Annual Audit Manual
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6044 Reporting by the auditor
Nov-2011
In This Section
Impact to opinion when appropriate evidence is not attainable
Overview
This topic explains:
- Impact to opinion when appropriate evidence is not attainable
- Reference to work performed by service auditors
CAS Requirement
The user auditor shall modify the opinion in the user auditor's report in accordance with CAS 705 if the user auditor is unable to obtain sufficient appropriate audit evidence regarding the services provided by the service organization relevant to the audit of the user entity's financial statements (CAS 402.20).
See OAG Audit 8013 for guidance on modifications to the opinion in the Independent Auditor's Report.
CAS Guidance
When a user auditor is unable to obtain sufficient appropriate audit evidence regarding the services provided by the service organization relevant to the audit of the user entity’s financial statements, a limitation on the scope of the audit exists. This may be the case when (CAS 402.A42):
- The user auditor is unable to obtain a sufficient understanding of the services provided by the service organization and does not have a basis for the identification and assessment of the risks of material misstatement
- A user auditor’s risk assessment includes an expectation that controls at the service organization are operating effectively and the user auditor is unable to obtain sufficient appropriate audit evidence about the operating effectiveness of these controls; or
- Sufficient appropriate audit evidence is only available from records held at the service organization, and the user auditor is unable to obtain direct access to these records
Whether the user auditor expresses a qualified opinion or disclaims an opinion depends on the user auditor’s conclusion as to whether the possible effects on the financial statements are material or pervasive.
CAS Requirement
The user auditor shall not refer to the work of a service auditor in the user auditor's report containing an unmodified opinion unless required by law or regulation to do so. If such reference is required by law or regulation, the user auditor's report shall indicate that the reference does not diminish the user auditor's responsibility for the audit opinion (CAS 402.21).
CAS Guidance
In some cases, law or regulation may require a reference to the work of a service auditor in the user auditor’s report, for example, for the purposes of transparency in the public sector. In such circumstances, the user auditor may need the consent of the service auditor before making such a reference (CAS 402.A43).
CAS Requirement
If reference to the work of a service auditor is relevant to an understanding of a modification to the user auditor's opinion, the user auditor's report shall indicate that such reference does not diminish the user auditor's responsibility for that opinion (CAS 402.22).
CAS Guidance
The fact that a user entity uses a service organization does not alter the user auditor’s responsibility under CAS is to obtain sufficient appropriate audit evidence to afford a reasonable basis to support the user auditor’s opinion. Therefore, the user auditor does not make reference to the service auditor’s report as a basis, in part, for the user auditor’s opinion on the user entity’s financial statements. However, when the user auditor expresses a modified opinion because of a modified opinion in a service auditor’s report, the user auditor is not precluded from referring to the service auditor’s report if such reference assists in explaining the reason for the user auditor’s modified opinion. In such circumstances, the user auditor may need the consent of the service auditor before making such a reference (CAS 402.A44).