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Why do we have to know if the reporting framework is acceptable? Does it mean We want to audit the FS that are prepared on the reporting framework that we as auditor know of. Professional competence and due care.
Short answer – NO – it is quite separate from ethical considerations.
See on page 47 of the notes – an acceptable financial reporting framework is a precondition of an audit to be conducted in accordance with ISAs. Remember that the objective of an audit according to ISAs is to report an independent opinion on the financial statement which is expressed in terms of “fair presentation” or “true and fair” in accordance with some criteria e.g. IFRS.
Those criteria must be suitable (otherwise an audit would not be an assurance engagement).
Acceptable alternatives to IFRS would be UK GAAP, US GAAP and other similar, national GAAPs.
Sir do you mean that if the auditor wan’t to choose a client He has to see if the FS statement are prepared in acceptable reporting framework. Not just randomly eg IFRS, if he want’s to conduct the audit in accordance with the ISAs….
Yes to your first statement- – that is a “precondition”.
I don’t understand what you mean by “Not just randomly eg IFRS “
Sir do you mean that in order to check the FS gives a true and fair view we need to compare it against a criteria.(Financial reporting framework). If the financial statement had not been prepared so then we couldn’t give an opinion because we cannot check it against the criteria, that is why before accepting we need to look at if the financial statements are made in respect to acceptable reporting framework.
EXACTLY!
Many years ago – before ISAs stipulated “preconditions” – it could happen that an auditor accepted an appointment, only to find out later that they wouldn’t be able to form an opinion as required by the ISAs – which would all be a bit of a waste of everyone’s time (and money)!
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