Read the following figure given to answer the following questions: (2 Marks) Wha
ID: 2525177 • Letter: R
Question
Read the following figure given to answer the following questions: (2 Marks)
What is the figure about and name the client and the auditor?
Explain its content relating it to the standards of PCAOB/ASB in reporting audited financial statements.
Do you find all the elements as you have learnt, or do you find any difference? if yes bring out the differences.
What is your opinion about the going concern according to the report?
IE AUDITORS REPORT TO THE SHAREHOLDERS OF SAUDI BASIC INDUSTRIES CORPORATION (SABIC) (Saudi Joint Stock Company) Scope of audit We have audited the accompanying consolidated balance sheet of Saudi Basic Industries Corporation C SABIC) and its subsidaries the "Group") as at31 December 2016 and the related consolidated statements of income, cash flows and shareholders' equity for the year then ended. These consolidated financial statements are the responsibilty of the Group's management and have been prepared by them in accordance with the requirements of the Regulations for Companies and submitted to us together with all the information and explanations which we required. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the Kingdom of Saudi Arabia. Those standards require that we plan and perform the audit to cbtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audt provides a reasonable degree of assurarce to enable us to express an opinion on the consolidated financial Unqualified opinion In our opinion, the consolidated financial statements taken as a whole: 0 present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2016 and the results of is cperations and its cash flows for the year then ended in accordance with accounting standards generally accepted in the Kingdom of Saudi Arabia. ) comply wilth the requirements of the Regulations for Companies and SABIC's brlaws in so far as they affect the preparation and presentation of the consolidated financial statements for tified Public Accountant Registration No. 366 Riyadht 25 Jumad Awal 1438H (22 February 2017)Explanation / Answer
Figure About : Independent Auditor's Report on Consolidated Balance Sheet of Saudi Basic Industries Corporation.
Name of the Client : Saudi Basic Industries Corporation.
Name of the Auditor : Ernst & Young & Co (Public accountants)
SA 200 deals with the Overall Objectives of the Independent Auditor and conduct of an audit in accordance with Standards on auditing. This SA explains the nature and scope of audit designed to enable the independent auditor to meet these objectives. The purpose of the audit is to enhance the degree of confidence of the intended users in the financial statements. This is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared, in all material aspects, in accordance with an applicable financial reporting framework. As the basis for the auditor's opinion, SA requires the auditor to obtain reasonable assurance about whether financial statements as a whole are free from material misstatements, whether due to error or fraud. The concept of materiality is applied by the auditor both in planning and performing the audit and in evaluating the effect of identified misstatements on the audit.
However audit in accordance with SA is conducted on the premise that management and where appropriate, those charged with governance have responsibilities that are fundamental to the conduct of the audit. The audit of the financial statements does not relieve management or those charged with governance of those responsilities.
The SA's contains objectives, requirements and application and other explanatory material that are designed to support the auditor in obtaining reasonable assurance.
Missing elements:
(i) Report on Other Legal and Regulatory requirements is missing in Independent auditors report as required by the Section 143(3) of the Act
(ii) Annexure A to the independent auditors report which states management and auditor's responsibilty for internal financial controls is missing. Also what are limitations of Internal Financial controls over financial reporting is missing.
(iii) Annexure B to the independent audit report is missing which states whether the comapny has maintain proper records and all fixed assets are physically verified or not
Opinion on Going Concern :
As per SA 570 "Going Concern" the auditor has expressed the unqualified opinion it means on the basis of audit evidence obtained, no material uncertainity exists related to events or conditions that may cast significant doubt on the entity ability to continue as a going concern.
As no doubt appears on the management ability to continue as a going concern . So yes as per professional judgement it appears that entity is going concern.
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