AS · Certificate Level

Audit Completion and Reporting

The procedures performed at the completion stage of the audit: subsequent events review, going concern evaluation (ISA 570 — indicators of doubt, auditor procedures, reporting implications), written representations from management, overall review of the financial statements, and the auditor's report. Covers ISA 700 (forming an opinion and reporting — structure and key sections of the unmodified report), ISA 705 (modified opinions — qualified, adverse, and disclaimer of opinion), and ISA 706 (emphasis of matter and other matter paragraphs).

38 min read

Learning Objectives

•Describe the key audit procedures performed at the completion stage of an audit
•Explain the auditor's responsibilities regarding subsequent events and the procedures performed
•Describe the going concern indicators of doubt and the auditor's procedures under ISA 570
•Explain the reporting implications when a material uncertainty related to going concern exists
•Explain the purpose and content of written representations from management
•Describe the purpose of the overall analytical review at the completion stage
•Identify the key sections of an unmodified auditor's report under ISA 700
•Distinguish between the three types of modified opinion under ISA 705 (qualified, adverse, disclaimer) and explain when each is appropriate
•Explain the purpose and use of emphasis of matter and other matter paragraphs under ISA 706

Audit Completion — Overview

After performing substantive procedures and tests of controls, the auditor enters the completion stage. This is the final phase before forming the audit opinion and issuing the auditor's report. Key completion procedures include:

Reviewing subsequent events (events after the reporting period)
Evaluating going concern
Obtaining written representations from management
Performing an overall analytical review
Evaluating accumulated misstatements and their effect on the financial statements
Forming the audit opinion and drafting the auditor's report

Subsequent Events Review

The auditor has an active duty to perform procedures to identify events between the reporting date and the date of the auditor's report that may require adjustment of, or disclosure in, the financial statements. This is governed by ISA 560 Subsequent Events (which complements IAS 10).

Three periods to consider:

Period 1: From the reporting date to the date of the auditor's report

The auditor must perform procedures to identify adjusting and non-adjusting events. Typical procedures include:

Inquiring of management whether any significant events have occurred after the reporting date (new commitments, guarantees, contingencies, litigation, unusual transactions)
Reading minutes of board meetings and shareholder meetings held after the year end
Reviewing the entity's latest interim financial information, management accounts, budgets, and cash flow forecasts
Reviewing correspondence with solicitors about litigation and claims
Reviewing post-year-end bank statements and cash flows
Considering the implications of any other audit evidence obtained during the audit

Period 2: From the date of the auditor's report to the date the financial statements are issued

The auditor has no active duty to perform procedures during this period. However, if the auditor becomes aware of facts that, had they been known at the date of the auditor's report, might have caused the report to be amended, the auditor must discuss the matter with management, determine whether the financial statements need amendment, and if management amends them, issue a new auditor's report on the amended statements.

Period 3: After the financial statements have been issued

The auditor has no obligation to perform procedures. However, if a fact becomes known that, had it been known earlier, would have caused the report to be amended, the auditor must discuss with management whether to reissue the financial statements. If management does not take appropriate action, the auditor takes steps to prevent further reliance on the report (e.g., notifying those charged with governance or relevant regulators).

Going Concern (ISA 570)

ISA 570 (Revised) Going Concern sets out the auditor's responsibilities regarding going concern. The directors are responsible for assessing the entity's ability to continue as a going concern and for preparing the financial statements on that basis. The auditor is responsible for obtaining sufficient appropriate evidence about the appropriateness of management's use of the going concern basis.

Indicators of Going Concern Doubt

The auditor should remain alert throughout the audit for evidence of events or conditions that may cast significant doubt on the entity's ability to continue as a going concern. Indicators include:

Financial indicators:

Net liability position (liabilities exceed assets) or net current liability position
Fixed-term borrowings approaching maturity with no realistic prospect of renewal or repayment
Excessive reliance on short-term borrowings to finance long-term assets
Adverse key financial ratios (e.g., negative operating cash flows, declining profit margins, low interest cover)
Inability to pay creditors on due dates; arrears of dividends
Inability to comply with the terms of loan agreements (covenant breaches)
Change from credit to cash-on-delivery terms by suppliers
Inability to obtain financing for essential investment or product development

Operating indicators:

Loss of key management without replacement
Loss of a major market, customer, franchise, licence, or key supplier
Labour difficulties or shortages of important supplies
Emergence of a highly successful competitor

Other indicators:

Non-compliance with capital or other statutory requirements (e.g., solvency requirements)
Pending legal or regulatory proceedings that could result in claims the entity cannot satisfy
Changes in legislation or government policy expected to adversely affect the entity
Uninsured or underinsured catastrophes (fire, flood)

The presence of one or more of these indicators does not necessarily mean the entity is not a going concern — the auditor must consider the mitigating factors and management's plans.

Auditor's Procedures for Going Concern

Whether or not indicators of doubt have been identified, the auditor must:

Evaluate management's assessment of the entity's ability to continue as a going concern. Management is required by IAS 1 to assess going concern for at least 12 months from the reporting date (but the auditor should consider information beyond this period if available).
Inquire of management about their awareness of events or conditions beyond the assessment period that may cast doubt on going concern

If indicators of doubt are identified, additional procedures include:

Reviewing management's plans for future action — e.g., plans to dispose of assets, borrow funds, restructure debt, reduce costs, increase income. Are these plans realistic and feasible?
Evaluating the reliability of management's cash flow forecasts — compare prior forecasts to actual outcomes to assess management's forecasting track record
Reviewing the terms and conditions of loan agreements and determining whether any covenants have been breached
Reading board minutes for any discussion of financial difficulties
Inquiring of the entity's solicitors about the status of litigation and claims
Confirming the existence, legality, and enforceability of arrangements for financial support from related parties or third parties
Considering the entity's order book and pipeline — are there committed future revenues?

Going Concern — Reporting Implications

The auditor's conclusion on going concern determines the reporting approach:

Scenario	Going concern basis appropriate?	Material uncertainty?	Auditor's report
No indicators of doubt, or indicators adequately mitigated	Yes	No	Unmodified opinion with no additional going concern paragraph
Material uncertainty exists but adequately disclosed in the financial statements	Yes	Yes — disclosed	Unmodified opinion but with a separate section headed "Material Uncertainty Related to Going Concern" drawing attention to the disclosure
Material uncertainty exists but NOT adequately disclosed	Yes	Yes — not disclosed	Qualified or adverse opinion (depending on pervasiveness) due to inadequate disclosure
Going concern basis is NOT appropriate (entity should use break-up basis) but has used going concern	No	N/A	Adverse opinion — the financial statements are materially and pervasively misstated
Management unwilling to make or extend its assessment when requested by the auditor	Unknown	Unknown	Consider qualified opinion or disclaimer due to scope limitation

The "Material Uncertainty Related to Going Concern" section (when included) is not a modification of the opinion — the opinion is still unmodified. It is a separate required section that draws attention to the note in the financial statements where the uncertainty is disclosed.

Written Representations (ISA 580)

ISA 580 requires the auditor to obtain written representations from management (and, where appropriate, those charged with governance). These are a formal written statement from management confirming certain matters.

Purpose:

To confirm management's responsibility for the preparation of the financial statements and for providing the auditor with all relevant information
To provide audit evidence where other sufficient appropriate evidence cannot reasonably be expected to exist (e.g., management's intentions, internal plans, or knowledge of matters not documented elsewhere)
To support other audit evidence — but NOT as a substitute for evidence that the auditor could reasonably expect to obtain

Required representations include:

Management has fulfilled its responsibility for the preparation of the financial statements in accordance with the applicable framework, including fair presentation
Management has provided the auditor with all relevant information and access as agreed in the engagement letter
All transactions have been recorded and reflected in the financial statements
Management has disclosed all known actual or possible litigation and claims
Management has disclosed all known instances of non-compliance with laws and regulations
Management has disclosed all known related party relationships and transactions
Management has disclosed all known fraud or suspected fraud affecting the entity

Form and date: Written representations must be in the form of a representation letter, dated the same date as the auditor's report, and signed by management (and TCWG where appropriate). They should cover the period of the financial statements being audited.

If management refuses to provide representations: This is a scope limitation. The auditor should (a) discuss with management, (b) re-evaluate management's integrity, and (c) take appropriate action — which may include issuing a qualified opinion or disclaimer of opinion and considering whether to resign from the engagement.

Overall Analytical Review

ISA 520 requires the auditor to perform analytical procedures at or near the end of the audit. This is the overall review — a final "sense check" to assess whether the financial statements as a whole are consistent with the auditor's understanding of the entity.

Procedures include:

Reviewing the financial statements for overall consistency with the auditor's knowledge of the entity and its business
Comparing key figures and ratios to prior year, budget, and industry benchmarks
Investigating any significant or unexpected fluctuations or relationships that were not identified during the audit
Considering whether any previously unidentified risks of material misstatement need to be addressed
Considering whether any previously identified misstatements indicate a pattern (e.g., management bias)

If the overall review identifies new risks or matters that were not addressed during the audit, the auditor must perform additional procedures before forming the opinion.

Evaluating misstatements (ISA 450):

The auditor accumulates all identified misstatements (other than those that are clearly trivial) and:

Communicates them to management and requests correction
For misstatements that management refuses to correct: evaluates whether the aggregate of uncorrected misstatements is material — if so, the opinion must be modified
Communicates uncorrected misstatements and their effect to those charged with governance
Obtains a written representation from management that the effects of uncorrected misstatements are immaterial (individually and in aggregate)

The Auditor's Report (ISA 700)

ISA 700 (Revised) Forming an Opinion and Reporting on Financial Statements prescribes the form and content of the auditor's report. The report is addressed to the members (shareholders) of the entity.

Key sections of an unmodified auditor's report:

#	Section	Content
1	Title	"Independent Auditor's Report" — the word "independent" is required to distinguish it from reports by others.
2	Addressee	Addressed to the members (shareholders) of the company — not the directors.
3	Opinion	The opinion paragraph comes FIRST (under ISA 700 Revised). States that the financial statements give a true and fair view (UK terminology) / are presented fairly in all material respects (IFRS terminology) in accordance with the applicable framework and CA 2006. Identifies the financial statements audited (entity name, date, period covered).
4	Basis for Opinion	States the audit was conducted in accordance with ISAs (UK). References the "Auditor's Responsibilities" section. Confirms independence and compliance with ethical requirements. States that the auditor believes sufficient appropriate evidence has been obtained.
5	Material Uncertainty Related to Going Concern	Included ONLY if a material uncertainty exists and is adequately disclosed. Draws attention to the relevant note. States the opinion is not modified in respect of this matter. (If no material uncertainty, this section is omitted.)
6	Other Information	The auditor's responsibilities regarding other information in the annual report (e.g., directors' report, strategic report). States whether the auditor has identified any material inconsistencies or misstatements. Required by ISA 720.
7	Responsibilities of the Directors	Describes the directors' responsibilities for preparing the financial statements (true and fair view, going concern assessment, appropriate accounting policies) and for the entity's internal control.
8	Auditor's Responsibilities for the Audit	Describes the auditor's objectives (reasonable assurance, opinion on whether FS are free from material misstatement). Explains key audit concepts: materiality, professional scepticism, evaluating accounting policies and estimates, assessing going concern. May reference a website for fuller description.
9	Signature	The name of the engagement partner (for listed companies under ISA 700 (UK)) and the name of the audit firm.
10	Date	The date of the auditor's report — must not be earlier than the date the auditor has obtained sufficient appropriate evidence (including evidence that the complete financial statements have been prepared and TCWG have taken responsibility).
11	Auditor's address	The location of the firm (city/town).

The unmodified opinion is expressed when the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. This is the "clean" report — the standard report with no modifications, emphasis, or qualifications.

Modified Opinions (ISA 705)

ISA 705 deals with situations where the auditor cannot issue an unmodified opinion. A modified opinion is required when:

The financial statements are materially misstated (the auditor has found misstatements that management has not corrected), OR
The auditor is unable to obtain sufficient appropriate evidence (a scope limitation prevents the auditor from completing the audit as planned)

The type of modification depends on two dimensions: (1) the nature of the issue (misstatement vs inability to obtain evidence), and (2) the pervasiveness of the matter (material but not pervasive, vs material AND pervasive).

	Material but NOT pervasive	Material AND pervasive
Financial statements are materially misstated	Qualified opinion ("except for")	Adverse opinion
Unable to obtain sufficient appropriate evidence	Qualified opinion ("except for")	Disclaimer of opinion

Pervasive: A matter is pervasive if it: (a) is not confined to specific elements, accounts, or items of the FS, (b) represents a substantial proportion of the FS, or (c) relates to disclosures that are fundamental to users' understanding.

Qualified Opinion ("Except For")

Issued when the auditor concludes that misstatements (or the possible effects of undetected misstatements due to inability to obtain evidence) are material but not pervasive to the financial statements.

The opinion paragraph states: "In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section, the financial statements give a true and fair view…"

The report includes a "Basis for Qualified Opinion" section (replacing "Basis for Opinion") describing the matter and its quantified effect (if known).

Examples:

Disagreement: The entity has not depreciated a building with a carrying amount of £2m (material). This affects the depreciation charge and the carrying amount, but the rest of the FS are fairly stated → qualified (except for).
Limitation: The auditor was unable to attend the inventory count (inventory is material but not a dominant proportion of total assets). Alternative procedures were limited → qualified (except for the possible effects of the inability to verify inventory).

Adverse Opinion

Issued when the auditor concludes that misstatements are both material AND pervasive to the financial statements — the FS as a whole do not give a true and fair view.

The opinion paragraph states: "In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion section, the financial statements do not give a true and fair view…"

The report includes a "Basis for Adverse Opinion" section.

Example: The entity has not consolidated a material subsidiary (IFRS 10 violation). This affects almost every line item in the FS (assets, liabilities, revenue, expenses, equity) and the overall picture — the misstatement is pervasive → adverse opinion.

Disclaimer of Opinion

Issued when the auditor is unable to obtain sufficient appropriate evidence and the possible effects are both material AND pervasive — the auditor cannot form an opinion.

The report states: "We do not express an opinion on the financial statements… Because of the significance of the matter described in the Basis for Disclaimer of Opinion section, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion."

The report includes a "Basis for Disclaimer of Opinion" section.

Example: The entity's accounting records were destroyed in a fire. The auditor cannot verify any of the figures in the FS — the limitation affects virtually everything → disclaimer of opinion.

Note: When a disclaimer is issued, the auditor should not include the "Key Audit Matters" section (where applicable) or describe the auditor's responsibilities in detail, as doing so might imply the auditor performed a more thorough audit than was actually possible.

Emphasis of Matter and Other Matter Paragraphs (ISA 706)

ISA 706 allows the auditor to include additional paragraphs in the report to draw attention to important matters, without modifying the opinion.

Emphasis of Matter (EOM) paragraph:

Used when the auditor considers it necessary to draw users' attention to a matter presented or disclosed in the financial statements that is of such importance that it is fundamental to users' understanding
The opinion is NOT modified — the paragraph explicitly states that the opinion is not qualified in this respect
The paragraph refers to the specific note or disclosure in the financial statements
Examples: An uncertainty about the outcome of major litigation disclosed in the notes; a significant subsequent event disclosed in the notes; early application of a new accounting standard that has a pervasive effect on the financial statements; a major catastrophe that has had a significant effect on the entity's financial position
Placed after the "Basis for Opinion" section (or after the "Material Uncertainty Related to Going Concern" section if one exists)

Other Matter (OM) paragraph:

Used when the auditor considers it necessary to communicate a matter NOT presented or disclosed in the financial statements that is relevant to users' understanding of the audit, the auditor's responsibilities, or the auditor's report
The opinion is NOT modified
Examples: The auditor's report on the prior period was issued by a different auditor; a restriction on the distribution of the auditor's report; the entity has prepared two sets of financial statements (e.g., one under IFRS, one under local GAAP)
Placed after the "Emphasis of Matter" section (if any) or after "Basis for Opinion"

Key distinction: EOM relates to something in the financial statements. OM relates to something about the audit or the report that is not in the financial statements.

Forming the Opinion — Decision Summary

Use this decision framework when determining the appropriate audit report:

Step 1: Are the financial statements free from material misstatement?

Yes → Unmodified opinion (consider EOM/OM if needed)
No → Go to Step 2

Step 2: What is the nature of the issue?

Material misstatement (auditor disagrees with treatment and management won't correct) → Go to Step 3
Inability to obtain sufficient evidence (scope limitation) → Go to Step 3

Step 3: Is the matter pervasive?

Material but NOT pervasive → Qualified opinion ("except for")
Material AND pervasive:
- If due to misstatement → Adverse opinion
- If due to inability to obtain evidence → Disclaimer of opinion

Separately: Is there a material uncertainty related to going concern?

If adequately disclosed → unmodified opinion + "Material Uncertainty Related to Going Concern" section
If NOT adequately disclosed → qualified or adverse (depending on pervasiveness)
If going concern basis is entirely inappropriate → adverse opinion

Examiner Focus

Modified opinions are tested in almost every sitting. You MUST know the 2×2 matrix: misstatement vs inability to obtain evidence, crossed with material-not-pervasive vs material-and-pervasive. This gives: qualified (except for), adverse, qualified (except for), and disclaimer. Practise applying this to scenarios.

Common Pitfall

Students frequently confuse the "Material Uncertainty Related to Going Concern" section with a modified opinion. It is NOT a modification — the opinion is still unmodified. It is a separate required section that draws attention to the GC disclosure in the notes. The opinion is only modified if the GC disclosures are inadequate or the going concern basis is inappropriate.

Study Tip

To determine pervasiveness, ask: "Does this matter affect the financial statements as a WHOLE, or just one specific item?" If it affects multiple line items, multiple assertions, or is so significant that users cannot rely on the FS at all, it is pervasive → adverse or disclaimer. If confined to one area, it is not pervasive → qualified.

Watch Out

Written representations are required evidence but are the LEAST reliable form of evidence (they come from the party being audited). They cannot substitute for evidence the auditor could reasonably obtain from other sources. If management refuses to provide them, it's a fundamental scope limitation — likely leading to a disclaimer.

Examiner Focus

Know the structure of the auditor's report under ISA 700 (Revised). The opinion paragraph comes FIRST. Then: Basis for Opinion, Material Uncertainty Related to Going Concern (if applicable), Other Information, Responsibilities of Directors, Auditor's Responsibilities, signature (engagement partner name for listed entities), date, and address.

Common Pitfall

The auditor's report is addressed to the MEMBERS (shareholders), not the directors. The directors are responsible for the financial statements — the auditor reports independently to the shareholders. This is a fundamental principle of the audit.

Key Definitions

Subsequent events (ISA 560)

Events occurring between the reporting date and the date of the auditor's report. The auditor has an active duty to identify events requiring adjustment or disclosure during this period.

Going concern (ISA 570)

The assumption that the entity will continue in operation for the foreseeable future. The auditor must evaluate management's assessment and conclude on the appropriateness of the going concern basis.

Material uncertainty related to going concern

An uncertainty that may cast significant doubt on the entity's ability to continue as a going concern. If adequately disclosed, the auditor includes a separate section in the report but does NOT modify the opinion.

Written representations (ISA 580)

A formal written statement from management confirming its responsibilities, the completeness of information provided, and specific matters relevant to the audit. Dated the same as the auditor's report.

Overall analytical review

Analytical procedures performed near the end of the audit (ISA 520) as a final "sense check" that the financial statements are consistent with the auditor's understanding of the entity.

Unmodified opinion

The "clean" audit opinion issued when the financial statements are prepared, in all material respects, in accordance with the applicable framework. States the FS give a "true and fair view."

Qualified opinion ("except for")

Issued when the auditor concludes that misstatements, or possible effects of undetected misstatements, are material but NOT pervasive. The opinion states the FS give a true and fair view "except for" the identified matter.

Adverse opinion

Issued when misstatements are material AND pervasive — the financial statements as a whole do not give a true and fair view.

Disclaimer of opinion

Issued when the auditor is unable to obtain sufficient appropriate evidence and the possible effects are material AND pervasive. The auditor does not express an opinion.

Pervasive

A matter is pervasive if it: is not confined to specific elements/accounts, represents a substantial proportion of the FS, or is fundamental to users' understanding. Pervasiveness determines whether a qualified opinion escalates to adverse/disclaimer.

Emphasis of matter paragraph (ISA 706)

An additional paragraph drawing attention to a matter PRESENTED IN the financial statements that is fundamental to users' understanding. Does NOT modify the opinion.

Other matter paragraph (ISA 706)

An additional paragraph communicating a matter NOT in the financial statements but relevant to users' understanding of the audit or the report. Does NOT modify the opinion.

True and fair view

The overarching objective of financial statements under UK law. The auditor expresses an opinion on whether the FS give a true and fair view (UK) / are presented fairly in all material respects (IFRS).

Key Formulas

Worked Examples

Practice Questions

Question 1 of 8

When a material uncertainty related to going concern exists and is ADEQUATELY disclosed, the auditor's report should:

Question 2 of 8

An auditor discovers a material misstatement that management refuses to correct. The misstatement affects one specific account balance but is not pervasive to the financial statements as a whole. The appropriate opinion is:

Question 3 of 8

The auditor's report under ISA 700 (Revised) places the opinion paragraph:

Question 4 of 8

Which of the following would result in an adverse opinion?

Question 5 of 8

Written representations from management should be:

Question 6 of 8

An Emphasis of Matter paragraph is used to:

Question 7 of 8

The auditor has an active duty to search for subsequent events up to:

Question 8 of 8

A disclaimer of opinion is issued when:

Source and Version

Syllabus: ICAEW ACA Certificate Level 2026 · Reviewed: 2026-05-04

ICAEW ACA syllabusLocal syllabus coverage review

Audit Evidence and Procedures for Each FSA Area