AUDITING (AUD 339)

Chapter 5: AUDIT REPORT

Table of Contents
1. Types of audit report ...................................................................................................................2
2. Modified opinion consist of: .........................................................................................................5
3. Components of an unmodified audit report ..................................................................................7
4. Sample of audit report ...............................................................................................................11
1. Unmodified audit report ...................................................................................................... 11
2. QUALIFIED OPINION except for due to a material misstatement – obtain audit evidence . 20

3. Qualified Opinion except for due to the auditor’s inability/unable to obtain sufficient audit
evidence ................................................................................................................................... 22

4. ADVERSE OPINION - obtain audit evidence – misstatement is material and pervasive .... 24

5. DISCLAIMER OF OPINION – unable to obtain audit evidence – misstatement is material

and pervasive............................................................................................................................ 26

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1. Types of audit report

1. Standard 2. Emphasis of Matter paragraph (EOM)

Standard:
1. Unmodified opinion/ unmodified audit report Unmodified audit report (i.e. standard report
(standard report) – the opinion expressed by the with EOM) with EOM
auditor when the auditor concludes that the FS are
prepared in all material respects, in accordance Emphasis of Matter paragraph –
with the applicable financial reporting frameworks. 1. Refers to a MATTER appropriately presented
1. FS free from material misstatement. or disclosed in the financial statements that,
2. in the auditor’s judgment, is of such
2. Auditors normally use one of the following two well- importance that it is fundamental to users’
known phrases to reflect their conclusion, either (i.e. understanding of the financial statements.
specific sentence/ term):
1. ‘The financial statements present fairly, in all Other Matter paragraph –
material respects...’ or ▪ Refers to a matter other than those presented or
disclosed in the financial statements that, in the
2. ‘The financial statements give a true and fair auditor’s judgment, is relevant to users’
view of...’ understanding of the audit, the auditor’s
responsibilities or the auditor’s report.

Purpose:
1. To draw attention to a matter already
disclosed in the financial statements because
the auditor believes it is fundamental to their
understanding.

2. It is a way of saying to the users: ‘you know

that note in the financial statements, the one
about the uncertainty surrounding the legal
dispute? Well us auditors think it’s really
important, so make sure you’ve read it!

NOTE: EOM does not affect auditor’s opinion (i.e. as

a whole in the FS items) → it still consider as
standard report with emphasis of the matters.

What are the example/ conditions to issues EOM?

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A: Conditions/ circumstance for issuing unmodified audit report (standard report): **

1. All statements, SOFP, SOPL, statement of retained earnings and statement of cash flows are
included in the financial statements.
2. The three general standards have been followed in all respects on the engagement (i.e. ISA).
3. Sufficient evidence (i.e. audit evidence) has been accumulated and the auditor has conducted
the engagement in a manner that enables him or her to conclude that the three standards of field
work have been met.
4. The financial statements are prepared in accordance with generally accepted accounting
principles. This also means that adequate disclosure has been included in the footnotes and
other parts of the FS.
5. There are no circumstances requiring the addition of an explanatory paragraph or modification
of the wording of the report (i.e. qualified opinion except for, adverse & disclaimer).

Or

There are no circumstances requiring the modification of the report.

1.Standard report - unmodified

2. Standard report with EOM - unmodified
3. Qualified opinion except for - modified
4. Adverse opinion - modified
5. Disclaimer - modified

B: Conditions/ example for issuing unmodified audit report with Emphasis of matter
paragraph (EOM) **:
1. The company has a financial problem whereby the GOING CONCERN of the company is
affected and the issue has already been presented in the FS (i.e. note the accounts).
 This matter not affect now (by the time the audit report being published) but it will affect
in the future or the client acknowledged it and might take action to prevent it from
happening in the future.
2. Any UNCERTAINTY RELATING TO THE FUTURE OUTCOME (i.e. other than going concern)
OF THE EXCEPTIONAL LITIGATION OR REGULATORY ACTIONS exists and the issue has
already been presented in the FS.

3. The issuance of new accounting standards (e.g. GST, then changed to SST) whereby it has
material effects on the FS and the issue has already been presented in the FS.
4. Unusual important subsequent event (i.e. significant subsequent event – event after the
financial year end) occurred and the issue has already been presented in the FS.
 A significant subsequent event that occurs between the date of the financial statements (i.e.
closed the account) and the date of the auditor’s report (i.e. date Auditor signed the audit
report).
However, a widespread use of Emphasis of Matter paragraphs may diminish the effectiveness
of the auditor’s communication about such matters.

• If the directors haven’t disclosed a matter as required by financial reporting standards,

• then the auditor may conclude that the financial statements are materially misstated and
modify the opinion instead.

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C: SIGNIFICANCE (i.e. impact/ purpose) of auditor’s report (e.g. standard, standard with EOM,
qualified opinion except for, adverse & disclaimer): **

1. Inform users of FS whether or not the FS are fairly stated (i.e. follow the accounting and
auditing standard) or whether no conclusion can be made with regard to the fairness of their
presentation.

2. Increase reliability and credibility of financial statement.

❑ Unaudited financial statements are less reliable because they have not been verified
by independent third party (i.e. auditor).

3. Shareholder more confident when making economic decision based on financial

statement since the information on the FS has been verified by external auditor.

4. It helps shareholders to hold the management accountable if the financial statements show
unfavourable opinion (e.g. adverse and disclaimer).

5. Others (any acceptable answer)

D: Circumstances When a Modification (opposite unmodified) to the Auditor’s Opinion Is

Required:

1. The auditor shall modify the opinion in the auditor’s report when:
1) The auditor concludes that, based on the audit evidence obtained, the financial statements
as a whole are not free from material misstatement; or
2) The auditor is unable to obtain sufficient appropriate audit evidence to conclude that
the financial statements as a whole are free from material misstatement.

2. ISA 450 defines a MISSTATEMENT as a difference between the REPORTED amount,

classification, presentation, or disclosure of a financial statement item and the amount,
classification, presentation, or disclosure that IS REQUIRED for the item to be in accordance
with the applicable financial reporting framework.

3. Accordingly, a material misstatement of the financial statements may arise in relation to:
1) The appropriateness of the selected accounting policies;
2) The application of the selected accounting policies; or
3) The appropriateness or adequacy of disclosures in the financial statements.

➔ Unmodified (standard report) versus Modified (Modification → NOT standard report)

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2. Modified opinion consist of (i.e. modification): ***

1. A qualified opinion “except for”,

2. An adverse opinion, or
3. A disclaimer of opinion

1. A qualified opinion “except for 2. An adverse opinion 3. A disclaimer of opinion

The auditor shall express a qualified The auditor shall express an The auditor shall disclaim an
opinion when: adverse opinion when: opinion when:
1) The auditor, having obtained 1) the auditor, having obtained 1) the auditor is unable to obtain
sufficient appropriate audit sufficient appropriate audit sufficient appropriate audit
evidence, evidence, evidence on which to base the
1. concludes that misstatements
opinion, and
2) concludes that misstatements,
(e.g. reported 50k versus individually or in the 2) the auditor concludes that the
required 70k = diff by 20k), aggregate, possible effects on the
individually or in the financial statements of
3) are BOTH MATERIAL AND
aggregate, are material, undetected misstatements, if
PERVASIVE to the financial
2. but NOT pervasive, to the
any, could be BOTH
statements.
financial statements; MATERIAL AND PERVASIVE.

or The auditor shall disclaim an

opinion when,
2) The auditor is unable to obtain
a) in extremely rare circumstances
sufficient appropriate audit
involving multiple uncertainties,
evidence on which to base the
opinion, b) the auditor concludes that,
notwithstanding having
1. but the auditor concludes that obtained sufficient appropriate
the possible effects on the audit evidence regarding each
financial statements of of the individual uncertainties,
undetected misstatements,
c) it is not possible to form an
2. if any, could be material but opinion on the financial
NOT pervasive. statements due to the potential
interaction of the uncertainties
and their possible cumulative
effect on the financial
statements.

Pervasive (ISA 705) –

• A term used, in the context of misstatements, to describe the effects on the financial statements of
misstatements (i.e. obtained audit evidence) or the possible effects on the financial statements of
misstatements (i.e. cannot obtained audit evidence), if any, that are undetected due to an inability to
obtain sufficient appropriate audit evidence.

• Pervasive effects on the financial statements are those that, in the auditor’s judgment:

a) Are NOT confined to specific elements, accounts or items of the financial statements (Income,
expenses, NCA, CA, CL, NCL, equity → items in FS);

b) If so confined, represent or could represent a substantial proportion (i.e. major – many account,
significant elements, 90%) of the financial statements; or

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c) In relation to disclosures, are fundamental to users’ understanding of the financial statements.

Auditor’s Judgment about the Pervasiveness of

the Effects or Possible Effects on the Financial
Statements
Nature of Matter Giving Rise to the Modification***
Material but Not Material and
Pervasive Pervasive (both)
1. Financial statements are materially misstated –
auditor obtain audit evidence, when the FS are not Qualified opinion – Adverse opinion
except for
free from material misstatement.

2. Auditor unable to obtain sufficient appropriate audit

evidence Qualified opinion – Disclaimer of opinion
except for

NOTE: student need to self-understand/ self-identify the term of audit evidence (obtained or not
obtained), material & pervasive in the FINAL EXAM (i.e. key word in the case study question).

1. Audit evidence – obtained or not

2. Material – Yes or No
3. Pervasive – YES or No

Explanation (Qualified opinion except for): *

1. The auditor having obtained sufficient appropriate evidence, concludes that misstatement
individually or aggregate are material but not pervasive to the financial statements.

2. The auditor is unable to obtain sufficient appropriate evidence on which to base the
opinion but the auditor concludes that the possible effects on the financial statement of
undetected misstatement if any could be material but not pervasive.

Levels of materiality used for determining the type of opinion (i.e. type of report) to issue: *

1. Amounts (i.e. misstatements) are immaterial and not affecting the decisions of a reasonable
user (Standard report).

2. Amounts are material but do not overshadow the financial statement as a whole (Standard
with EOM, Qualified opinion except for).

3. Amounts are so material or so pervasive that overall truth and fairness of the financial
statements are in questions (Adverse or disclaimer).

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1. Components of an unmodified audit report

Typical COMPONENTS of an unmodified audit report (i.e. layout of audit
report): **

1. Report title

2. Addressee

3. Auditor’s opinion

4. Basis for opinion

5. Key audit matters (KAM)

6. Other information

7. Responsibilities of the directors for the FS

8. Auditor’s responsibilities for the audit of FS

9. Other reporting responsibilities

10. Name of the engagement partner

11. Signature of the auditor

12. Auditor’s address

13. Date of auditor’s report

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Components Explanation/ purposes

1. Report title 1. A title indicating the report is the report of an independent auditor, for example,
“Independent Auditor’s Report,”.
2. Significant/ impact/ purpose: *
1) Informed users that the FS has been audited.
2) To differentiate between auditor report in FS with non-
engagement/non-assurance (e.g. due diligence) and other report in FS
such as Chairman Statement, Executive director’s report, CSR report,
ICS report, etc.
2. Addressee* 1. The terms of the engagement may specify to whom the auditor’s report is
to be addressed.
2. The auditor’s report is normally addressed to those for whom the report is
prepared, shareholders or to those charged with governance of the entity
whose financial statements are being audited.
3. For example, “To the shareholders of ABC company - ISA” or “to the
member of Malayan Banking Berhad”
3. Auditor’s report 1. A written report encompasses reports issued in hard copy and those using an
electronic medium.
2. For example: “Report on the Audit of the Financial Statements” Maybank:
Report on the Financial Statements.
4. Auditor’s opinion 1. The first section of the auditor’s report shall include the auditor’s opinion, and
shall have the heading “Opinion.”
2. The opinion section of the auditor’s report shall also:
1) Identify the entity whose FS have been audited;
2) State that the FS have been audited;
3) Identify the title of each statement comprising the FS;
4) Refer to the notes, including the summary of significant accounting
policies; and
5) Specify the date of, or period covered by, each FS comprising the FS.
3. When expressing an unmodified opinion on financial statements, use one
of the following phrases:
a. In our opinion, the accompanying financial statements present fairly,
in all material respects, […] in accordance with [the applicable
financial reporting framework]; or
b. In our opinion, the accompanying financial statements give a true and
fair view of […] in accordance with [the applicable financial reporting
framework].
Qualified except for:
In our opinion, EXCEPT FOR the effects of the matter described in the Basis for Qualified
Opinion section of our report, the accompanying financial statements present fairly, in all
material respects, (or give a true and fair view of)
Adverse opinion:
In our opinion, because of the significance of the matter discussed in the Basis for Adverse
Opinion section of our report, the accompanying consolidated financial statements do not
present fairly (or do not give a true and fair view of)
Disclaimer opinion:
We do not express an opinion on the accompanying consolidated financial statements….

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5. Basis for opinion 1. The auditor’s report shall include a section, directly following the opinion
section, with the heading “Basis for opinion”.

2. States that the audit was conducted in accordance with International

Standards on Auditing.

3. Refers to the section of the auditor’s report that describes the auditor’s
responsibilities under the ISAs.

4. 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 jurisdiction of origin of the relevant
ethical requirements or refer to the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants
(IESBA Code).

5. States whether the auditor believes that the audit evidence the auditor has
obtained is sufficient and appropriate to provide a basis for the auditor’s
opinion.

6. Key audit matters 1. For audits of complete sets of general purpose financial statements of listed
(KAM)* entities, the auditor shall communicate key audit matters in the auditor’s report
in accordance with ISA 701.

2. Key audit matters (KAM) refer to additional information to intended users of

the financial statements to assist them in understanding those matters that, in
the auditor’s professional judgement, were of MOST SIGNIFICANCE in the
audit of the financial statements.

3. 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 ISA 701.

4. For example, entities/company characterized in such law or regulation as

PUBLIC INTEREST ENTITIES (public deposit money in the company), such
as banks, insurance companies, and pension funds. – refer CHAP 2 for LIST
of company under public interest entities.

5. The key matter may be of significant public interest.

7. Responsibilities of 1. The auditor’s report shall include a section with a heading “Responsibilities of
the directors or mgmt. Management for the Financial Statements.”
for the FS (CHAP 1)
2. 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”

3. This section of the auditor’s report shall describe management’s responsibility

for:
a. Preparing the FS in accordance with the applicable financial reporting
framework, and for such internal control as management determines

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is necessary to enable the preparation of FS that are free from material

misstatement, whether due to fraud or error; and
b. Assessing the entity’s ability to continue as a going concern and
whether the use of the going concern basis of accounting is
appropriate as well as disclosing, if applicable, matters relating to
going concern.

4. This section of the auditor’s report shall also identify those responsible for the
oversight of the financial reporting process are different from those who fulfill
the responsibilities for FS.
8. Auditor’s 1. The auditor’s report shall include a section with the heading “Auditor’s
responsibilities for the Responsibilities for the Audit of the Financial Statements.”
audit of FS (CHAP 1)
2. Purpose/ importance:
a. to prevent misunderstanding regarding the scope of work performed
by the auditor or the inherent limitations of the audit procedures.
b. To differentiate the information in the management’s responsibility
element.
c. Informed uses that the audit is conducted in accordance with ISAs and
conducted to obtained reasonable assurance that the financial
statement is free from material misstatement.
3. This section of the auditor’s report shall:
1) State that the objectives of the auditor are to:
a. Obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement,
whether due to fraud or error; and
b. Issue an auditor’s report that includes the auditor’s opinion.

2) State that reasonable assurance is a high level of assurance, but is not

a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists; and

3) State that misstatements can arise from fraud or error.

3. The Auditor’s Responsibilities for the Audit of the Financial Statements

section of the auditor’s report shall further:
1) State that, as part of an audit in accordance with ISAs, the auditor
exercises professional judgment and maintains professional skepticism
throughout the audit; and

2) Describe an audit by stating that the auditor’s responsibilities are:

a. 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 the auditor’s opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.

b. To obtain an understanding of internal control relevant to the audit in order

to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. In circumstances when the 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

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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.

c. To evaluate the appropriateness of accounting policies used and the

reasonableness of accounting estimates and related disclosures made by
management.

d. 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.

e. 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.

4.The auditor’s responsibilities in a group audit engagement by stating that:

1. 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;

2. The auditor is responsible for the direction, supervision and performance of

the group audit; and

3. The auditor remains solely responsible for the auditor’s opinion.

4. Sample of audit report

Sample of audit report consist of:

1. Unmodified audit report – refer real life MAYBANK or sample from ISA is ABC Company

2. Qualified opinion except for due to a material misstatement – obtain audit evidence.

3. Qualified opinion except for due to the auditor’s inability/unable to obtain sufficient audit evidence

4. Adverse opinion - obtain audit evidence – misstatement is material and pervasive

5. Disclaimer opinion

1. Unmodified audit report

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of ABC Company [or other Appropriate Addressee]

Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of ABC Company and its subsidiaries (the
Group), which comprise the consolidated statement of financial position as at December 31, 2019,
and the consolidated statement of comprehensive income, consolidated statement of changes in
equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, (or give a true and fair view of) the consolidated financial position of the Group as at
December 31, 2019, and (of) its consolidated financial performance and its consolidated cash flows
for the year then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion (Standard ISA)

We conducted our audit in accordance with International Standards on Auditing (ISAs). our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the
Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics
for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
[Description of each key audit matter in accordance with ISA 701.]

Other Information [or another title if appropriate such as “Information Other than the
Financial Statements and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ISA 720 (Revised) – see
Illustration 1 in Appendix 2 of ISA 720 (Revised).]

Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRSs, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting
process.

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Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and 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 consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• 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 Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
• 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.
We communicate 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 we identify during our audit.
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.
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

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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.

Report on Other Legal and Regulatory Requirements

[The form and content of this section of the auditor’s report would vary depending on the nature of
the auditor’s other reporting responsibilities prescribed by local law, regulation, or national auditing
standards. The matters addressed by other law, regulation or national auditing standards (referred
to as “other reporting responsibilities”) shall be addressed within this section unless the other
reporting responsibilities address the same topics as those presented under the reporting
responsibilities required by the ISAs as part of the Report on the Audit of the Consolidated Financial
Statements section. The reporting of other reporting responsibilities that address the same topics as
those required by the ISAs may be combined (i.e., included in the Report on the Audit of the
Consolidated Financial Statements section under the appropriate subheadings) provided that the
wording in the auditor’s report clearly differentiates the other reporting responsibilities from the
reporting that is required by the ISAs where such a difference exists.]
The engagement partner on the audit resulting in this independent auditor’s report is [name].
[Signature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor Address] [Date]

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REAL LIFE EXAMPLE: MAYBANK

29

Independent Auditors’
Report (report title)
to the members of Malayan Banking Berhad (addressee)
(Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMETNS (auditor’s report)

Opinion (Auditor’s opinion)

We have audited the financial statements of Malayan Banking Berhad, which comprise the statements of financial
position as at 31 December 2018 of the Group and of the Bank, and the income statements, statements of
comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the
Bank for the financial year then ended, and notes to the financial statements, including a summary of significant
accounting policies, as set out on pages 34 to 3 14.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the
Group and of the Bank as at 31 December 2018, and of their financial performance and their cash flows for the
financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial
Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International
Standards on Auditing. Our responsibilities under those standards are further described in the Auditors'
responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence
we Have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and other ethical responsibilities

We are independent of the Group and of the Bank in accordance with the By-Laws (on Professional Ethics,
Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants ("IESBA Code”), and we have
fulfilled our other ethical responsibilities in accordance with the By-Laws and IESBA Code.

Basis for Opinion (Standard ISA)

We conducted our audit in accordance with International Standards on Auditing (ISAs). our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled
our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the Group and of the Bank for the current financial year. These matters were addressed
in the context of our audit of the financial statements of the Group and of the Bank as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter is provided in that context.

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Chapter 5: AUDIT REPORT

We have fulfilled the responsibilities described in the Auditor's’ responsibilities/or the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of the
financial statements of the Group and of the Bank. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying financial
statements.

Impairment on (i) goodwill and (ii) investment in

subsidiaries and interest in associates

(i) Goodwill
The Group's goodwill balance as at 31 December 2018 Our audit procedures included, among others, evaluating the
stood at RM5.G billion. assumptions and methodologies used by the Group and the
Bank in performing the impairment assessment.
Goodwill impairment testing of cash generating units
(“CG Us”) relies on estimates of value-in-use (“VIU”) based We tested the basis of preparing the cash flow forecasts taking into
on estimated future cash flows. The Group is required to account the I back testing results on the accuracy of previous
annually test the amount of goodwill for impairment. forecasts and the historical

(ii) Investment in subsidiaries and interest in associates evidence supporting underlying assumptions.
As at 31 December 2016, the carrying amount of investment We also assessed the appropriateness of the other key
in subsidiaries (Bank only) stood at RM3 1.4 billion and assumptions, such as the weighted average cost of capital discount
interest in associates (Group and Bank] stood a: RM2.3 rates assigned to the CGUs, as well as the long-term growth rate, by
comparing against internal information, and external economic and
billion and RM0.5 billion respectively.
market data.
Similarly, we focused on impairment assessment of We also assessed the sensitivity analysis performed by
investment in subsidiaries and interest in associates as the management on the key inputs to the impairment models, to
impairment testing relies on VIU estimates based on understand the impact that reasonable alternative assumptions
estimated future cash flows- ” would have on the overall carrying amounts.
These involve management judgement and are based on complex We also reviewed the adequacy of the Group*s and the
assumptions that are affected by expected future market and Bank's disclosures within the financial statements about
economic conditions. those assumptions to which the outcome of the

'

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Key Audit Matters (cont'd.)

t of these procedures where their specific expertise was required.

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Information other than the financial statements and auditors’ report thereon
The directors of the Bank are responsible for the other information. The other information comprises the
annual report, but does not include the financial statements of the Group and of the Bank and our auditors’
report thereon, which is expected to be made available to us after the date of this auditors’ report.
Our opinion on the financial statements of the Group and of the Bank does not cover the other information
and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Bank, our responsibility is to
read the other infOfM3tion identified above and, in doing so, consider whether the other information is
materially inconsistent with the financial statements of the Group and of the Bank or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditors’ report, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.

When we read the annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors of the Bank and take appropriate action.

Responsibilities of the directors for the financial statements

The directors of the Bank are responsible for the preparation of the financial statements of the Group and
of the Bank that give a true and fair view in accordance with Malaysian Financial Reporting Standards,
International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
The directors are also responsible for such internal control as the directors determine is necessary to enable
the preparation of financial statements of the Group and of the Bank that are free from material
misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Bank, the directors are responsible for
assessing the Group's and the Bank’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Bank or to cease operations, or have no realistic alternative but to do
so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of
the Bank as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors* report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and
International Standards on Auditing will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards
on Auditing, we exercise professional judgement and maintain professional skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial statements of the Group and of
the Bank. whether due to fraud or error, design and performance audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the
override of internal control.

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• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s and of the Bank’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of directors’ 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 Group‘s and the Bank’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditors’ report to the related disclosures in the financial statements or, if such disclosures are
inadequate. to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditors' report. However, future events or conditions may cause the Group or the
Bank to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements of the Group and
of the Bank, including the disclosures and whether the financial statements of the Group and of the
Bank represent the, underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial statements of the Group.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit

We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.

We also provide the directors 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.

From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financia1 statements of the Group and of the Bank for the current financial
year and are therefore the key audit matters. We describe these matters in our auditors’ 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.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we
have not acted as auditors, are disclosed in Note 68 to the financial statements.

OTHER MATTERS
This report is made solely to the members of the Bank, as a body, in accordance with Section 266 of the Companies Art
2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of
this report

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AUD 339. Chapter 5: Audit Report

2. QUALIFIED OPINION except for due to a material misstatement – obtain audit

evidence

Example: Qualified Opinion due to a Material Misstatement of the Financial Statements

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of ABC Company [or other Appropriate Addressee]

Report on the Audit of the Financial Statements

Qualified Opinion
We have audited the financial statements of ABC Company (the Company), which comprise the
statement of financial position as at December 31, 2019, and the statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, EXCEPT FOR the effects of the matter described in the Basis for Qualified
Opinion section of our report, the accompanying financial statements present fairly, in all
material respects, (or give a true and fair view of) the financial position of the Company as at
December 31, 2019, and (of) its financial performance and its cash flows for the year then ended
in accordance with International Financial Reporting Standards (IFRSs).

Basis for Qualified Opinion

The Company’s inventories are carried in the statement of financial position at RMxxx.
Management has not stated the inventories at the lower of cost and net realizable value but has
stated them solely at cost, which constitutes a departure from IFRSs. The Company’s records
indicate that, had management stated the inventories at the lower of cost and net realizable
value, an amount of xxx would have been required to write the inventories down to their net
realizable value. Accordingly, cost of sales would have been increased by RMxxx, and income
tax, net income and shareholders’ equity would have been reduced by RMxxx, RMxxx and
RMxxx, respectively.

We conducted our audit in accordance with International Standards on Auditing (ISAs). our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in
[jurisdiction], and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our qualified opinion.

Other Information [or other title if appropriate such as “Information Other that the
Financial Statements and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements of ISA 720 (Revised) – see Illustration
6 in Appendix 2 of ISA 720 (Revised). The last paragraph of the other information section in
Illustration 6 would be customized to describe the specific matter giving rise to the qualified
opinion that also affects the other information.]

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period. These matters were addressed in the

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AUD 339. Chapter 5: Audit Report

context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. In addition to the matter described
in the Basis for Qualified Opinion section we have determined the matters described below to
be the key audit matters to be communicated in our report.
[Description of each key audit matter in accordance with ISA 701.]

Responsibilities of Management and Those Charged with Governance for the Financial
Statements

Auditor’s Responsibilities for the Audit of the Financial Statements

Report on Other Legal and Regulatory Requirements

The engagement partner on the audit resulting in this independent auditor’s report is [name].
[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate
for the particular jurisdiction]
[Auditor Address]

[Date]

IDENTIFIED FROM CASE STUDY: ANSWER: Qualified except for – obtained audit evidence
1. Obtained audit evidence. How? The Company’s records indicate….

2. Pervasive. YES or NO. How? Inventories only → NOT PERVASIVE

PERVASIVE → If so confined, represent or could represent a substantial proportion (i.e.
major – many account, significant elements, 90%) of the financial statements

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3. Qualified Opinion except for due to the auditor’s inability/unable to obtain

sufficient audit evidence
Example: Qualified Opinion due to the auditor’s inability to obtain sufficient audit
evidence regarding a foreign associate

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of ABC Company [or other Appropriate Addressee]

Report on the Audit of the Consolidated Financial Statements

Qualified Opinion
We have audited the consolidated financial statements of ABC Company and its subsidiaries
(the Group), which comprise the consolidated statement of financial position as at December
31, 2019, and the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, EXCEPT FOR the possible effects of the matter described in the Basis for
Qualified Opinion section of our report, the accompanying consolidated financial statements
present fairly, in all material respects, (or give a true and fair view of) the financial position of the
Group as at December 31, 2019, and (of) its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRSs).

Basis for Qualified Opinion

The Group’s investment in XYZ Company, a foreign associate acquired during the year and
accounted for by the equity method, is carried at RMxxx on the consolidated statement of
financial position as at December 31, 2019, and ABC’s share of XYZ’s net income of xxx is
included in ABC’s income for the year then ended. We were unable to obtain sufficient
appropriate audit evidence about the carrying amount of ABC’s investment in XYZ as at
December 31, 2019 and ABC’s share of XYZ’s net income for the year because we were denied
access to the financial information, management, and the auditors of XYZ. Consequently, we
were unable to determine whether any adjustments to these amounts were necessary.

We conducted our audit in accordance with International Standards on Auditing (ISAs). our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in [jurisdiction], and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Other Information [or another title if appropriate such as “Information Other than the
Financial Statements and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements of ISA 720 (Revised) – see
Illustration 6 in Appendix 2 of ISA 720 (Revised). The last paragraph of the other information
section in Illustration 6 would be customized to describe the specific matter giving rise to the
qualified opinion that also affects the other information.]

Key Audit Matters

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AUD 339. Chapter 5: Audit Report

Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the consolidated financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. In addition to the matter described in the Basis for Qualified Opinion section, we have
determined the matters described below to be the key audit matters to be communicated in our
report.
[Description of each key audit matter in accordance with ISA 701.]

Responsibilities of Management and Those Charged with Governance for the

Consolidated Financial Statements

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Report on Other Legal and Regulatory Requirements

The engagement partner on the audit resulting in this independent auditor’s report is [name].
[Signature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor Address]

[Date]

IDENTIFIED FROM CASE STUDY: ANSWER: Qualified except for – CANNOT audit evidence
1. Obtained audit evidence. CANNOT. How? we were denied access to the financial
information.
We were unable to obtain sufficient appropriate audit evidence → CONCEPT, student will
not see or this sentence will not appear in the FINAL EXAM.
2. Pervasive. YES or NO. How? Group’s investment in XYZ Company
If PERVASIVE → If so confined, represent or could represent a substantial proportion (i.e.
major – many account, significant elements, 90%) of the financial statements

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4. ADVERSE OPINION - obtain audit evidence – misstatement is material and

pervasive

Example: Adverse Opinion due to a Material Misstatement of the Consolidated Financial

Statements

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of ABC Company [or other Appropriate Addressee]

Report on the Audit of the Consolidated Financial Statements

Adverse Opinion
We have audited the consolidated financial statements of ABC Company and its subsidiaries
(the Group), which comprise the consolidated statement of financial position as at December
31, 2019, and the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, because of the significance of the matter discussed in the Basis for Adverse
Opinion section of our report, the accompanying consolidated financial statements do not
present fairly (or do not give a true and fair view of) the consolidated financial position of the Group
as at December 31, 2019, and (of) its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting
Standards (IFRSs).

Basis for Adverse Opinion

As explained in Note X, the Group has not consolidated subsidiary XYZ Company that the
Group acquired during 2019 because it has not yet been able to determine the fair values of
certain of the subsidiary’s material assets and liabilities at the acquisition date. This investment
is therefore accounted for on a cost basis. Under IFRSs, the Company should have
consolidated this subsidiary and accounted for the acquisition based on provisional amounts.
Had XYZ Company been consolidated, many elements in the accompanying consolidated
financial statements would have been materially affected. The effects on the consolidated
financial statements of the failure to consolidate have not been determined.
We conducted our audit in accordance with International Standards on Auditing (ISAs). our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent
of the Group in accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in [jurisdiction], and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our adverse opinion.

Other Information [or another title if appropriate such as “Information Other than the
Financial Statements and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ISA 720 (Revised) – see Illustration
7 in Appendix 2 of ISA 720 (Revised). The last paragraph of the other information section in
Illustration 7 would be customized to describe the specific matter giving rise to the qualified
opinion that also affects the other information.]

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AUD 339. Chapter 5: Audit Report

Key Audit Matters

Except for the matter described in the Basis for Adverse Opinion section, we have determined
that there are no other key audit matters to communicate in our report.

Responsibilities of Management and Those Charged with Governance for the

Consolidated Financial Statements

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Report on Other Legal and Regulatory Requirements

The engagement partner on the audit resulting in this independent auditor’s report is [name].
[Signature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor Address]

[Date]

IDENTIFIED FROM CASE STUDY: ANSWER: Adverse opinion

1. Obtained audit evidence. YES. How? explained in Note X

2. Pervasive. YES or NO. How to know from the basis? many elements in the accompany
If PERVASIVE → If so confined, represent or could represent a substantial proportion (i.e.
major – many account, significant elements, 90%, etc.) of the financial statements

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5. DISCLAIMER OF OPINION – unable to obtain audit evidence – misstatement is material

and pervasive

Example: Disclaimer of opinion due to the auditor’s inability to obtain sufficient appropriate audit
evidence about a single element of the consolidated financial statements

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of ABC Company [or other Appropriate Addressee]

Report on the Audit of the Consolidated Financial Statements

Disclaimer of Opinion

We were engaged to audit the consolidated financial statements of ABC Company and its
subsidiaries (the Group), which comprise the consolidated statement of financial position as at
December 31, 2019, and the consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then
ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies.

We do not express an opinion on the accompanying consolidated financial statements of the

Group. Because of the significance of the matter described in the Basis for Disclaimer of Opinion
section of our report, we have not been able to obtain sufficient appropriate audit evidence to
provide a basis for an audit opinion on these consolidated financial statements.

Basis for Disclaimer of Opinion

The Group’s investment in its joint venture XYZ Company is carried at RMxxx on the Group’s
consolidated statement of financial position, which represents over 90% of the Group’s net
assets as at December 31, 2019. We were not allowed access to the management and the
auditors of XYZ Company, including XYZ Company’s auditors’ audit documentation. As a result,
we were unable to determine whether any adjustments were necessary in respect of the
Group’s proportional share of XYZ Company’s assets that it controls jointly, its proportional
share of XYZ Company’s liabilities for which it is jointly responsible, its proportional share of
XYZ’s income and expenses for the year, and the elements making up the consolidated
statement of changes in equity and the consolidated cash flow statement.

Responsibilities of Management and Those Charged with Governance for the

Consolidated Financial Statements
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibility is to conduct an audit of the Group’s consolidated financial statements in
accordance with International Standards on Auditing and to issue an auditor’s report. However,
because of the matter described in the Basis for Disclaimer of Opinion section of our report, we
were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit
opinion on these consolidated financial statements.
We are independent of the Group in accordance with the ethical requirements that are relevant
to our audit of the financial statements in [jurisdiction], and we have fulfilled our other ethical
responsibilities in accordance with these requirements.

Report on Other Legal and Regulatory Requirements

[Signature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]

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AUD 339. Chapter 5: Audit Report

[Auditor Address] [Date]

IDENTIFIED FROM CASE STUDY: ANSWER: Disclaimer opinion

1. Obtained audit evidence. NO. How? We were not allowed access to the management

2. Pervasive. YES or NO. How? represents over 90% of the Group’s net
If PERVASIVE → If so confined, represent or could represent a substantial proportion (i.e.
major – many account, significant elements, 90%, etc.) of the financial statements

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