Q Audit evidence acquired and the conclusions made will affect the overall audit Home, - Explain how the evaluation of audit evidence acquired At the end of the reasonable assurance audit engagement, the auditor will evaluate the audit evidence obtained and the conclusion made during the performance of the audit. Explain how the evaluation of audit evidence acquired and the conclusions made will affect the overall audit opinion formed on the financial statements of a reporting entity. Answers:- The aim of reasonable assurance engagement is decrease of risk in engagement to circumstances where the risk is acceptable. The reasonable assurance gives an auditor confidence and satisfaction that evidence obtained during performing audit support the assertions. Auditor will be responsible to issue appropriate report based on circumstances while forming opinion under ASA 700, auditor will conclude that the modification in report is required. However, auditor may also express modified opinion under which auditor will report either adverse opinion, qualified and disclaimer opinion. The modified opinion will be dependent on the matter nature give rise to modified opinion, when auditor is not able to obtain the sufficient evidence for audit or may be any material misstatement is present. The auditor may also provide a judgement under which any pervasiveness of possible effects are there on the matter of financial report. The auditor conclude based on the evidence obtained and if auditor is unable to obtain the appropriate evidence of audit then auditor conclude that financial report does not include any material misstatement. Auditor provide qualified opinion when there is sufficient information available but there are some misstatements individually or in aggregate which is not pervasive to the financial report or the auditor is unable to base opinion due to no sufficient audit evidence is there and auditor conclude that possible effects of financial statements are undetected as misstatements and can be considered as material but may not be pervasive. Similarly, adverse opinion of auditor expresses when auditor is having sufficient information but conclude misstatement either separately or in aggregate both pervasive or material to financial report. Auditor may also provide disclaimer of opinion when no appropriate audit evidence is obtained to base any opinion and conclude that possible effect of financial report are undetected misstatements and can be both material and pervasive. Auditor disclaims an opinion in rare circumstances and happens in case of uncertainties where auditor cannot form an opinion due to interaction of uncertainties and possible cumulative effect found on financial report. Related: Evaluating the auditor - client relationship Risk assessment process Explain how the evaluation of audit evidence acquired
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