized authority have asserted that they
(a) All thefinancial
statements statements.
that comprise the financial statements, including the related notes, have b
Auditor’s Address
47. The auditor’s report shall name the location in the jurisdiction where the auditor practices.
Date ofothef tAuditor’s

Date Report Report
he Auditor’s
48. The auditor’s report shall be dated no earlier than the date on which the auditor has obtained sufficient
appropriate audit evidence on which to base the auditor’s opinion on the financial statements, including
evidence that: (Ref: Para. A61–A64)
(a) All the statements that comprise the financial statements, including the related notes, have been
prepared; and
(b) Those with the recognized authority have asserted that they have taken responsibility for those
Auditor’s Report Prescribed by Law or Regulation
49. If the auditor is required by law or regulation of a specific jurisdiction to use a specific layout, or wording
of the auditor’s report, the auditor’s report shall refer to Philippine Standards on Auditing only if the
auditor’s report includes, at a minimum, each of the following elements: (Ref: Para. A65–A66)
(a) A title.
(b) An addressee, as required by the circumstances of the engagement.
prepared; and
Auditor’s ReportRPrescribed
Auditor’s by Law or Regulation
eport Prescribed by Law or Regula?on
(a) A title.
(c) An Opinion section containing an expression of opinion on the financial statements and a
reference to the applicable financial reporting framework used to prepare the financial statements
(including identifying the jurisdiction of origin of the financial reporting framework that is not
Philippine Financial Reporting Standards see paragraph 26).
(d) An identification of the entity’s financial statements that have been audited.
(e) A statement that the auditor is independent of the entity in accordance with the relevant ethical
requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in
accordance with these requirements. The statement shall identify the jurisdiction of origin of the
relevant ethical requirements or refer to the Philippine Code of Ethics.
prepared; and
Auditor’s ReportRPrescribed
Auditor’s by Law or Regulation
eport Prescribed by Law or Regula?on
(a) A title.
(c) An Opinion section containing an expression of opinion on the financial statements and a
reference to the applicable financial reporting framework used to prepare the financial statements
(including identifying the jurisdiction of origin of the financial reporting framework that is not
Philippine Financial Reporting Standards see paragraph 26).
(d) An identification of the entity’s financial statements that have been audited.
(e) A statement that the auditor is independent of the entity in accordance with the relevant ethical
requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in
(b)
(b) An
Anaddressee,
addressee,asasrequired
requiredbybythethecircumstances
circumstancesof ofthethe
engagement.
engagement.
(c) An
AnOpinion
Opinionsection
sectioncontaining
containingananexpression
expressionof ofopinion opinion on on
thethe
financial and and
statements a a
reference
referencetotothe
theapplicable
applicablefinancial
financialreporting
reportingframework
framework usedused
to prepare the the
to prepare financial statements
(includingidentifying
(including identifyingthethejurisdiction
jurisdictionofoforigin
originof ofthethefinancial
financial reporting
reporting framework
framework thatthat
is notis not
Auditor’s Report
Philippine
Philippine PReporting
Financial
Financial rescribed
ReportingStandardsby Lsee
Standards aw oparagraph
r Regula?on
seeparagraph 26).26).
(d) An
(d) Anidentification
identificationofofthetheentity’s
entity’sfinancial
financialstatements
statementsthatthat
havehave
beenbeen audited.
audited.
(e) AAstatement
(e) statementthat
thatthetheauditor
auditorisisindependent
independentof ofthetheentity entity in accordance
in accordance withwith
the the relevant
relevant ethical
ethical
requirementsrelating
requirements relatingtotothetheaudit,
audit,andandhashasfulfilled
fulfilledthethe auditor’s
auditor’s otherother ethical
ethical responsibilities
responsibilities in in
(f) Where applicable, a section that addresses, and is not inconsistent with, the reporting
(f) Where applicable,
requirements a section that
in paragraph 22 ofaddresses,
PSA 570 and is not inconsistent with, the reporting
(Revised).
requirements in paragraph 22 of PSA 570 (Revised).
(g) Where applicable, a Basis for Qualified (or Adverse) Opinion section that addresses, and is not
(g) Where applicable,
inconsistent with, atheBasis for Qualified
reporting (or Adverse)
requirements Opinion section
in paragraph that570
23 of PSA addresses, and is not
(Revised).
inconsistent with, the reporting requirements in paragraph 23 of PSA 570 (Revised).
(h) Where applicable, a section that includes the information required by PSA 701, or additional
(h) Where applicable,
information aboutathe
section
auditthat
thatincludes the information
is prescribed by law or required
regulationbyand
PSAthat
701,addresses,
or additionaland is
information about the audit that is prescribed by law or regulation16 and that addresses, and is
not inconsistent with, the reporting requirements in that PSA. (Ref: Para. A66–A67)
16
(f) Where applicable, a section that addresses, and is not inconsistent with, the reporting
requirements in paragraph 22 of PSA 570 (Revised).
(g) Where applicable, a Basis for Qualified (or Adverse) Opinion section that addresses, and is not
Auditor’s Report
inconsistent with,Pthe
rescribed by Law oinr paragraph
reporting requirements Regula?on
23 of PSA 570 (Revised).
(h) Where applicable, a section that includes the information required by PSA 701, or additional
information about the audit that is prescribed by law or regulation and that addresses, and is
PSA 700 (REVISED), FORMING AN OPINION AND REPORTING
16
ON FINANCIAL STATEMENTS
(i) A description of management’s responsibilities for the preparation of the financial statements and
an identification of those responsible for the oversight of the financial reporting process that
addresses, and is not inconsistent with, the requirements in paragraphs 32–35.
_____________________
(j) A reference to Philippine Standards on Auditing and the law or regulation, and a description of the
16
auditor’s11–16
PSA 701, paragraphs responsibilities for an audit of the financial statements that addresses, and is not
inconsistent with, the requirements in paragraphs 36–39. (Ref: Para. A49–A50)
(k) For audits of complete sets of general purpose financial statements of listed entities, the name of
the engagement partner unless, in rare circumstances, such disclosure is reasonably expected to
lead to a significant personal security threat.
(l) The auditor’s signature.
(m) The auditor’s address.
(n) The date of the auditor’s report.
an identification of those responsible for the oversight of the financial reporting process that
addresses, and is not inconsistent with, the requirements in paragraphs 32–35.
(j)A reference to Philippine Standards on Auditing and the law or regulation, and a description of the
auditor’s responsibilities for an audit of the financial statements that addresses, and is not
Auditor’s Report Prescribed by Law or Regula?on
inconsistent with, the requirements in paragraphs 36–39. (Ref: Para. A49–A50)
(k) For audits of complete sets of general purpose financial statements of listed entities, the name of
the engagement partner unless, in rare circumstances, such disclosure is reasonably expected to
lead to a significant personal security threat.
Auditor’s Report for Audits Conducted in Accordance with Both Auditing Standards of a Specific Jurisdiction
and Philippine Standards on Auditing
50. An auditor may be required to conduct an audit in accordance with the auditing standards of a specific
jurisdiction (the national standards), and has additionally complied with the PSAs in the conduct of the
audit. If this is the case, the auditor’s report may refer to Philippine Standards on Auditing in addition to
the national auditing standards, but the auditor shall do so only if: (Ref: Para. A71–A72)
(a) There is no conflict between the requirements in the national auditing standards and those in
Auditor’s Report for Audits Conducted in Accordance with Both Auditing Standards of a Specific Jurisdiction
Auditor’s Report for Audits Conducted in Accordance with both
and Philippine Standards on Auditing
AS of a Specific Jurisdic?on and PSA
50. An auditor may be required to conduct an audit in accordance with the auditing standards of a specific
jurisdiction (the national standards), and has additionally complied with the PSAs in the conduct of the
audit. If this is the case, the auditor’s report may refer to Philippine Standards on Auditing in addition to
PSAs that would lead the auditor (i) to form a different opinion, or (ii) not to include an Emphasis
of Matter paragraph or Other Matter paragraph that, in the particular circumstances, is required
by PSAs; and
(b) The auditor’s report includes, at a minimum, each of the elements set out in paragraphs 49(a)–(n)
above when the auditor uses the layout or wording specified by the national auditing standards.
However, reference to “law or regulation” in paragraph 49(j) shall be read as reference to the
national auditing standards. The auditor’s report shall thereby identify such national auditing
standards.
PSAs that would lead the auditor (i) to form a different opinion, or (ii) not to include an Emphasis
Auditor’s ofRMatter
eport for Audits
paragraph or OtherCMatter
onducted
paragraphin that,
Accordance
in the particularw ith both is required
circumstances,
AS of a Specific
by PSAs; Jand
urisdic?on and PSA
(b) The auditor’s report includes, at a minimum, each of the elements set out in paragraphs 49(a)–(n)
above when the auditor uses the layout or wording specified by the national auditing standards.
However, reference to “law or regulation” in paragraph 49(j) shall be read as reference to the
national auditing standards. The auditor’s report shall thereby identify such national auditing
standards.
51. When the auditor’s report refers to both the auditing standards and Philippine Standards on Auditing,
the auditor’s report shall identify the jurisdiction of origin of the national auditing standards.
Supplementary Information Presented with the Financial Statements (Ref: Para. A73–A79)
52. If supplementary information that is not required by the applicable financial reporting framework is
presented with the audited financial statements, the auditor shall evaluate whether, in the auditor’s
professional judgment, supplementary information is nevertheless an integral part of the financial
statements due to its nature or how it is presented. When it is an integral part of the financial
51. When the auditor’s report refers to both the auditing standards and Philippine Standards on Auditing,
the auditor’s report shall identify the jurisdiction of origin of the national auditing standards.
Supplementary Information Presented with the Financial Statements (Ref: Para. A73–A79)
Supplementary Informa?on Presented with the F/S
statements, the supplementary information shall be covered by the auditor’s opinion.
53. If supplementary information that is not required by the applicable financial reporting framework is not
considered an integral part of the audited financial statements, the auditor shall evaluate
statements, the supplementary
Supplementary Informa?on information shall be covered
Presented with tby theF/S
he auditor’s opinion.
53. If supplementary information that(REVISED),
PSA 700 is not required by AN
FORMING theOPINION
applicable
ANDfinancial reporting
REPORTING framework
ON FINANCIAL is not
STATEMENTS
considered an integral part of the audited financial statements, the auditor shall evaluate
whether such supplementary information is presented in a way that sufficiently and clearly
differentiates it from the audited financial statements. If this is not the case, then the auditor shall
ask management to change how the unaudited supplementary information is presented. If
management refuses to do so, the auditor shall identify the unaudited supplementary information
and explain in the auditor’s report that such supplementary information has not been audited.
***

True or false
1.  The most important tasks of the auditor are to
form an appropriate opinion and to express
the opinion in a appropriately worded report.
2. PSA 701 promotes consistency in the auditor’s
report, but recognizes the need for flexibility to
accommodate par%cular circumstances of
individual jurisdic%ons.
3. PSA 700 deals with the form and content of the
auditor’s report issued as a result of an audit of
financial statements.
4. Consistency in the auditor’s report promotes
credibility in the global marketplace by making
more readily iden%fiable those audits that
have been conducted in accordance with
globally recognized standards and in
accordance with PSAs.
5. Modified opinion expressed by the auditor
when the auditor concludes that the F/S
are prepared, in all material respects, in
accordance with the applicable financial
repor%ng framework.
6. The objec%ve of the auditor in PSA 701 is to
form an opinion on the financial statements
based on an evalua%on of the conclusions
drawn from the audit evidence obtained.
7. Financial repor%ng framework is a financial
repor%ng framework designed to meet the
common financial informa%on needs of a wide
range of users. The financial repor%ng
framework may be a fair presenta%on
framework or a compliance framework.
8. PSA 700 refers to “financial statements” as “a
complete set of general purpose F/S, including
the related notes.” The requirements of the
applicable financial repor%ng framework
determine the form and content of the F/S, and
what cons%tutes a complete set of F/S.
9. The auditor shall form an opinion on whether
the financial statements are prepared, in all
material respects, in accordance with the
applicable financial repor%ng framework.
10. In some jurisdic%ons, relevant ethical
requirements may exist in several different
sources, such as the ethical codes & addi%onal
rules & requirements within the law &
regula%on.
11. In preparing the F/S in accordance with the
applicable financial repor%ng framework, & for
such internal control as management determines
is necessary to enable the prepara%on of F/S that
are free from material misstatement, whether
due to fraud or error.
12. ‘Responsibili%es of Management for the F/S”
sec%on describes the en%ty’s ability to con%nue
as going concern under PSA 570 & whether the
use of the going concern basis of accoun%ng is
not appropriate as well as disclosing maIers
rela%ng to going concern.
13. When the F/S are prepared in accordance with
a fair presenta%on framework, the descrip%on
of responsibili%es for the F/S in the auditor’s
report shall refer to “the prepara%on of the
compliance framework”.
14. The auditor’s report shall include a sec%on
with the heading “Auditor’s Responsibili%es for
the Audit of the Financial Statements.”
15. A descrip%on that the F/S are prepared in
accordance with a par%cular applicable
financial repor%ng framework is appropriate
only if the F/S comply with all the requirements
of that framework that are effec%ve during the
period covered by the F/S.
16. The auditor’s report shall state that
misstatements can arise from fraud or error, &
describe that they are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on
the basis of these F/S.
17. When F/S are prepared in accordance with a
compliance framework, the auditor is not
required to evaluate whether the F/S
achieve fair presenta%on.
18. If the reference to the applicable financial
repor%ng framework in the auditor’s opinion is
not the PFRSs, issued by the Financial Repor%ng
Standards Council, the auditor’s opinion shall
iden%fy the jurisdic%on of origin of the
framework.
19. The Opinion Sec?on of auditor’s report shall
state whether the auditor believes that the
audit evidence that has been obtained is
sufficient and appropriate to provide a basis
for the auditor’s opinion.
20. When the auditor is otherwise required by law
or regula%on, or decides to communicate key
audit maIers in the auditor’s report, the
auditor shall do so in accordance with PSA 701.
21. The auditor’s report shall use the term that
is appropriate in the context of the legal
framework in the par%cular jurisdic%on and
need not refer specifically to “management”.
21. In par%cular, the auditor shall evaluate whether,
in view of the requirements of the applicable
financial repor%ng framework the financial
statements adequately disclose the significant
accoun%ng policies selected and applied.
23. The auditor shall evaluate whether the F/S
adequately refer to or describe the applicable
24. The auditor shall express a modified opinion
when the auditor concludes that the F/S are
prepared, in all material respects, in accordance
with the applicable compliance framework.
25. If F/S prepared in accordance with the requirements
of a fair presenta%on framework do not achieve fair
presenta%on, the auditor shall discuss the maIer
with mgt &, depending on the requirements of the
applicable financial repor%ng framework & how the
maIer is resolved, shall determine whether it is
necessary to modify the opinion in the auditor’s
report in accordance with PSA 705
26. In par%cular, the auditor shall evaluate whether,
in view of the requirements of the applicable
financial repor%ng framework the terminology
used in the financial statements, including the
%tle of each financial statement, is appropriate.
MULTIPLE CHOICES
1. Why must audit documenta%on be reviewed?
a.  To ensure that the audit meets the CPA firms’ standard
of performance
b.  To evaluate the performance of inexperienced
personnel.
c.  To counteract bias that o7en enters into the auditor’s
judgment
d.  All of the above are reasons for review of audit
documenta%on.
2. Which of the following is not a misstatement of the
F/S?
a.  The client uses different inventory accoun%ng methods
for internal & external repor%ng
b.  A departure from GAAP
c.  The footnote for pensions is omiIed
d.  A clerk incorrectly based the allowance for doubtul
accounts on 31% of sales as opposed to 13% of sales
as determined by the controller.
3. Misstatements detected during the audit that were
ini%ally deemed to be immaterial must be
summarized to determine their
a.  Control
b.  Quan%ta%ve effect
c.  Aggregate effects
d.  Nature of misstatement
4. At the end of the audit the auditor is supposed to
accumulate and evaluate the need for
adjustment of
a.  Known uncorrected errors
b.  Unknown projected errors
c.  Carry over of prior year errors
d.  All of the above
5. The adjustments arising from audit that were
considered to be material should be informed by
the auditor to the:
a.  Audit staff
b.  Audit commiIee
c.  SEC
d.  Internal auditors
6. Reference to F/S in PSA 700 means
a.  A complete set of general purpose F/S including the
related notes
b.  A complete set of F/S prepared to mee%ng the
financial informa%on needs of specific users
c.  A complete set of F/S prepared in accordance with
special purpose framework
d.  A complete set of F/S prepared in accordance with
either a general or special purpose framework.
7.  Which of the following F/S best describes a Compliance
Framework (CF)?
a.  A CF requires compliance with the requirements of the
framework & acknowledges explicitly or implicity, that, to
achieve fair presenta%on of the F/S.
b.  A CF requires compliance w/ requirements of the framework &
acknowledges explicitly that it may be necessary for
management to be part from a requirement of the framework.
c.  A CF only requires compliance with the requirements of the
framework.
d.  A CF refers to a financial repor%ng framework designed to
meet the financial informa%on needs of specific users.
8. Which of the following should be considered when
forming an opinion on the audited F/S?
I.  Whether sufficient appropriate audit evidence has
been obtained.
II.  Whether uncorrected misstatements are material,
individually or in aggregate
III.  The qualita%ve aspects of the en%ty’s accoun%ng
prac%ces, including indicators of possible bias in
management’s judgments.
a.  I only c. I and II only
b.  I & III only d. I, II and III
9. When repor%ng on F/S prepared in accordance with a
compliance framework, the auditor shall evaluate
A B C D
a.  The overall presenta%on, structure & no yes no yes
content of the F/S
b.  Whether the F/S, including the related no yes yes no
notes, represent the underlying
transac%ons & events in a manner that
achieves fair presenta%on.
10. An audit client’s descrip%on that its F/S are prepared in
accordance with a par%cular applicable financial repor%ng
framework is appropriate only if:
a.  The F/S comply with all the requirements of that framework
that are effec%ve during the period covered by the F/S
b.  The F/S are in substan%al compliance with that framework.
c.  The F/S adequately disclose the significant accoun%ng
policies selected & applied.
d.  The terminology used in the F/S, including the %tle of each
F/S, is appropriate.
11. Which of the following is not a required communica%on
with the audit commiIee?
a.  Auditor’s responsibility under PSAs, including
independence
b.  Analy%cal review
c.  Overview of planned audit scope and %ming
d.  Significant audit findings. team.
12. Management es%mates the company’s allowance for
doubtul accounts as P200,000 and the auditors develop an
es%mate that suggests that the amount should be between
P230,000 & P250,000. The factual misstatement in this
situa%on is:
a.  P0
b.  P40,000
c.  P30,000
d.  P50,000
13. Mr. Co an external auditor of ABC Co. Based the ABC’s past results &
last year’s sales, Mr. Co es%mates that the company will have
warranty expense of P400,000 for 2018. ABC however has
es%mated only P350,000. Mr. Co knew that materiality for the
audit is much larger than the difference in their es%mates. The
audit is not complete yet, so it is possible that other misstatements
may be be found. What should Mr. Co do in this case?
a.  Advise the client that a qualified opinion will be required unless the
client revises its es%mate.
b.  Record the P50,000 difference as an unadjusted item & consider all
unadjusted items together at the end of the audit.
c.  Ignore the P50,000 as it is below materiality.
d.  Ignore the P50,000 difference as it is only an es%mate.
14. Auditors are responsible for determining whether F/S are
materially misstated, so upon discovering a material
misstatement they must bring it to the aIen%on of:
a.  The client’s management
b.  Regulators
c.  Audit firm managing partner
d.  No one in par%cular
15. When F/S are audited by an accoun%ng firm, the partner-‐in
charge of engagement ordinarily signs in the name of the
firm because:
a.  The partner-‐in-‐charge of engagement should be relieved of
any responsibility regarding the opinion issued.
b.  It is required by repor%ng standards.
c.  The firm assumes responsibility for the audit
d.  The opinion becomes more credible if signed in the name
of the firm.
16. The discrip%on of the auditor’s responsibili%es for the audit
of the F/S shall be included:
I.  Within the body of the auditor’s report
II.  Within the appendix of the auditor’s report
III.  By a specific reference within the auditor’s report to the
loca%on of such a descrip%on on a website of an
appropriate authority.
a.  I only c. I or II only

b.  II only d. I, II or III
17. F/S prepared in accordance with a financial repor%ng
framework designed to meet the financial informa%on
needs of specific users are referred to as:
a.  General purpose F/S
b.  Special purpose F/S
c.  Special purpose framework
d.  Specific purpose F/S
18. PSA700 Audit Report: As part of an audit in accordance
with PSAs, the auditor shall:
I.  Exercise Professional Judgment
II.  Maintain Professional Skep%cism
III.  Iden%fy and assess the ROMM of the F/S, whether due to
fraud or error, design & perform audit procedures
responsive to those risk, & obtain audit evidence that is
sufficient & appropriate to provide a basis for opinion.
a.  I only c. I or II only
b.  II only d. I, II or III
19. The auditor’s responsibili%es for the audit of F/S describe
an audit by iden%fying & assessing the ROMM of the F/S,
whether due to fraud or error. The steps of evalua%ng the
misstatements are
I.  Iden%fy the type of misstatements
II.  Understand & respond to misstatement
III.  Accumulate misstatement
IV.  Design & perfom audit procedures.
a.  I & III only c. I, II & III only
b.  All of the above d. I, II & IV only
20. Which of the following is least likely considered as a
type of misstatement?
a.  Projected
b.  Factual
c.  Judgmental
d.  Fraud & error
21. Communica%ons with other par%es include the
following:
I.  Communica%on with the component audit group of
financial statements
II.  Change of auditors
III.  Li%ga%ons or claims
IV.  Fraud & NOCLAR
V.  Going Concern assessments
a.  All of the above c. I, II, III & V
b.  I, II, III & IV only d. I, II & IV only
22. The financial statement auditor’s responsibili%es in a
group audit engagement least likely include:
a.  The auditor remains solely responsible for the auditor’s
opinion.
b.  The auditor is responsible for the direc%on, supervision &
performance of the audit.
c.  The auditor’s report shall name the loca%on in the jurisdic%on
where the auditor prac%ces.
d.  The auditor’s responsibili%es are to obtain sufficient
appropriate audit evidence in the group of financial
informa%on of the en%%es or business ac%vi%es with the group
to express an opinion on the group F/S.
23. Below are examples of EQCR except:
a.  Client acceptance and con%nuance decisions

b.  Conclusions regarding independence
c.  MaIers to communicate to those charged with
governance
d.  En%ty assump%on specifically on business ac%vi%es
& processes
24. MaIers to communicate with management and those
charged with governance, except:
I.  Auditor’s responsibili%es
II.  Auditor’s independence
III.  Auditor’s judgment & skep%cism
IV.  Significant audit findings
V.  Overview of planned scope & %ming
a.  I only c. I, & V only

b.  III only d. II only
25. The following statements relate to the date of auditor’s
report. Which is false?
a.  The auditor should date the report as of the comple%on
date of the audit.
b.  The date of the auditor’s report should not be later than
the date on which the F/S are signed or approved by mgt.
c.  The date of the auditor’s report should always be later than
the date of the F/S.
d.  The date of the auditor’s report should not be earlier than
the date on which the F/S are signed or approved by mgt.
26. PSA 700, the Independent Auditor’s Report on a Complete
Set of General Purpose F/S, provides the following basic
elements of the auditor’s report except
a.  Introductory paragraph
b.  Management’s responsibility for the F/S
c.  Auditor’s opinion paragraph
d.  Star%ng and comple%on dates of the audit
27. Which of the following should not be the basis of da%ng
the audit report?
a.  When the audit fee is collected
b.  As of the comple%on date of the audit
c.  As of any date earlier than the date on which the F/S are
signed or approved by management
d.  Upon comple%on of the field work
28. Audit report for a public client indicates that the F/S were
prepared in conformity with:
a.  Applicable financial repor%ng framework
b.  Standards of the Oversight Board
c.  PSA
d.  PFRS
29. The auditor who wishes to indicate that the en%ty has
significant transac%ons with RP should disclose this fact in:
a.  An explanatory paragraph to the auditor’s report
b.  An explanatory note to the F/S
c.  The body of the F/S
d.  The ‘summary of significant accoun%ng policies’ sec%on of
the F/S
30. The auditor’s report should be dated as of the date
the:
a.  Report delivered to the client
b.  Auditors have accumulated sufficient evidence
c.  Fiscal period under audit ends
d.  Review of W/P is completed.

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PHILIPPINE STANDARD ON AUDITING 700 (REVISED)

PHILIPPINE STANDARD ON AUDITING 700 (REVISED)

PHILIPPINE STANDARD ON AUDITIG 700 (REVISED)

SAAE obtained from sa?sfactory Quan?ta?ve & qualita?ve

If applicable, has the required EQCR been performed?

Has required communica?on with TCWG, management,

Form the auditor’s opinion

Formulate the auditor’s report

PHILIPPINE STANDARD ON AUDITIG 700 (REVISED)

Scope of this PSA

complete set of financial statements.

Application and Other Explanatory Material

13. 10.In particular,

11. (e) Theto financial

20. The auditor’s report shall be in writing. (Ref: Para. A13–A14)

20. The auditor’s report shall be in writing. (Ref: Para. A13–A14)

35. When the financial statements are prepared

In making this evalua?on, the auditor considers:

The auditor is required to %mely communicate all misstatements

Timely, two-­‐way ENTITY

Speciﬁc Macers to Communicate • PSA 560 p. 7(b-­‐c), 10(a),

Dear Mr. Ocampo,

Communica?ons with Other Par?es

Summary of Iden?ﬁed Misstatements

Results of Communica?on with Client

• Client acceptance and con%nuance decisions

(iii) To evaluate the

Loca?on of the descrip?on of the auditor’s responsibili?es for

Date ofothef tAuditor’s

Application and Other Explanatory Material

a. I only c. I or II only

a. Client acceptance and con%nuance decisions

a. I only c. I, & V only

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Timely, two-‐way ENTITY

Speciﬁc Macers to Communicate •  PSA 560 p. 7(b-‐c), 10(a),

• Client acceptance and con%nuance decisions

a.  I only c. I or II only

a.  Client acceptance and con%nuance decisions

a.  I only c. I, & V only