Auditing and Assurance Standards and Guidance

FRC Bulletins

Bulletin: Compendium of illustrative auditor's reports on United Kingdom private sector financial statements for periods commencing on or after 17 June 2016

Location of the description of the auditor's responsibilities for the audit of the financial statements

38.	ISA (UK) 700 (Revised June 2016)²¹ permits the description of the auditor's responsibilities for the audit of the financial statements to be included either:

Within the body of the auditor's report;

Within an appendix to the auditor's report, in which case the auditor's report includes a reference to the location of the appendix; or

By a specific reference within the auditor's report to the location of such a description on a website of an appropriate authority.²²

39.	In the illustrative auditor's reports these alternatives are shown as follows:

Appendix 2 illustrates where the responsibilities are located within the body of the auditor's report.

Appendix 6 illustrates where the responsibilities are located within an appendix to the auditor's report.

Appendices 1, 3, 4, 5, 7A and 7B illustrate where a reference is included in the auditor's report to an appropriate website with a description of the responsibilities.

40.	Further descriptions of the auditor's responsibilities are required to be included (either in the auditor's report, in an appendix or by cross-reference) when they are relevant to the circumstances of the particular audit as follows:

(a)

When the financial statements are prepared in accordance with a fair presentation framework, the description of the auditor's responsibilities includes the responsibility 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. As noted in paragraph 5, the applicable financial reporting frameworks in the UK are either IFRSs as adopted by the EU or UK GAAP, both of which are fair presentation frameworks, hence this paragraph is usually required for audits of financial statements in the UK.

(b)

When ISA (UK) 600 (Revised June 2016)²³ applies the following paragraph is included in the description of the auditor's responsibilities for the audit of the financial statements:

Auditor's responsibilities for the audit of the financial statements

We also:

dotbullet Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the [consolidated] financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

Appendices 2 and 6 include such a description of the auditor's responsibilities in a group audit engagement.

(c)

When the entity is listed²⁴ the following statement should be included in the auditor's report:

Auditor's responsibilities for the audit of the financial statements

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Appendix 6 illustrates such a description.

(d)

When key audit matters are communicated in accordance with ISA (UK) 701²⁵ the following statement is included in the auditor's report:

Auditor's responsibilities for the audit of the financial statements

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Appendix 6 illustrates such a description.

²¹ ISA (UK) 700 (Revised June 2016), paragraph 41.

²² The website reference is www.frc.org.uk/auditorsresponsibilities.

²³ ISA (UK) 600 (Revised June 2016) Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors).

²⁴ "Listed entity" is defined in paragraph 7(g) of ISA (UK) 220 (Revised June 2016) Quality Control for an Audit of Financial Statements.

²⁵ ISA (UK) 701 Communicating Key Audit Matters in the Independent Auditor's Report.