The effect of material misstatements on the form and content of the audit report

The effect of material misstatements on the form and content of the audit report

The effect of significant distortions on form and content.

If there is a material misstatement related to certain amounts in the financial statements (including the disclosure of quantitative items).
The auditor should describe the effects of that distortion on the financial statements and determine its amount in the section on the basis of adjustment.
Unless it is not practical to do so.
The auditor should state this issue in the basis of adjustment paragraph.
(auditing standard 705, paragraph 17)
If the material misstatement in the financial statements is related to the descriptive information in the notes, the auditor must describe the misstatements in the disclosure in the Basis of Adjustment paragraph.
(auditing standard 705, paragraph 18)
If the significant distortion in the financial statements is related to the non-disclosure of information that is required to be disclosed.

The auditor must:
A. Negotiate with the governing bodies about undisclosed matters;
B. Describe the nature of undisclosed information in the basis of adjustment paragraph; f
C. To disclose undisclosed information, provided it is practical and obtain sufficient and appropriate audit evidence about those matters.
Unless there is a legal or regulatory prohibition in this regard.
(auditing standard 705, paragraph 19)
Even if the auditor gives a rejected opinion or no opinion.
In his report, he should describe any other important issues that he has been informed about and that could lead to the adjustment of his opinion along with its effects.
In such cases, limitations and distortions with no effect due to rejection or lack of comments are included under the subheading “other limitations or distortions” before the comments section.
(auditing standard 705, paragraph 21)
If the auditor concludes that it is necessary to draw the attention of users to a matter presented or disclosed in the financial statements that is of particular importance to their understanding of the financial statements.
He should include the emphasis on specific matter clause in his report on the condition that he has obtained sufficient and appropriate audit evidence that the matter in question has not been significantly distorted in the financial statements.
Such a clause should only refer to the information presented or disclosed in the financial statements.
(auditing standard 706, paragraph 6)