technical circular 7/2018, date 11/6/2018 booklet with ... · significant assessed risk of material...

Technical Circular 7/2018, Date 11/6/2018

Booklet with illustrations of Auditors Report

1

Auditors Report Booklet Table of Illustrations Unmodified Opinion

Illustration 1 Companies with subsidiaries submitting consolidated financial statements - EU Public Interest Entities (PIEs).

Illustration 2 Companies without subsidiaries - NON EU PIEs.

Illustration 3 Companies submitting consolidated financial statements - NON EU PIEs.

Illustration 4 Companies submitting consolidated financial statements - Listed but NON-EU PIEs e.g. listed in an unregulated market.

Illustration 5 Separate financial statements of a parent company that also prepares consolidated financial statements - NON EU PIEs.

Illustration 6 Companies that submit consolidated financial statements and separate financial statements of the parent company in the same set - NON EU PIEs.

Illustration 7 Separate financial statements of a parent company that elects not to prepare consolidated financial statements in accordance with IFRS 10 paragraph 4 or on the basis of the exemptions of the Cyprus Companies Law, Cap. 113 - NON EU PIEs.

Illustration 8 Emphasis of matter: Significant uncertainty in relation to an outstanding lawsuit - NON EU PIEs.

Illustration 9 Prior year audited by another auditor - Companies without subsidiaries - NON - EU PIEs.

Modified opinion –Except for opinions - NON EU PIEs

Illustration 10 Except for - disagreement: Financial statements are materially misstated due to Inappropriate accounting method.

Illustration 11 Except for - disagreement: Financial statements are materially misstated due to inadequate disclosure.

Illustration 12 Except for - disagreement: Material misstatement of the financial statements (i.e. inventory is materially misstated).

Illustration 13 Except for - disagreement: Inability to obtain sufficient audit evidence regarding foreign Investment.

Illustration 14 Except for - disagreement and Emphasis of Matter: Qualified Opinion along with Emphasis of Matter.

Illustration 15 Except for - disagreement: When the auditor’s report on the prior period, as previously issued, included a qualified opinion and the matter giving rise to the modification is unresolved.

Illustration 16 Except for - disagreement: When the auditor’s report on the prior period, as previously issued, included a qualified opinion and the matter giving rise to the modification is unresolved. This requires a modification to the auditor’s opinion because of the effect on the comparability of the current period’s figures and the corresponding figures.

Illustration 17 Except for - disagreement: Financial statements are materially misstated: Failure to prepare consolidated financial statements as required by International Financial Reporting Standard 10 (IFRS 10) and the Cyprus Companies Law, Cap. 113, in the case where the effect is material but not so material and pervasive as to require an adverse opinion.



2

Modified opinion – Disclaimer of opinions - NON - EU PIEs

Illustration 18 The auditor’s inability to obtain sufficient appropriate audit evidence about multiple elements of the financial statements: The Company did not allow the auditor to observe the physical inventory count and restricted his procedures relating to accounts receivable.

Illustration 19 The auditor’s inability to obtain sufficient appropriate audit evidence about a single element of the consolidated financial statements.

Modified opinion – Adverse opinions - NON - EU PIEs

Illustration 20 A material misstatement of the consolidated financial statements (non-consolidation of a subsidiary where the effect is so material and pervasive).

Illustration 21 Financial statements are materially misstated: Failure to prepare consolidated financial statements as required by International Financial Reporting Standard 10 (IFRS 10) and the Cyprus Companies Law, Cap. 113, in the case where the effect is so material and pervasive that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.

Going concern - NON - EU PIEs

Illustration 22 Unmodified opinion - When a Material Uncertainty exists related to Going Concern and disclosure in the financial statements is adequate.

Illustration 23 Modified opinion - When a Material Uncertainty exists related to Going Concern and the financial statements are materially misstated due to inadequate disclosure.

Illustration 24 Adverse opinion - Financial statements are materially misstated: when there is material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern, and is not disclosed in the financial statements and the effect is so material and pervasive.

Other illustrations - NON - EU PIEs

Illustration 25 Unmodified Opinion - Cyprus Branch of an overseas company.

Illustration 26 Unmodified Opinion - Partnership.

Illustration 27 Unmodified Opinion - Provident Fund/Occupational Retirement Benefits Fund.

Illustration 28 Unmodified Opinion - Individual businessman.

Illustration 29 Unmodified Opinion - Trust.

Illustration 30 Unmodified Opinion - Societies/ Institutions.

Illustration 31 Unmodified Opinion - Fund which is a Company.

Illustration 32 Unmodified Opinion - Fund which is a Partnership.

Illustration 33 Unmodified opinion - For a Cyprus Branch that is itself an EU Public Interest Entity.



3

Illustration1: Unmodified opinion – For EU Public Interest Entities Companies with subsidiaries submitting consolidated financial

statements

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of ABC Limited (the “Company”), and its subsidiaries (the “Group”), which are presented in pages […] to […] and comprise [the consolidated statement of financial position as at 31 December 20XX, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows]1 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 give a true and fair view of the consolidated financial position of the Group as at 31 December 20XX, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion 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 remained independent of the Group throughout the period of our appointment in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and 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 incorporating the most significant risks of material misstatements, including assessed risk of material misstatements due to fraud 5, 6 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. [Provide required information regarding each key audit matter in accordance with ISA 701 and the requirements of Article 10(2)(c) of the EU Regulation 537/2014. Provide the following: (i) a description of the most significant assessed risks of material misstatement, including assessed risks of material misstatement due to fraud; (ii) a summary of the auditor's response to those risks; and (iii) where relevant, key observations arising with respect to those risks. Where relevant to the above information provided in the audit report concerning each significant assessed risk of material misstatement, the audit report shall include a clear reference to the relevant disclosures in the consolidated financial statements].



4

Reporting on other information7 The Board of Directors is responsible for the other information. The other information comprises the {information included in the Consolidated Management Report, the Corporate Governance Statement, the X report and the Y report [tailor accordingly]} but does not include the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, 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. Responsibilities of the Board of Directors and those charged with governance for the Consolidated Financial Statements The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors 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, the Board of Directors 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 the Board of Directors 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. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements9 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 scepticism 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



5

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 the Board of Directors.

• Conclude on the appropriateness of the Board 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 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 a true and fair view.

• 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 period and are therefore the key audit matters. Report on Other Legal and Regulatory Requirements2

Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent Auditor’s Report, which is required in addition to the requirements of International Standards on Auditing.



6

Appointment of the Auditor and Period of Engagement We were first appointed as auditors of the Group on [date] by [state by which body]. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of [X] years. [This wording is indicative and should be updated accordingly depending on specific fact pattern in order to provide the required details in Article 10(2)(a) and (b) of the EU Regulation 537/2014 according to which the requirements are as follows (a) state by whom or by which body the statutory auditor(s) or the audit firm(s) was (were) appointed; (b) indicate the date of the appointment and the period of total uninterrupted engagement including previous renewals and reappointments of the statutory auditors or the audit firms. In the case of several reappointments it might be helpful to insert a table which shows all periods of total uninterrupted engagement including previous renewals and reappointments]. Consistency of the Additional Report to the Audit Committee We confirm that our audit opinion on the consolidated financial statements expressed in this report is consistent with the additional report to the Audit Committee of the Company, which we issued on [insert date] in accordance with Article 11 of the EU Regulation 537/2014. Provision of Non-audit Services We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors Law of 2017 were provided. In addition, there are no non-audit services which were provided by us to the Group and which have not been disclosed in the consolidated financial statements or the consolidated management report. Other Legal Requirements Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:

• In our opinion, based on the work undertaken in the course of our audit, the consolidated management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements.10

• In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the consolidated management report. We have nothing to report in this respect.10

• In our opinion, based on the work undertaken in the course of our audit, the information included in the corporate governance statement in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, [and which is included as a specific section of the consolidated management report,] have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap, 113, and is consistent with the consolidated financial statements.3

• In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. 3

• In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the corporate governance statement in relation to the information disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. We have nothing to report in this respect.3



7

Other Matter4

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to. The engagement partner on the audit resulting in this independent auditor’s report is……8

Where the statutory auditor is a firm

[Signature of engagement partner] [Name of engagement partner] Certified Public Accountant and Registered Auditor for and on behalf of [Name of audit firm] Certified Public Accountants and Registered Auditors [Address] [Date]

Where the statutory auditor is a sole practitioner

[Signature of sole practitioner] [Name of sole practitioner] Certified Public Accountant and Registered Auditor [Address] [Date]



8

Notes: 1. The titles of financial statements that have been used in the above report are those used in the latest version of

International Accounting Standard (IAS) 1 “Presentation of financial statements”. It should be noted, however, that paragraph 10 of IAS 1 allows entities to use titles other than those used in IAS 1.

2. In accordance with paragraph 42 of International Standard on Auditing (ISA) 700 “Forming an opinion and reporting on

financial statements”, if the auditor addresses other reporting responsibilities in the auditor’s report on the financial statements, that are in addition to the auditor’s responsibility under the ISAs to report on the financial statements, these other responsibilities shall be addressed in a separate section sub-titled “Report on other legal and regulatory requirements” or otherwise as appropriate to the content of the section.

3. This illustration includes the reference required by subparagraph (d) of Paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113 in relation to the corporate governance statement that forms a special part of the Management report or a separate statement which is published together with the Management report or is included in a document that is published in the website of the entity whose securities have been admitted to trading in a regulated market.

4. The “Other matter” paragraph of the above report is based on paragraph 8 of ISA 706 “Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading. As the matter in question relates to the whole report it has been placed after the report on other legal requirements.

5. Per ISA700.30-31, the auditor is required to communicate key audit matters of a listed entity in the auditor’s report in

accordance with ISA 701. For non-listed entities, there is no such requirement unless the auditor decides to communicate the key audit matters in the auditor’s report. Per ISA 705.29, when the auditor’s disclaims an opinion on the financial statements, the auditor’s report shall not include a Key Audit Matters section in accordance with ISA 701.

Definition of Key Audit Matters

As per International Standards on Auditing: As per ISA701.8, key audit matters are those matters that, in the auditor’s professional judgment, were of most significance in the audit of financial statements of the current period. Key audit matters are selected from matters communicated to those charged with governance.

The auditor shall determine, from the matters communicated to those charged with governance, those matters that required significant auditor attention in performing the audit. In making this determination, the auditor shall take into account the following:

a) Areas of higher assessed risk of material misstatement, or significant risks identified in accordance with ISA 315 (Revised).

b) Significant auditor judgments relating to areas in the financial statements that involved significant management judgment, including accounting estimates that have been identified as having high estimation uncertainty.

c) The effect on the audit of significant events or transactions that occurred during the period.

As per EU Regulation 537/2014: In accordance with Article 10(2)(c) of the EU Regulation 537/2014 the statutory auditor(s) or the audit firm(s) shall provide in the audit report, in support of the audit opinion, the following:

(i) a description of the most significant assessed risks of material misstatement, including assessed risks of material misstatement due to fraud;

(ii) a summary of the auditor’s response to those risks; and (iii) where relevant, key observations arising with respect to those risks.

Furthermore, where relevant to the above information provided in the audit report concerning each significant assessed risk of material misstatement, the audit report shall include a clear reference to the relevant disclosures in the financial statements.

6. A matter giving rise to a modified opinion in accordance with ISA 705 (Revised), or a material uncertainty related to

events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA 570 (Revised), are by their nature key audit matters. However, in such circumstances, these matters shall not be described in the Key Audit Matters section of the auditor’s report. Rather, the auditor shall report on these matters in accordance with the applicable ISAs and include a reference to the Basis for Qualified (Adverse) Opinion or the Material Uncertainty Related to Going Concern section.



9

7. Per ISA 720.A3 and A4, Other Information may comprise of: management report, management commentary, or

operating and financial review or similar reports by those charged with governance (for example, a directors’ report), chairman’s statement, corporate governance statement, internal control and risk assessment reports. Per ISA 720.12 (c), Other Information is defined as financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report, and therefore includes also the tax computation(s) (if presented as additional information in the annual report), detailed analysis of expenses or other items of the statement of comprehensive income and any other analyses/statements that are included in the annual report.

7A In accordance with articles 151A and 151B of the Cyprus Companies Law, Cap. 113, large undertakings which are public- interest entities exceeding at their balance sheet date the criterion of the average number of 500 employees during the financial year shall include in the management report a non-financial statement (‘NFS’) prepared on the basis of the provisions outlined in the aforesaid articles; such NFS would constitute ‘Other Information’ in the context of ISA720. In accordance with article 152A(4) the auditor’s reporting obligations in relation to the management report do not extend to the non-financial statement.

7B In accordance with the provisions of article 151A(9) or 151B(9) of the Cyprus Companies Law, Cap. 113 entities can elect to present the NFS as a separate report rather than as part of the management report (within 6 months after the balance sheet date, on the company's website and be referred to in the management report). In such instances the NFS would still represent ‘Other Information’ and the guidance in ISA720. Appendix 2, Illustration 2 (which illustrates the case when the auditor obtained part of the other information prior to the date of the auditor’s report and expects to obtain other information after the date of the auditor’s report) would be applicable.

8. Per ISA700.49 (k), the name of engagement partner is required to be disclosed for audit of complete set of financial statements of listed entities.

9. Per ISA 705.28, when the auditor disclaims an opinion on the financial statements, a more limited description of the auditor’s responsibility section is required.

10. References to the management report remain only when such a report is included in the financial statements (there

are exemptions for preparing management report in accordance with article 151(1) of the Cyprus Companies Law, Cap. 113).



10

Illustration 2: Unmodified opinion Companies without subsidiaries - NON EU PIEs

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows].1 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information4 The Board of Directors is responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



11

Responsibilities of the Board of Directors for the Financial Statements The Board of Directors is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors is responsible for assessing the Company’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 Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements6 Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit5. We also:

• Identify and assess the risks of material misstatement of the 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 Company’s internal control.


• Conclude on the appropriateness of the Board 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 Company’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 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 Company to cease to continue as a going concern.



12

• 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 true and fair view.

We communicate with the Board of 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. Report on Other Legal Requirements2 Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:

• In our opinion, the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the financial statements.7

• In our opinion, and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the management report.7

Other Matter3

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.


[Signature of engagement partner] [Name of engagement partner] Certified Public Accountant and Registered Auditor for and on behalf of [Name of audit firm] Certified Public Accountants and Registered Auditors

[Address]

[Date]


[Signature of sole practitioner] [Name of sole practitioner] Certified Public Accountant and Registered Auditor [Address]

[Date]



13

Notes: 1. The titles of financial statements that have been used in the above report are those used in the latest version of International Accounting Standard (IAS) 1 “Presentation of financial statements”. It should be noted, however, that paragraph 10 of IAS 1 allows entities to use titles other than those used in IAS 1. 2. In accordance with paragraph 42 of International Standard on Auditing (ISA) 700 “Forming an opinion and reporting on financial statements”, if the auditor addresses other reporting responsibilities in the auditor’s report on the financial statements, that are in addition to the auditor’s responsibility under the ISAs to report on the financial statements, these other responsibilities shall be addressed in a separate section sub-titled “Report on other legal and regulatory requirements” or otherwise as appropriate to the content of the section. 3. The “Other matter” paragraph of the above report is based on paragraph 8 of ISA 706 “Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading. As the matter in question relates to the whole report it has been placed after the report on other legal requirements. 4. Per ISA 720.A3 and A4, Other Information may comprise of: management report, management commentary, or operating and financial review or similar reports by those charged with governance (for example, chairman’s statement, corporate governance statement, internal control and risk assessment reports). Per ISA 720.12 (c), Other Information is defined as financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report, and therefore includes also the tax computation(s) (if presented as additional information in the annual report), detailed analysis of expenses or other items of the statement of comprehensive income and any other analyses/statements that are included in the annual report. 5. Per ISA 700.40(b), as an alternative this material can be located in an Appendix to the auditor’s report. 6. Per ISA 705.28, when the auditor disclaims an opinion on the financial statements, a more limited description of the auditor’s responsibility section is required. 7. References to the management report remain only when such a report is included in the financial statements (there are exemptions for preparing the management report in accordance with article 151(1) of the Cyprus Companies Law, Cap. 113).



14

Illustration 3: Unmodified opinion Companies submitting consolidated financial statements – NON EU PIEs

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of ABC Limited (the “Company”), and its subsidiaries (the “Group”), which are presented in pages […] to […] and comprise [the consolidated statement of financial position as at 31 December 20XX, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows]1 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 give a true and fair view of the consolidated financial position of the Group as at 31 December 20XX, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion 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) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information4

The Board of Directors is responsible for the other information. The other information comprises the {information included in the X report, but does not include the consolidated financial statements and our auditor’s report thereon.} Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



15

Responsibilities of the Board of Directors for the Consolidated Financial Statements The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors 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, the Board of Directors 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 the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The Board of Directors is responsible for overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements6 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 scepticism throughout the audit5. 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.






16



We communicate with the Board of 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. Report on Other Legal Requirements2

Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:

• In our opinion, the consolidated management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements.7

• In our opinion, and in the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we have not identified material misstatements in the consolidated management report.7

Other Matter3








17





3. The “Other matter” paragraph of the above report is based on paragraph 8 of ISA 706 “Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading. As the matter in question relates to the whole report it has been placed after the report on other legal requirements.


operating and financial review or similar reports by those charged with governance (for example, chairman’s statement, corporate governance statement, internal control and risk assessment reports). Per ISA 720.12 (c), Other Information is defined as financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report, and therefore includes also the tax computation(s) (if presented as additional information in the annual report), detailed analysis of expenses or other items of the statement of comprehensive income and any other analyses/statements that are included in the annual report.

5. Per ISA 700.40(b), as an alternative this material can be located in an Appendix to the auditor’s report. 6. Per ISA 705.28, when the auditor disclaims an opinion on the financial statements, a more limited description of the

auditor’s responsibility section is required (see Illustrations 18 & 19).

7. References to the management report remain only when such a report is included in the financial statements (there are exemptions for preparing the management report in accordance with article 151(1) of the Cyprus Companies Law, Cap. 113).



18

Illustration 4: Unmodified opinion Companies submitting consolidated financial statements – Listed but NON EU PIEs e.g. listed in an unregulated market

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of ABC Limited (the “Company”), and its subsidiaries (the “Group”), which are presented in pages […] to […] and comprise [the consolidated statement of financial position as at 31 December 20XX, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows]1 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 give a true and fair view of the consolidated financial position of the Group as at 31 December 20XX, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion 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) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and 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 matters5, 6 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. [Provide required information regarding each key audit matter in accordance with ISA 701]. Other information4

The Board of Directors is responsible for the other information. The other information comprises the {information included in the X report, but does not include the consolidated financial statements and our auditor’s report thereon.} Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.



19

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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. Responsibilities of the Board of Directors and those charged with governance for the Consolidated Financial Statements The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors 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, the Board of Directors 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 the Board of Directors 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. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements8 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 scepticism throughout the audit7. 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.





20




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 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 Requirements2


• In our opinion, the consolidated management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements.9

• In our opinion, and in the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we have not identified material misstatements in the consolidated management report.9

Other Matter3




21

The engagement partner on the audit resulting in this independent auditor’s report is ………10





Notes: 1. The titles of financial statements that have been used in the above report are those used in the latest version of International Accounting Standard (IAS) 1 “Presentation of financial statements”. It should be noted, however, that paragraph 10 of IAS 1 allows entities to use titles other than those used in IAS 1. 2. In accordance with paragraph 42 of International Standard on Auditing (ISA) 700 “Forming an opinion and reporting on financial statements”, if the auditor addresses other reporting responsibilities in the auditor’s report on the financial statements, that are in addition to the auditor’s responsibility under the ISAs to report on the financial statements, these other responsibilities shall be addressed in a separate section sub-titled “Report on other legal and regulatory requirements” or otherwise as appropriate to the content of the section.

3. The “Other matter” paragraph of the above report is based on paragraph 8 of ISA 706 “Emphasis of matter paragraphs

and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading. As the matter in question relates to the whole report it has been placed after the report on other legal requirements.

4. Per ISA 720.A3 and A4, Other Information may comprise of: management report, management commentary, or operating and financial review or similar reports by those charged with governance (for example, chairman’s statement, corporate governance statement, internal control and risk assessment reports). Per ISA 720.12 (c), Other Information is defined as financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report, and therefore includes also the tax computation(s) (if presented as additional information in the annual report), detailed analysis of expenses or other items of the statement of comprehensive income and any other analyses/statements that are included in the annual report. 5. Per ISA700.30-31, the auditor is required to communicate key audit matters of a listed entity in the auditor’s report in

accordance with ISA 701. For non-listed entities, there is no such requirement unless the auditor decides to communicate the key audit matters in auditor’s report. Per ISA 705.29, when the auditor’s disclaims an opinion on the financial statements, the auditor’s report shall not include a Key Audit Matters section in accordance with ISA 701.

Definition of Key Audit Matters

As per International Standards on Auditing:



22

As per ISA701.8, key audit matters are those matters that, in the auditor’s professional judgment, were of most significance in the audit of financial statements of the current period. Key audit matters are selected from matters communicated with those charged with governance.

The auditor shall determine, from the matters communicated to those charged with governance, those matters that required significant auditor attention in performing the audit. In making this determination, the auditor shall take into account the following:

a) Areas of higher assessed risk of material misstatement, or significant risks identified in accordance with ISA 315 (Revised).

b) Significant auditor judgments relating to areas in the financial statements that involved significant management judgment, including accounting estimates that have been identified as having high estimation uncertainty.

c) The effect on the audit of significant events or transactions that occurred during the period.

6. A matter giving rise to a modified opinion in accordance with ISA 705 (Revised), or a material uncertainty related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA 570 (Revised), are by their nature key audit matters. However, in such circumstances, these matters shall not be described in the Key Audit Matters section of the auditor’s report. Rather, the auditor shall report on these matters in accordance with the applicable ISAs and include a reference to the Basis for Qualified (Adverse) Opinion or the Material Uncertainty Related to Going Concern section). 7. Per ISA 700.40(b), as an alternative this material can be located in an Appendix to the auditor’s report. 8. Per ISA 705.28, when the auditor disclaims an opinion on the financial statements, a more limited description of the auditor’s responsibility section is required (see Illustrations 17 & 18).


are exemptions for preparing the management report in accordance with article 151(1) of the Cyprus Companies Law, Cap. 113).

10. Per ISA700.49 (k), the name of engagement partner is required to be disclosed for audit of complete set of financial statements of listed entities.



23

Illustration 5: Unmodified opinion Separate financial statements of a parent company that also prepares consolidated financial statements – NON EU PIEs

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of parent company ABC Limited (the “Company”), ……….. [the remaining words are the same as those appearing in the first paragraph of the Opinion paragraph of Illustration 2 except for the following]. In our opinion, the accompanying financial statements give a true and fair view of the financial position of parent company ABC Limited as at 31 December 20XX ……….. [the remaining words are the same as those appearing in the second paragraph of the Opinion paragraph of Illustration 2]. Basis for Opinion [As per Illustration 2]. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2]. Report on Other Legal Requirements

[As per Illustration 2]. Other Matters [As per Illustration 2]. We have reported separately on the consolidated financial statements of the Company and its subsidiaries for the year ended 31 December 20XX. [That report is modified with the inclusion of an emphasis of matter] [The opinion in that report is (qualified) / (an adverse opinion) / (a disclaimer of opinion)]. 1



24





Notes: 1. The International Standards on Auditing do not provide any guidance on reporting on the parent company financial

statements that are presented separately from the consolidated financial statements. However, if we are engaged to express an opinion separately on the financial statements of the parent company we must ensure that they comply with all the requirements of each applicable Standard in accordance with paragraph 4 of International Financial Reporting Standard (IFRS) 10 “Consolidated Financial Statements”. An unqualified opinion may be issued on the separate financial statements of the parent company provided that additional disclosures as to the basis of preparation in the notes to the financial statements state that:

• the separate financial statements of the parent company were prepared in addition to the consolidated financial

statements, together with the reasons why;

• the consolidated financial statements are publicly available, together with enough information to allow the reader to obtain the consolidated financial statements; and

• the separate financial statements of the parent company should be read in conjunction with the consolidated financial statements to obtain a proper understanding of the financial position, the financial performance and the cash flows of the Company and its subsidiaries.

An example of the disclosure note of the basis of preparation of the separate financial statements of the parent company is presented below:

“These financial statements are separate financial statements of the Company. The Company prepared consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union for the Company and its subsidiaries. The consolidated financial statements can be obtained from [address]. Users of these separate financial statements of the parent company should read them together with the consolidated financial statements of the Company and its subsidiaries as at and for the year ended 31 December 20XX in order to obtain a proper understanding of the financial position, the financial performance and the cash flows of the Company and its subsidiaries.”

2. A company may elect to present the separate financial statements of the parent company in the same set as the

consolidated financial statements. In this case a single audit report should be issued referring to both the separate financial statements of the parent company and the consolidated financial statements as shown in illustration 6.



25

Illustration 6: Unmodified opinion Companies that submit consolidated financial statements and separate financial statements of the parent company in the same set - NON EU PIEs

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Consolidated Financial Statements and the Separate Financial Statements Opinion We have audited the consolidated financial statements of ABC Limited and its subsidiaries (the “Group”), and the separate financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the consolidated statement of financial position and the statement of financial position of the Company as at 31 December 20XX, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows, and the statements of comprehensive income, changes in equity and cash flows of the Company]1 for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements and the separate financial statements give a true and fair view of the financial position of the Group and the Company as at 31 December 20XX, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion 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 and the Separate Financial Statements section of our report. We are independent of the Group and the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements and separate financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information4 The Board of Directors is responsible for the other information. The other information comprises the {information included in the X report, but does not include the consolidated financial statements and the separate financial statements and our auditor’s report thereon.} Our opinion on the consolidated financial statements and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.



26

In connection with our audit of the consolidated financial statements and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements and separate financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.

Responsibilities of the Board of Directors for the Consolidated Financial Statements and Separate Financial Statements The Board of Directors is responsible for the preparation of consolidated financial statements and separate financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements and separate financial statements, the Board of Directors is responsible for assessing the Group’s and the Company’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 Board of Directors either intends to liquidate the Group and the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is responsible for overseeing the Group’s and the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements and Separate Financial Statements6 Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and separate 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 and separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit5. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements and separate 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



27

expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.


• Conclude on the appropriateness of the Board 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 Company’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 and separate 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 and the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements and separate financial statements, including the disclosures, and whether the consolidated financial statements and separate financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.




• In our opinion, the consolidated and separate management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements and separate financial statements7.

• In our opinion, and in the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit, we have not identified material misstatements in the consolidated and separate management report7.

Other Matter3 This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.



28







29

Notes:

1. The titles of financial statements that have been used in the above report are those used in the latest version of





and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading. As the matter in question relates to the whole report it has been placed after the report on other legal and regulatory requirements.


operating and financial review or similar reports by those charged with governance (for example, chairman’s statement, corporate governance statement, internal control and risk assessment reports). Per ISA 720.12 (c), Other Information is defined as financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report, and therefore includes also the tax computation(s) (if presented as additional information in the annual report), detailed analysis of expenses or other items of the statement of comprehensive income and any other analyses/statements that are included in the annual report.

5. Per ISA 700.40(b), as an alternative this material can be located in an Appendix to the auditor’s report.

6. Per ISA 705.28, when the auditor disclaims an opinion on the financial statements, a more limited description of the

auditor’s responsibility section is required (see Illustrations 18 & 19). 7. References to the management report remain only when such a report is included in the financial statements (there

are exemptions for preparing the management report in accordance with article 151(1) of the Cyprus Companies Law, Cap. 113).



30

Illustration 7: Unmodified opinion Separate financial statements of a parent company that elects not to prepare consolidated financial statements in accordance with IFRS 10 paragraph 4 or on the basis of the exemptions of the Cyprus Companies Law, Cap. 113 – NON EU PIEs

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of parent company ABC Limited (the “Company”), ……….. [the remaining words are the same as those appearing in the first paragraph of the Opinion paragraphs of Illustration]. In our opinion, the accompanying financial statements give a true and fair view of the financial position of parent company ABC Limited as at 31 December 20XX ……….. [the remaining words are the same as those appearing in the second paragraph of the Opinion paragraphs of Illustration 2]. Basis for Opinion [As per Illustration 2]. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2]. Report on Other Legal Requirements

[As per Illustration 2]. Other Matter [As per Illustration 2].



31



Where the statutory auditor is a sole practitioner [Signature of sole practitioner] [Name of sole practitioner] Certified Public Accountant and Registered Auditor [Address] [Date]



32

Illustration 8: Unmodified Opinion - Emphasis of matter Significant uncertainty in relation to an outstanding lawsuit – NON EU PIEs

Independent Auditor’s Report

To the Members of ABC Limited Report on the Audit of the Financial Statements Opinion [As per Illustration 2]. Basis for Opinion [As per Illustration 2]. Emphasis of Matter We draw attention to Note X of the financial statements, which describes the uncertainty related to the outcome of a lawsuit alleging infringement of certain patent rights and claiming royalties and punitive damages that was filed against the Company. The Company filed a counter action, and preliminary hearings and discovery proceedings on both actions are in progress. The ultimate outcome of the matter cannot be determined at present, and no provision has been made in the financial statements for any liability that may result. Our opinion is not modified in respect of this matter. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2]. Report on Other Legal Requirements [As per Illustration 2]. Other Matter [As per Illustration 2].



33



[Address]

[Date]





34

Illustration 9: Unmodified Opinion - Prior year audited by another auditor - Companies without subsidiaries – NON EU PIEs

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Opinion [As per Illustration 2]. Basis for Opinion [As per Illustration 2]. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2]. Report on Other Legal Requirements

[As per Illustration 2]. Other Matters [As per illustration 2].

Comparative figures1 The financial statements of ABC Ltd for the year ended 31 December 20X0, were audited by another auditor who expressed an unmodified2 opinion on those statements on 31 March 20X1.





35

[Address] [Date]


[Signature of sole practitioner] [Name of sole practitioner] Certified Public Accountant and Registered Auditor [Address] [Date] Notes:

1. The above illustration is based on International Standard on Auditing (ISA) 710 “Comparative information – corresponding

figures and comparative financial statements”, for cases where the corresponding amounts and other disclosures for the preceding period that are included as part of the current period financial statements, and which are intended to be read in relation to the amounts and other disclosures relating to the current period, have been audited by another auditor.

It should be noted that when the financial statements of the prior period have been audited by another auditor, when

conducting the audit the incoming auditor should comply with the requirements of ISA 710, as well as, with the requirements of ISA 510 “Initial audit engagements – opening balances”.

2. If the auditor’s report on the prior period included a modified opinion, and the matter that gave rise to the modification of that

report is unresolved, you should refer to Illustration 15.



36

Illustration 10: Modified opinion Except for – disagreement: Financial statements are materially misstated due to inappropriate accounting method

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and 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 give a true and fair view of the financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion As discussed in Note X to the financial statements, no depreciation has been provided in the financial statements, a practice which in our opinion is not in accordance with the requirements of International Accounting Standard 16 “Property, plant and equipment”. The charge for depreciation for the year ended 31 December 20XX should be €……. based on the straight-line method of depreciation using annual rates of 5% for the building and 20% for the equipment. Accordingly, the property, plant and equipment should be reduced by accumulated depreciation of €……. and the loss for the year and accumulated deficit should be increased by €…… and €…….. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.



37

Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2]. Report on Other Legal Requirements


• In our opinion, the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the financial statements.

• In our opinion, and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the management report, [except as explained in the Basis for Qualified Opinion section of our report – update accordingly to describe specific misstatements as considered necessary].

Other Matter [As per Illustration 2].


[Signature of engagement partner] [Name of engagement partner] Certified Public Accountant and Registered Auditor for and on behalf of [Name of audit firm] Certified Public Accountants and Registered Auditors [Address]

[Date]





38

Illustration 11: Modified opinion Except for – disagreement: Financial statements are materially misstated due to inadequate disclosure


To the Members of ABC Limited Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and 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 give a true and fair view of the financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion On 15 January 20XX, the Company issued debentures at the amount of €……. for financing the expansion of its plant. The debenture agreement restricts the payment of future cash dividends to earnings after 31 December 20XX. In our opinion, disclosure of this information is required by [refer to the relevant statute or law]. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2].



39

Report on Other Legal Requirements

Pursuant to the additional requirements of the Auditors Law of 2017 we report the following:


• In our opinion, and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the management report, [except as explained in the Basis for Qualified Opinion section of our report – update accordingly to describe specific misstatements, if any as considered necessary].








40

Illustration 12: Modified opinion – Qualified Opinion Except for – disagreement: Material misstatement of the financial statements (e.g. inventory is materially misstated)

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and 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 give a true and fair view of the financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion The Company’s inventories are carried in the statement of financial position at its cost of xxx. The Board of Directors 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 the Board of Directors stated the inventories at the lower of cost and net realizable value, an amount of xxx would have been required to write down the inventories to their net realizable value. Accordingly, cost of sales would have been increased by xxx, and net income and shareholders’ equity would have been reduced by xxx. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2].



41

Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2]. Report on Other Legal Requirements











42

Illustration 13: Modified opinion Except for – disagreement: Inability to obtain sufficient audit evidence regarding foreign investment


To the Members of ABC Limited Report on the Audit of the Consolidated Financial Statements Qualified Opinion We have audited the consolidated financial statements of ABC Limited (the “Company”) and its subsidiaries (the “Group”), which are presented in pages […] to […] and comprise [the consolidated statement of financial position as at 31 December 20XX, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and 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 give a true and fair view of the consolidated financial position of the Group as at 31 December 20XX, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion The Group’s investment in XYZ Company, a foreign associate acquired during the year and accounted for using the equity method, is carried at xxx on the consolidated statement of financial position as at 31 December 20X1, 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 31 December 20X1 and ABC’s share of XYZ’s net income for the year because we were denied access to the financial information, Board of Directors, 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.



43

Other information [As per Illustration 3]. Responsibilities of the Board of Directors for the Consolidated Financial Statements [As per Illustration 3]. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements [As per Illustration 3]. Report on Other Legal Requirements


• In our opinion, the consolidated management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements.

• In our opinion, and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the consolidated management report, [except that the scope of our work was limited by the matter described in the Basis for Qualified opinion section of our report as considered necessary].








44

Illustration 14: Modified opinion Except for – Disagreement and Emphasis of Matter: Qualified Opinion

along with Emphasis of Matter

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and 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 give a true and fair view of the financial statements financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion The Company’s short-term marketable securities are carried in the statement of financial position at xxx. The Board of Directors has not marked these securities to market but has instead stated them at cost, which constitutes a departure from the requirements of IFRSs. The Company’s records indicate that had the Board of Directors marked the marketable securities to market, the Company would have recognized a fair value loss of xxx in the statement of profit or loss and other comprehensive income for the year. The carrying amount of the securities in the statement of financial position would have been reduced by the same amount at 31 December 20XX, and net income and shareholders’ equity would have been reduced by xxx and xxx, 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Emphasis of Matter – Effects of a Fire We draw attention to Note X to the financial statements, which describes the effects of a fire in the Company’s production facilities. Our opinion is not modified in respect of this matter.



45












46

Illustration 15: Modified opinion Except for – disagreement: When the auditor’s report on the prior period, as previously issued, included a qualified opinion and the matter giving rise to the modification is unresolved

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20X1 and 20X0, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows] for the years 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 give a true and fair view of the financial position of the Company as at 31 December 20X1 and 20X0 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion As discussed in Note X to the financial statements, no depreciation has been provided in the financial statements, which constitutes a departure from the requirements of IFRSs. This is a result of a decision taken by the Board of Directors at the start of the proceeding financial year and caused us to qualify our audit opinion on the financial statements relating to that year. Based on the straight-line method of depreciation and annual rates of 5% for the building and 20% for the equipment, the loss for the year should be increased by xxx in 20X1 and xxx in 20X0, property, plant and equipment should be reduced by accumulated depreciation of xxx in 20X1 and xxx in 20X0, and the accumulated loss should be increased by xxx in 20X1 and xxx in 20X0. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2].



47

Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2].




• In our opinion, and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the management report, [except as explained in the Basis for Qualified Opinion section of our report – update accordingly to describe specific circumstances as considered necessary].








48

Illustration 16: Modified opinion Except for – disagreement: When the auditor’s report on the prior period, as previously issued, included a qualified opinion and the matter giving rise to the modification is unresolved. This requires a modification to the auditor’s opinion because of the effect on the comparability of the current period’s figures and the corresponding figures

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20X1 and 20X0, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows] for the years 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 give a true and fair view of the financial position of the Company as at 31 December 20X1 and 20X0 and of its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion Because we were appointed auditors of ABC Company during 20X0, we were not able to observe the counting of the physical inventories at the beginning of that period or satisfy ourselves concerning those inventory quantities by alternative means. Since opening inventories affect the determination of the results of operations, we were unable to determine whether adjustments to the results of operations and opening retained earnings might be necessary for 20X0. Our audit opinion on the financial statements for the period ended 31 December 20X0 was modified accordingly. Our opinion on the current period’s financial statements is also modified because of the possible effect of this matter on the comparability of the current period’s figures and the corresponding figures. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.



49

Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2].












50

Illustration 17: Modified opinion

Except for – disagreement: Financial statements are materially misstated: Failure to prepare consolidated financial statements as required by International Financial Reporting Standard 10 (IFRS 10) and the Cyprus Companies Law, Cap. 113, in the case where the effect is material but not so material and pervasive as to require an adverse opinion

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and 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 give a true and fair view of the financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion As stated in Νote Χ to the financial statements, the Company has not prepared consolidated financial statements as required by the Cyprus Companies Law, Cap. 113 and International Financial Reporting Standard 10 “Consolidated Financial Statements”. In our opinion, the presentation of consolidated information is necessary for a proper understanding of the financial position, the financial performance and the cash flows of the Company and its subsidiaries. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2].



51




• In our opinion, and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the management report [except that the Company has not prepared a consolidated management report, since as explained in the Basis for Qualified Opinion section of our report, the Company has not prepared consolidated financial statements].








52

Illustration 18: Modified opinion - Disclaimer - Auditor’s inability to obtain sufficient appropriate audit evidence about multiple elements of the financial statements: The Company did not allow the auditor to observe the physical inventory count and restricted his procedures relating to accounts receivable

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Disclaimer of Opinion We were engaged to audit the financial statements of ABC Company (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20X1, and the statement of profit or loss and other comprehensive income, changes in equity and cash flows] for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. We do not express an opinion on the accompanying financial statements of the Company. Because of the significance of the matters 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 financial statements. Basis for Disclaimer of Opinion We were not appointed as auditors of the Company until after 31 December 20X1 and thus did not observe the counting of physical inventories at the beginning and end of the year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 31 December 20X0 and 20X1, which are stated in the statements of financial position at xxx and xxx, respectively. In addition, the introduction of a new computerized accounts receivable system in September 20X1 resulted in numerous errors in accounts receivable. As of the date of our report, the Board of Directors was still in the process of rectifying the system deficiencies and correcting the errors. We were unable to confirm or verify by alternative audit procedures the accounts receivable included in the statement of financial position at a total amount of xxx as at 31 December 20X1. As a result of these matters, we were unable to determine whether any adjustments might have been determined to be necessary in respect of recorded or unrecorded inventories and accounts receivable, and the related elements included in the statement of comprehensive income, statement of changes in equity and statement of cash flows. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2].



53

Auditor’s Responsibilities for the Audit of the Financial Statements

Our responsibility is to conduct an audit of the Company’s financial statements in accordance with International Standards on Auditing and to issue an auditor’s report. However, because of the matters 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 financial statements. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Report on Other Legal Requirements


• Because of the significance of the matters discussed in the basis for disclaimer of opinion section of our report, we do not express an opinion as to whether the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, as to whether the information given is consistent with the financial statements and as to whether in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements in the management report.

Other Matter

[As per Illustration 2].







54

Illustration 19: Modified opinion - Disclaimer - Auditor’s inability to obtain sufficient appropriate audit evidence about a single element of the consolidated financial statements

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Consolidated Financial Statements Disclaimer of Opinion We were engaged to audit the consolidated financial statements of ABC Company (the “Company”) and its subsidiaries (the “Group”), which are presented in pages […] to […] and comprise [the consolidated statement of financial position as at 31 December 20XX, and the consolidated statements of profit or loss and other comprehensive income, statement of changes in equity and 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 matters 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 operations XYZ Company is carried at xxx on the Group’s consolidated statement of financial position, which represents over 90% of the Group’s net assets as at 31 December 20X1. We were not allowed access to the Board of Directors 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 share of XYZ Company’s assets that it controls jointly, its share of XYZ Company’s liabilities for which it is jointly responsible, its 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 the Board of Directors for the Consolidated Financial Statements [As per Illustration 2]. 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 matters 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 Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements.



55



• Because of the significance of the matters discussed in the basis for disclaimer of opinion section of our report, we do not express an opinion as to whether the consolidated management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, as to whether the information given is consistent with the financial statements and as to whether in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements in the consolidated management report.

Other Matter

[As per Illustration 2].







56

Illustration 20: Modified Opinion - Adverse opinion Material misstatement of the consolidated financial statements (Non-consolidation of a subsidiary where the effect is so material and pervasive)

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Consolidated Financial Statements Adverse Opinion We have audited the consolidated financial statements of ABC Limited (the “Company”) and its subsidiaries (the “Group”), which are presented in pages […] to […] and comprise [the consolidated statement of financial position as at 31 December 20XX, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and 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 give a true and fair view of the consolidated financial position of the Group as at 31 December 20XX, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Adverse Opinion As explained in Note X, the Group has not consolidated subsidiary XYZ Company that the Group acquired during 20XX 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. In accordance with 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 Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.



57

Other information [As per Illustration 3]. Responsibilities of the Board of Directors for the Consolidated Financial Statements [As per Illustration 3]. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements [As per Illustration 3]. Report on Other Legal and Regulatory Requirements


• In our opinion, the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements.

• In our opinion, and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the management report, [except as explained in the Basis for Adverse Opinion section of our report – update accordingly to describe specific misstatements as considered necessary].








58

Illustration 21: Modified opinion – Adverse opinion Financial statements are materially misstated:

Failure to prepare consolidated financial statements as required by International Financial Reporting Standard 10 (IFRS 10) and the Cyprus Companies Law, Cap. 113, in the case where the effect is so material and pervasive that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Adverse Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows] for the year then ended, and notes to the 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 financial statements do not give a true and fair view of the financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Adverse Opinion As stated in Νote Χ to the financial statements, the Company has not prepared consolidated financial statements as required by the Companies Law, Cap. 113 and International Financial Reporting Standard (IFRS) 10 “Consolidated Financial Statements”. The presentation of consolidated information is fundamental for a proper understanding of the financial position, the financial performance and the cash flows of the Company and its subsidiaries. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.



59












60

Illustration 22: Going concern - Unmodified opinion When a Material Uncertainty exists related to Going Concern and

disclosure in the financial statements is adequate

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Opinion [As per Illustration 2]. Basis for Opinion [As per Illustration 2]. Material Uncertainty Related to Going Concern We draw attention to Note XX to the financial statements, which indicates that the Company incurred a net loss of ZZZ during the year ended 31 December 20XX and, as of that date, the Company’s current liabilities exceeded its total assets by YYY. As stated in Note XX, these events or conditions, along with other matters as set forth in Note XX, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2]. Report on Other Legal Requirements

[As per Illustration 2]. Other Matter [As per Illustration 2].



61







62

Illustration 23: Going concern - Modified opinion Qualified Opinion when a material uncertainty exists related to Going

Concern and the financial statements are materially misstated due to inadequate disclosure


To the Members of ABC Limited Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20X1, and the statements of profit or loss and other comprehensive income, changes in equity and 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 incomplete disclosure of the information referred to in the Basis for Qualified Opinion section of our report, the accompanying financial statements give a true and fair view of, the financial position of the Company as at 31 December 20X1, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Qualified Opinion As discussed in Note XX, the Company’s financing arrangements expire and amounts outstanding are payable [future date]. The Company has been unable to conclude re-negotiations or obtain replacement financing. This situation indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. The financial statements do not adequately disclose this matter. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2].



63












64

Illustration 24: Modified opinion – Adverse opinion – Going Concern Financial statements are materially misstated: when there is material

uncertainty that may cast significant doubt on the company’s ability to continue as a going concern, and is not disclosed in the financial statements and the effect is so material and pervasive

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Adverse Opinion We have audited the financial statements of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows] for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, because of the omission of the information mentioned in the Basis for Adverse Opinion section of our report, the accompanying financial statements do not give a true and fair view of the financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Adverse Opinion The Company’s financing arrangements expired and the amount outstanding was payable on 31 December 20XX. The Company has been unable to conclude re-negotiations or obtain replacement financing and is considering filing for bankruptcy. This situation indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. The financial statements do not adequately disclose this matter. 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion. Other information [As per Illustration 2]. Responsibilities of the Board of Directors for the Financial Statements [As per Illustration 2]. Auditor’s Responsibilities for the Audit of the Financial Statements [As per Illustration 2].



65









Signature of sole practitioner] [Name of sole practitioner] Certified Public Accountant and Registered Auditor [Address] [Date]



66

Illustration 25: Unmodified opinion Cyprus branch of an overseas company

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of the Cyprus branch (the “Branch”) of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income and cash flows]1 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Cyprus branch of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion 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 Cyprus branch of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information3 The Board of Directors is responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



67

Responsibilities of the Board of Directors for the Financial Statements The Board of Directors of the Company is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors is responsible for assessing the ability of the Cyprus branch of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Cyprus branch of the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is responsible for overseeing the financial reporting process of the Cyprus branch of the Company. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:


• 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 Branch’s internal control.


• Conclude on the appropriateness of the Board 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 Branch’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 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 Branch to cease to continue as a going concern.



68




• In our opinion, the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the financial statements.4

• In our opinion, and in the light of the knowledge and understanding of the Cyprus branch of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the management report. 4








69





3. Per ISA 720.A3 and A4, Other Information may comprise of: management report, management commentary, or operating and financial review or similar reports by those charged with governance, chairman’s statement, corporate governance statement, internal control and risk assessment reports. Per ISA 720.12 (c), Other Information is defined as financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report, and therefore includes also the tax computation(s) (if presented as additional information in the annual report), detailed analysis of expenses or other items of the statement of comprehensive income and any other analyses/statements that are included in the annual report.

4. References to the management report remain only when such a report is included in the financial statements (there are exemptions for preparing management report in accordance with article 151(1) of the Cyprus Companies Law, Cap. 113).



70

Illustration 26: Unmodified opinion Partnership1

Independent Auditor’s Report To the Partners of the Partnership ABC Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Partnership ABC (the “Partnership”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows]2 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Partnership as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union [and the requirements of the General and Limited Partnership and Business Names Law]1. Basis for Opinion 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 Partnership in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information5 The Partners are responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



71

Responsibilities of the Partners for the Financial Statements4

The Partners are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union [and the requirements of the General and Limited Partnership and Business Names Law]1, and for such internal control as the Partners determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Partners are responsible for assessing the Partnership’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 Partners either intend to liquidate the Partnership or to cease operations, or have no realistic alternative but to do so. The Partners are responsible for overseeing the Partnership’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:


• 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 Partnership’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Partners.

• Conclude on the appropriateness of the Partners’ 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 Partnership’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 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 Partnership to cease to continue as a going concern.



72


We communicate with the Partners 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. Other Matter3

This report, including the opinion, has been prepared for and only for the Partners of the Partnership as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.


[Signature of engagement partner]i [Name of engagement partner] Certified Public Accountant and Registered Auditor for and on behalf of [Name of audit firm] Certified Public Accountants and Registered Auditors [Address] [Date]





73

Notes:

1. The requirement to prepare financial statements and for statutory audit is applicable for the partnerships defined in

Article 64A(1) of the General and Limited Partnerships and Business Names Law. It does not apply to partnerships of which all partners are physical persons or at least one of the general partners is a physical person. For these partnerships there should be no reference to the partnership law.




and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading.

4. The responsibility for the preparation of the financial statements should be defined based on the partnership agreement

(if different).




74

Illustration 27: Unmodified opinion Provident Fund/Occupational Retirement Benefits Fund

Independent Auditor’s Report To the Members of the ABC Limited Employees’ [Provident Fund/ Occupational Retirement Benefits Fund] (delete as appropriate) Report on the Audit of the Financial Statements Opinion We have audited the financial statements of ABC Limited Employees’ [Provident Fund/ Occupational Retirement Benefits Fund] (delete as appropriate) (the “Fund”), which are presented in pages […] to […] and comprise [the statement of net assets available for benefits as at 31 December 20XX, and the statement of changes in net assets available for benefits] for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the amount and disposition of the assets and liabilities of the Fund as at 31 December 20XX and of its financial transactions for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Fund’s Regulations and the Establishment, the Activities and the Supervision of Funds for Occupational Retirement Benefits Law of 2012 1. Basis for Opinion 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 Fund in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information4 The Fund’s Administrative Committee is responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



75

Responsibilities of the Administrative Committee for the Financial Statements The Fund’s Administrative Committee is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Fund’s Regulations and the Establishment, the Activities and the Supervision of Funds for Occupational Retirement Benefits Law of 2012, and for such internal control as the Administrative Committee determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Administrative Committee is responsible for assessing the Fund’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 Administrative Committee either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so. The Administrative Committee is responsible for overseeing the Fund’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:


• 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 Fund’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Administrative Committee.

• Conclude on the appropriateness of the Administrative Committees’ 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 Fund’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 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 Fund to cease to continue as a going concern.



76


We communicate with the Administrative Committee 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. Other Matter3 This report, including the opinion, has been prepared for and only for the Fund’s members as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.




[Signature of sole practitioner] [Name of sole practitioner] Certified Public Accountant and Registered Auditor [Address] [Date] Notes: 1. On 28 December 2012 “the Establishment, the Activities and the Supervision of Funds for Occupational Retirement

Benefits Law of 2012”, Ν.208(I)/2012 was issued and was amended from time to time. This Law applies to all Funds for Occupational Retirement Benefits, and supersedes the Provident Funds Laws of 1981 to 2005, and the Establishment, the Activities and the Supervision of Funds for Occupational Retirement Benefits Laws of 2006 and 2007.

2. For the preparation of financial statements of Provident Funds or Occupational Retirement Benefits Funds, the

International Accounting Standard 26 “Accounting and reporting by retirement benefit plans” should be applied.

3. The “Other matter” paragraph of the above report is based on paragraph 8 of ISA 706 “Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading.



77

4. Per ISA 720.A3 and A4, Other Information may comprise the report of the Administrative Committee. Per ISA 720.12 (c), Other Information is defined as financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report, and therefore includes additional information included in the annual report.



78

Illustration 28: Unmodified opinion Individual businessman


To the Individual businessman Mr. Andreas Georgiou for the operation of his shop of children commodities “Extra”.

Report on the Audit of the Financial Statements Opinion We have audited the financial statements of individual businessman Mr. Andreas Georgiou (the “Individual Businessman”) for the operation of his shop of children commodities “Extra”, which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows]1 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of individual businessman Mr. Andreas Georgiou for the operation of his shop of children commodities “Extra” as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Basis for Opinion 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 individual businessman in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information2 The Individual Businessman is responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



79

Responsibilities of the Individual Businessman for the Financial Statements The Individual businessman is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as the Individual businessman determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Individual businessman is responsible for assessing the businesses’ 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 individual businessman either intends to liquidate the business or to cease operations, or has no realistic alternative but to do so. The individual businessman is responsible for overseeing the businesses’ financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:


• 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 Individual Businessman’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Individual Businessman.

• Conclude on the appropriateness of the Individual Businessman’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 Individual Businessman’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 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 Individual Businessman to cease to continue as a going concern.



80


We communicate with the Individual Businessman 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.


[Signature of engagement partner]

[Name of engagement partner] Certified Public Accountant and Registered Auditor for and on behalf of [Name of audit firm] Certified Public Accountants and Registered Auditors [Address] [Date]









81

Illustration 29: Unmodified opinion Trust


To the Trustees of ABC Trust

Report on the Audit of the Financial Statements

Opinion We have audited the financial statements of ABC Trust (the “Trust”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows]1 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements give a true and fair view of the financial position of the Trust at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union [and the Trust Deed dated…. and any amendments thereof (if applicable)].

Basis for Opinion 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 Trust in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information3 The Trustees are responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



82

Responsibilities of the Trustees for the Financial Statements The Trustees are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union [and the Trust Deed dated… and any amendments thereof (if applicable)], and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Trustees are responsible for assessing the Trust’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 Trustees either intend to liquidate the Trust or to cease operations, or have no realistic alternative but to do so.

The Trustees are responsible for overseeing the Trust’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:


• 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 Trust’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Trustees.

• Conclude on the appropriateness of the Trustees’ 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 Trust’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 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 Trust to cease to continue as a going concern.




83

We communicate with the Trustees 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.

Other Matter2

This report, including the opinion, has been prepared for and only for the Trustees as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.



[Address]

[Date]


[Signature of sole practitioner] [Name of sole practitioner] Certified Public Accountant and Registered Auditor

[Address]

[Date]

Notes: 1. The titles of financial statements that have been used in the above report are those used in the latest version of International Accounting Standard (IAS) 1 “Presentation of financial statements”. It should be noted, however, that paragraph 10 of IAS 1 allows entities to use titles other than those used in IAS 1. 2. The “Other matter” paragraph of the above report is based on paragraph 8 of ISA 706 “Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading. As the matter in question relates to the whole report it has been placed after the report on other legal and regulatory requirements.





84

Illustration 30: Unmodified opinion Society/Institution


To the Members of Society/Institution (delete as appropriate) ABC Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Society/Institution ABC (the “Society/Institution”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows] 1 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements give a true and fair view of the financial position of the Society/Institution as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Societies and Institutions and Other Related Matters Law of 2017, and the Articles of Association of the Society/Institution. Basis for Opinion 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 Society/Institution in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus1, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information3 The Administrator is responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



85

Responsibilities of the Administrator for the Financial Statements The Administrator is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union [and the requirements of Societies and Institutions and Other Related Matters Law of 2017, and the Articles of Association of the Society/Institution], and for such internal control as the Administrators determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Administrator is responsible for assessing the Society’s/Institution’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 Administrator either intends to liquidate the Society/Institution or to cease operations, or has no realistic alternative but to do so. The Administrator is responsible for overseeing the Society’s/Institution’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:


• 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 Society’s/Institution’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Administrator.

• Conclude on the appropriateness of Administrator’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 Society’s/Institution’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 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 Society/Institution to cease to continue as a going concern.



86


We communicate with the Administrator 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. Other Matter2 This report, including the opinion, has been prepared for and only for the Society’s/Institution’s members as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.




[Signature of sole practitioner] [Name of sole practitioner] Certified Public Accountant and Registered Auditor

[Address] [Date]

Notes:

1. The titles of financial statements that have been used in the above report are those used in the latest version of International Accounting Standard (IAS) 1 “Presentation of financial statements”. It should be noted, however, that paragraph 10 of IAS 1 allows entities to use titles other than those used in IAS 1.







87

Illustration 31: Unmodified opinion Fund which is a Company8


To the Members of ABC Fund Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of ABC Fund Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows].1 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information4 The Board of Directors is responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



88

Responsibilities of the Board of Directors for the Financial Statements The Board of Directors is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors is responsible for assessing the Company’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 Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements6 Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit5. We also:


• 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 Company’s internal control.


• Conclude on the appropriateness of the Board 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 Company’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 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 Company to cease to continue as a going concern.



89


We communicate with the Board of 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. Report on Other Legal Requirements2 Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:

• In our opinion, the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the financial statements. 7

• In our opinion, and in the light of the knowledge and understanding of the Fund and its environment obtained in the course of the audit, we have not identified material misstatements in the management report. 7

Other Matter3








90

Notes:






and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading, that shall be included immediately after the Opinion paragraph and any Emphasis of matter paragraph, or elsewhere in the auditor’s report if the content of the “Other matter” paragraph is relevant to the Other reporting responsibilities section. As the matter in question relates to the whole report it has been placed after the report on other legal and regulatory requirements.


operating and financial review or similar reports by those charged with governance (for example, chairman’s statement, corporate governance statement, internal control and risk assessment reports, and management report). Per ISA 720.12 (c), Other Information is defined as financial or non-financial information (other than financial statements and the auditor’s report thereon) included in an entity’s annual report, and therefore includes also the tax computation(s) (if presented as additional information in the annual report), detailed analysis of expenses or other items of the statement of comprehensive income and any other analyses/statements that are included in the annual report.

5. Per ISA 700.40(b), as an alternative this material can be located in an Appendix to the auditor’s report.

6. Per ISA 705.28, when the auditor disclaims an opinion on the financial statements, a more limited description of the

auditor’s responsibility section is required. 7. References to the management report remain only when such a report is included in the financial statements (there

are exemptions for preparing management report in accordance with article 151(1) of the Companies Law).

8. As per the Alternative Investments Funds Law of 2014, article 76(1) of Part VI of The Alternative Investment Funds Law of 2014, “The annual report of an Alternative Investment Fund (AIF) shall be prepared, audited, submitted to the Securities and Exchange Commission and published in accordance with section 29 of the Alternative Investment Fund Managers Law.” As per the Alternative Investments Funds Law of 2014 article 116(2) of Part VI of The Alternative Investment Funds Law of 2014 “An alternative investment fund with limited number of persons shall prepare an annual report, which is audited by an independent auditor and which ensures that during the period covered by the report, this organisation fulfilled the conditions of section 114, whereas it shall submit that report to the Securities and Exchange Commission within one month from the end of the period it refers to.”



91

Illustration 32: Unmodified opinion Fund which is a Partnership6

Independent Auditor’s Report To the Members of ABC Partnership Fund Report on the Audit of the Financial Statements Opinion We have audited the financial statements of ABC Partnership Fund (the “Partnership”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows]2 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Partnership as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union [and the requirements of the General and Limited Partnership and Business Names Law]1. Basis for Opinion 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 Partnership in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information5 The Partners are responsible for the other information. The other information comprises the {information included in the X report, but does not include the financial statements and our auditor’s report thereon.} Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.



92

Responsibilities of the Partners for the Financial Statements4

The Partners are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union [and the requirements of the General and Limited Partnership and Business Names Law]1, and for such internal control as the Partners determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Partners are responsible for assessing the Partnership’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 Partners either intend to liquidate the Partnership or to cease operations, or have no realistic alternative but to do so. The Partners are responsible for overseeing the Partnership’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:


• 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 Partnership’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Partners.

• Conclude on the appropriateness of the Partners’ 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 Partnership’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 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 Partnership to cease to continue as a going concern.



93


We communicate with the Partners 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. Other Matter3

This report, including the opinion, has been prepared for and only for the Partners of the Partnership as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.







94

Notes: 1. The requirement to prepare financial statements and for statutory audit is applicable for the partnerships defined in

Article 64A(1) of the General and Limited Partnerships and Business Names Law. It does not apply to partnerships of which all partners are physical persons or at least one of the general partners is a physical person. For these partnerships there should be no reference to the partnership law.





4. The responsibility for the preparation of the financial statements should be defined based on the partnership agreement

(if different).


6. As per the Alternative Investments Funds Law of 2014, article 76(1) of Part VI of The Alternative Investment Funds Law of 2014, “The annual report of an AIF shall be prepared, audited, submitted to the Securities and Exchange Commission and published in accordance with section 29 of the Alternative Investment Fund Managers Law.” As per the Alternative Investments Funds Law of 2014 article 116(2) of Part VI of The Alternative Investment Funds Law of 2014 “An alternative investment fund with limited number of persons shall prepare an annual report, which is audited by an independent auditor and which ensures that during the period covered by the report, this organisation fulfilled the conditions of section 114, whereas it shall submit that report to the Securities and Exchange Commission within one month from the end of the period it refers to.”



95

Illustration 33: Unmodified opinion For a Cyprus Branch that is itself an EU Public Interest Entity

Independent Auditor’s Report To the Members of ABC Limited Report on the Audit of the Financial Statements Opinion We have audited the financial statements of the Cyprus branch (the “Branch”) of ABC Limited (the “Company”), which are presented in pages […] to […] and comprise [the statement of financial position as at 31 December 20XX, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows]1 for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Cyprus branch of the Company as at 31 December 20XX, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for Opinion 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 remained independent of the Cyprus branch of the Company throughout the period of our appointment in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Most significant risks of material misstatements, including assessed risk of material misstatements due to fraud 4 The most significant risks of material misstatements, including assessing risk of material misstatements due to fraud, 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 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. [Provide required information regarding each most significant risk of material misstatement, including assessed risk of material misstatements due to fraud in accordance with the requirements of Article 10(2)(c) of the EU Regulation 537/2014]. Provide the following: (i) a description of the most significant assessed risks of material misstatement, including assessed risks of material misstatement due to fraud; (ii) a summary of the auditor's response to those risks; and (iii) where relevant, key observations arising with respect to those risks. Where relevant to the above information provided in the audit report concerning each significant assessed risk of material misstatement, the audit report shall include a clear reference to the relevant disclosures in the financial statements].



96

Reporting on other information6 The Board of Directors of the Company is responsible for the other information. The other information comprises the {information included in the Management Report, the X report and the Y report [tailor accordingly]} but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, 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. Responsibilities of the Board of Directors of the Company and those charged with governance for the Financial Statements The Board of Directors of the Company is responsible for the preparation of financial statements of the Cyprus Branch that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors of the Company determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors of the Company is responsible for assessing the Branch’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 Board of Directors of the Company either intends to liquidate the Cyprus branch of the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the financial reporting process of the Cyprus branch of the Company. Auditor’s Responsibilities for the Audit of the Financial Statements 7 Our objectives are to obtain reasonable assurance about whether the 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 financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:




97

• 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 Branch’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors of the Company.

• Conclude on the appropriateness of the Company’s Board 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 Branch’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 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 Branch to cease to continue as a going concern.

• 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 a true and fair view.

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. Report on Other Legal and Regulatory Requirements2

Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent Auditor’s Report, which is required in addition to the requirements of International Standards on Auditing. Appointment of the Auditor and Period of Engagement We were first appointed as auditors of the Cyprus Branch of the Company on [date] by [state by which body]. Our appointment has been renewed annually by [state by which body] representing a total period of uninterrupted engagement appointment of [X] years. [This wording is indicative and should be updated accordingly depending on specific fact pattern in order to provide the required details in Article 10(2)(a) and (b) of the EU Regulation 537/2014 according to which the requirements are as follows (a) state by whom or by which body the statutory auditor(s) or the audit firm(s) was (were) appointed; (b) indicate the date of the appointment and the period of total uninterrupted engagement including previous renewals and reappointments of the statutory auditors or the audit firms. In the case of several reappointments it might be helpful to insert a table which shows all periods of total uninterrupted engagement including previous renewals and reappointments. Consistency of the Additional Report to the Audit Committee of the Company

We confirm that our audit opinion on the financial statements expressed in this report is consistent with the additional report to the Audit Committee of the Company, which we issued on [insert date] in accordance with Article 11 of the EU Regulation 537/2014.



98

Provision of Non-audit Services We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors Law of 2017 were provided. In addition, there are no non-audit services which were provided by us to the Branch and which have not been disclosed in the financial statements or the management report. Other Legal Requirements Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:

• In our opinion, based on the work undertaken in the course of our audit, the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the financial statements. 8

• In light of the knowledge and understanding of the Cyprus branch of the Company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the management report. We have nothing to report in this respect. 8

Other Matter3

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to. The engagement partner on the audit resulting in this independent auditor’s report is







99


International Accounting Standard (IAS) 1 “Presentation of financial statements”. It should be noted, however, that paragraph 10 of IAS 1 allows entities to use titles other than those used in IAS 1. In case the Branch does not have any items of equity and hence a statement of changes in equity is not presented, then the wording in the auditor’s report should be updated accordingly.




and other matter paragraphs in the independent auditor’s report”, according to which if the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgement, is relevant to users’ understanding of the auditor’s responsibilities or the auditor’s report and this is not prohibited by law or regulation, the auditor shall do so in a paragraph in the auditor’s report, with the heading “Other matter”, or other appropriate heading. As the matter in question relates to the whole report it has been placed after the report on other legal requirements.

4. In accordance with Article 10(2)(c) of the EU Regulation 537/2014 the statutory auditor(s) or the audit firm(s) shall

provide in the audit report, in support of the audit opinion, the following:

- a description of the most significant assessed risks of material misstatement, including assessed risks of material misstatement due to fraud;

- a summary of the auditor’s response to those risks; and - where relevant, key observations arising with respect to those risks.

Furthermore, where relevant to the above information provided in the audit report concerning each significant assessed risk of material misstatement, the audit report shall include a clear reference to the relevant disclosures in the financial statements.

5. A matter giving rise to a modified opinion in accordance with ISA 705 (Revised), or a material uncertainty related to

events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with ISA 570 (Revised), constitute by their nature most significant risk of material misstatement. However, in such circumstances, these matters shall not be described in the Most Significant Risks of Material Misstatement section of the auditor’s report. Rather, the auditor shall report on these matters in accordance with the applicable ISAs and include a reference to the Basis for Qualified (Adverse) Opinion or the Material Uncertainty Related to Going Concern section(s).



7. Per ISA 705.28, when the auditor disclaims an opinion on the financial statements, a more limited description of the auditor’s responsibility section is required.


are exemptions for preparing management report in accordance with article 151(1) of the Cyprus Companies Law, Cap. 113).

technical circular 7/2018, date 11/6/2018 booklet with ... · significant assessed risk of material...

Documents