Sample Audit Reports

CPA Guidance:Sample Auditor’s Reports

Effective for accountingperiods ending on or after

15th December 2005.

April 2006

The Institute of Certified Public Accountants in Ireland

Index Page Introduction 4 SECTION 1: UNMODIFIED AUDITOR’S REPORTS ON FINANCIAL

STATEMENTS Example 1 – Auditor’s report on individual company financial Statements. 6 Example 2 – Auditor’s report on individual company financial Statements with the exemptions under PASE Availed of. 8 Example 3 – Auditor’s report on individual company financial Statements. Financial Statements contain surround information other than directors’ report 11 Example 4 – Auditor’s report on group and parent company Financial Statements. 13 Example 5 – Auditor’s report on Abridged Financial Statements. 16 SECTION 2: MODIFIED AUDITOR’S REPORTS ON FINANCIAL STATEMENTS (EXCLUDING GOING CONCERN ISSUES) Example 6 – Unqualified opinion –Emphasis of matter. Possible

Outcome of a lawsuit to unable quantify effect on Financial Statements. 21

Example 7 – Qualified opinion-Disagreement, inappropriate accounting treatment of debtors. 24 Example 8 – Qualified opinion-Disagreement, prior period

Qualification unresolved and results in a modification Of the auditor’s report regarding the current period Figures. 25

Example 9 – Qualified opinion-Limitation on scope. Auditor not

Appointed at time of the stock take. 26

Example 10 – Disclaimer of opinion. Unable to observe all physical Stock and confirm trade debtors. 28

Example 11 – Adverse opinion. No provision made for losses

To arise on certain long term contracts. 30 SECTION 3: MODIFIED AUDITOR’S REPORTS ON FINANCIAL STATEMENTS ARISING FROM GOING CONCERN ISSUES

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Example 12 – Unqualified opinion. Emphasis of matter. Material

Uncertainty about the Company’s ability to continue As a going concern 33

Example 13 – Qualified opinion-Disagreement. Irish GAAP financial

Statements where the going concern period Considered by directors does not comply with FRS 18 But is disclosed. 35

Example 14 – Qualified opinion-Disagreement. Non-disclosure of

Going concern problem. 37 Example 15 – Qualified opinion-Limitation of scope. Evidence

Available to auditor regarding going concern status Was limited because cash flow forecasts were only Prepared for a period of nine months from approval Of financial statements. 39

Example 16 – Disclaimer of opinion. Going concern-company has

Not prepared profit or cash flow projections for an Appropriate period subsequent to the balance sheet date. 41

Example 17 – Adverse opinion. Significant level of concern about

Company’s ability to continue as a going concern that Is not disclosed in the financial statements. 43

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Introduction In January 2006, the Auditing Practices Board issued APB Bulletin 2006/1 “Auditor’s Reports on Financial Statements in the Republic of Ireland”. This information leaflet has been produced to assist practicing members with audit reports for non-publicly traded companies. The purpose of this information leaflet is to provide illustrative examples of

a. Unmodified auditor’s reports for audits of financial statements of companies incorporated in the Republic of Ireland:

a. Performed in accordance with the International standards on Auditing (UK and Ireland) (ISAs UK and Ireland) issued by the Auditing Practices Board; and

b. For periods commencing on or after 15 December 2004

b. Modified auditors reports (excluding going concern issues) c. Modified auditors reports arising from going concern issues

This information leaflet applies to “non-publicly traded companies” – defined as “those who do not have any securities that are admitted to trading on a regulated market in any member state in the European Union”. Auditor reports for publicly traded companies are not covered in this information leaflet. For further guidance on auditor reports for publicly traded companies please review the APB Bulletin 2006/1 “Auditor’s reports on Financial Statements in the Republic of Ireland”. In addition to the sample auditor reports on the APB Bulletin 2006/1 we have also included a standard unqualified auditor report for abridged financial statements (Example 5) and an audit report where the exemptions under the Ethical Standards “Provisions Available for Small Entities” are availed of (Example 2).

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SECTION 1 UNMODIFIED AUDITOR’S REPORTS ON FINANCIAL STATEMENTS This section contains examples of unmodified auditor’s reports on financial statements for non-publicly traded companies incorporated in the Republic of Ireland

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Example 1 – Non-publicly traded company incorporated in the Republic of Ireland – Auditor’s report on individual company financial statements

• Company DOES NOT prepare group financial statements • Irish GAAP use to prepare individual financial statements • Financial statements contain NO surround information other than the

directors’ report • Auditor does not take advantage of ES PASE

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF XXX LIMITED We have audited the financial statements of XXX Limited for the year ended ………..which comprise (state the primary financial statements such as the Profit and Loss Account, the Balance Sheet, (cash flow statement), the Statement of Total Recognised Gains and Losses) and the related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company's members as a body in accordance with the requirements of the Companies Acts 1963 to 2005. Our audit work has been undertaken so that we might state to the company's members those matters that we are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company or the company’s members as a body for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As described in the Statement of Directors’ Responsibilities the company’s directors are responsible for the preparation of the financial statements in accordance with applicable law and the accounting standards issued by the Accounting Standards Board. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland and are properly prepared in accordance with the Companies Acts 1963 to 2005. We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheet date, there exists a financial situation requiring the convening of an extraordinary general meeting of the company; and whether the information given in the Directors’ Report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the company’s Balance Sheet and its Profit and Loss Account are in agreement with the books of account.

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We report to the shareholders if, in our opinion, any information specified by law regarding directors’ remuneration and directors’ transactions is not disclosed, and where practicable, include such information in our report. We read the Directors’ Report and consider the implications for our report if we become aware of any apparent misstatement within it. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OPINION In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at………….. and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at …………… a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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• Company DOES NOT prepare group financial statements • Irish GAAP used to prepare individual financial statements • Financial statements contain NO surround information other than the

directors’ report • The Auditor avails of the exemptions granted under the Ethical Standard

“Provisions Available for Small Entities” INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF XXX LIMITED We have audited the financial statements of XXX Limited for the year ended ………..which comprise (state the primary financial statements such as the Profit and Loss Account, the Balance Sheet, (cash flow statement), the Statement of Total Recognised Gains and Losses) and the related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company's members as a body in accordance with the requirements of the Companies Acts 1963 to 2005. Our audit work has been undertaken so that we might state to the company's members those matters that we are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company or the company’s members as a body for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As described in the Statement of Directors’ Responsibilities the company’s directors are responsible for the preparation of the financial statements in accordance with applicable law and the accounting standards issued by the Accounting Standards Board. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland and are properly prepared in accordance with the Companies Acts 1963 to 2005. We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheet date, there exists a financial situation requiring the convening of an extraordinary general meeting of the company; and whether the information given in the Directors’ Report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the company’s Balance Sheet and its Profit and Loss Account are in agreement with the books of account.

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We report to the shareholders if, in our opinion, any information specified by law regarding directors’ remuneration and directors’ transactions is not disclosed, and where practicable, include such information in our report. We read the Directors’ Report and consider the implications for our report if we become aware of any apparent misstatement within it. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We have undertaken the audit in accordance with the requirements of the APB Ethical Standards – Provisions Available for Small Entities, in the circumstances set out in note X to the financial statements. *(Disclose in the notes to the financial statements the type of non-audit services provided to the audit client or the fact that a former engagement partner has joined the client) OPINION In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at………….. and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements.

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The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at …………… a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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• Company DOES NOT prepare group financial statements • Irish GAAP use to prepare individual financial statements • Financial statements contain surround information other than the

directors’ report INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF XXX LIMITED We have audited the financial statements of XXX Limited for the year ended ………..which comprise (state the primary financial statements such as the Profit and Loss Account, the Balance Sheet, (cash flow statement), the Statement of Total Recognised Gains and Losses) and the related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company's members as a body in accordance with the requirements of the Companies Acts 1963 to 2005. Our audit work has been undertaken so that we might state to the company's members those matters that we are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company or the company’s members as a body for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Directors’ Responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and the accounting standards issued by the Accounting Standards Board are set out in the Statement of Directors’ Responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland and are properly prepared in accordance with the Companies Acts 1963 to 2005. We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheet date, there exists a financial situation requiring the convening of an extraordinary general meeting of the company; and whether the information given in the Directors’ Report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the company’s Balance Sheet and its Profit and Loss Account are in agreement with the books of account.

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We report to the shareholders if, in our opinion, any information specified by law regarding directors’ remuneration and directors’ transactions is not disclosed, and where practicable, include such information in our report. We read the other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises only (the Directors’ Report and the Chairman’s Statement and the Operating and Financial Review). We consider the implications for our report if we become aware of any apparent misstatement or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OPINION In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at………….. and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at …………… a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 4 – Non-publicly traded company incorporated in the Republic of Ireland – Auditor’s report on group and Parent company financial statements

• Group and parent company financial statements not present separately. • Company prepares group financial statements • Irish GAAP used for group and parent company financial statements • Section 148(8) Companies Act 1963 exemption taken for parent

company’s own profit and loss account. INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF XXX LIMITED We have audited the group and parent company financial statements of XXX Limited for the year ended ………..which comprise (state the primary financial statements such as the Group Profit and Loss Account, the Group and Company Balance Sheets, the Group Cash Flow Statement, the Group Statement of Total Recognised Gains and Losses) and the related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company's members as a body in accordance with the requirements of the Companies Acts 1963 to 2005. Our audit work has been undertaken so that we might state to the company's members those matters that we are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company or the company’s members as a body for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Directors’ Responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and the accounting standards issued by the Accounting Standards Board are set out in the Statement of Directors’ Responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland and are properly prepared in accordance with the Companies Acts 1963 to 2005 and the European Communities (Companies: Group Accounts) Regulations 1992. We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheet date, there exists a financial situation requiring the convening of an extraordinary general meeting of the company; and whether the information given in the Directors’ Report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the company’s Balance Sheet and its Profit and Loss Account are in agreement with the books of account.

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We report to the shareholders if, in our opinion, any information specified by law regarding directors’ remuneration and directors’ transactions is not disclosed, and where practicable, include such information in our report. We read the other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises only (the Directors’ Report and the Chairman’s Statement and the Operating and Financial Review). We consider the implications for our report if we become aware of any apparent misstatement or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OPINION In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the group’s and company’s affairs as at………….. and of the group’s profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005 and the European Communities (Companies: Group Accounts) Regulations, 1992. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements.

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The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at …………… a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 5 – Non-publicly traded company incorporated in the Republic of Ireland – Auditor’s report on Abridged Financial Statements

• Company DOES NOT prepare group financial statements • Irish GAAP use to prepare individual financial statements • Financial statements contain NO surround information other than the

directors’ report AUDITORS’ REPORT TO THE DIRECTORS OF XXX LIMITED PURSUANT TO SECTION 18(4) OF THE COMPANIES (ADMENDMENT) ACT 1986 We have examined:

(i) the abridged financial statements for the year ended ……….. on pages …. to….which the director’s of XXX Limited propose to annex to the annual return of the company; and

(ii) the financial statements to be laid before the Annual General Meeting,

which form the basis for those abridged financial statements. Respective responsibilities of directors and auditors It is your responsibility properly to prepare the abridged financial statements. It is our responsibility to form an independent opinion on those abridged financial statements and to report our opinion to you. Basis of opinion The scope of our work for the purpose of this report was limited to confirming that the directors are entitled to annex abridged financial statements to the annual return and that those abridged financial statements have been properly prepared, pursuant to Sections 10 to 12 of the Companies (Amendment) Act 1986, from the financial statements to be laid before the Annual General Meeting. The scope of our work for the purpose of this report does not include examining or dealing with events after the date of our report on the full financial statements. Opinion In our opinion the directors are entitled under Section 18 of the Companies (Amendment) Act 1986 to annex to the annual return of the company abridged financial statements and those abridged financial statements have been properly prepared pursuant to the provisions of Sections 10 to 12 of that Act (exemptions available to small and medium-sized companies)* ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date *Where, in the auditors’ opinion, the abridgement process has impaired the true and fair view given by the financial statements to be laid before the Annual General Meeting the following additional paragraph should be included.

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“In our opinion the abridged financial statements do not give a true and fair view because ….(outlining the auditors’ reservations). AUDITORS’ SPECIAL REPORT TO THE DIRECTORS OF XXX LIMITED PURSUANT TO SECTION 18(3) OF THE COMPANIES (ADMENDMENT) ACT 1986 On …….. we reported, as auditors’ of XXX Limited, to the directors of the company on the copy of the abridged financial statements for the year ended…….. on pages…to ….and our report was as follows: We have examined:

(i) the abridged financial statements for the year ended ……….. on pages …. to….which the director’s of XXX Limited propose to annex to the annual return of the company; and

(ii) the financial statements to be laid before the Annual General Meeting,

which form the basis for those abridged financial statements. Respective responsibilities of directors and auditors It is your responsibility properly to prepare the abridged financial statements. It is our responsibility to form an independent opinion on those abridged financial statements and to report our opinion to you. Basis of opinion The scope of our work for the purpose of this report was limited to confirming that the directors are entitled to annex abridged financial statements to the annual return and that those abridged financial statements have been properly prepared, pursuant to Sections 10 to 12 of the Companies (Amendment) Act 1986, from the financial statements to be laid before the Annual General Meeting. The scope of our work for the purpose of this report does not include examining or dealing with events after the date of our report on the full financial statements. Opinion In our opinion the directors are entitled under Section 18 of the Companies (Amendment) Act 1986 to annex to the annual return of the company abridged financial statements and those abridged financial statements have been properly prepared pursuant to the provisions of Sections 10 to 12 of that Act (exemptions available to small and medium-sized companies). Other information On ………. we reported as auditors of XXX Limited, to the members on the company’s financial statements for the year ended ……….. to be laid before it General Meeting, and our report was as follows: “We have audited the financial statements of XXX Limited for the year ended ………..which comprise (state the primary financial statements such as the Profit and Loss Account, the Balance Sheet, (cash flow statement), the Statement of Total Recognised Gains and Losses) and the related notes. These financial statements have been prepared under the accounting policies set out therein.

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This report is made solely to the company's members as a body in accordance with the requirements of the Companies Acts 1963 to 2005. Our audit work has been undertaken so that we might state to the company's members those matters that we are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company or the company’s members as a body for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As described in the Statement of Directors’ Responsibilities the company’s directors are responsible for the preparation of the financial statements in accordance with applicable law and the accounting standards issued by the Accounting Standards Board. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland and are properly prepared in accordance with the Companies Acts 1963 to 2005. We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheet date, there exists a financial situation requiring the convening of an extraordinary general meeting of the company; and whether the information given in the Directors’ Report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the company’s Balance Sheet and its Profit and Loss Account are in agreement with the books of account. We report to the shareholders if, in our opinion, any information specified by law regarding directors’ remuneration and directors’ transactions is not disclosed, and where practicable, include such information in our report. We read the Directors’ Report and consider the implications for our report if we become aware of any apparent misstatement within it. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

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OPINION In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at………….. and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at …………… a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company”. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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SECTION 2 MODIFIED AUDITOR’S REPORTS ON FINANCIAL STATEMENTS (EXCLUDING GOING CONCERN ISSUES) This section contains the following examples of modified auditor’s reports on financial statements:

• Examples of reports where the matter does not affect the auditor’s opinion for example, emphasis of matter paragraphs; and

• Example of reports where the matter does affect the auditor’s opinion for example;

o Qualified opinions o Disclaimers of opinion o Adverse opinions

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Example 6 – Unqualified opinion- Emphasis of matter. Possible outcome of a lawsuit, unable to quantify effect on financial statements.

• Irish non-publicly traded company prepares Irish GAAP financial statements.

• A lawsuit alleges that the company has infringed certain patent rights and claims royalties and punitive damages. The company has filed a counter action, and preliminary hearings and discovery proceedings on both actions are in progress.

• The ultimate outcome of the matter cannot presently be determined, and no provision for any liability that may result has been made in the financial statements.

• The company makes relevant disclosures in the financial statements • The auditor issues an unqualified auditor’s report with an emphasis of

matter paragraph describing the situation giving rise to the emphasis of matter and its possible effects on the financial statements, including that the effect on the financial statements of the resolution of the uncertainty cannot be quantified.

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF XXX LIMITED We have audited the financial statements of XXX Limited for the year ended ………..which comprise (state the primary financial statements such as the Profit and Loss Account, the Balance Sheet, (cash flow statement), the Statement of Total Recognised Gains and Losses) and the related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company's members as a body in accordance with the requirements of the Companies Acts 1963 to 2005. Our audit work has been undertaken so that we might state to the company's members those matters that we are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company or the company’s members as a body for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As described in the Statement of Directors’ Responsibilities the company’s directors are responsible for the preparation of the financial statements in accordance with applicable law and the accounting standards issued by the Accounting Standards Board. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland and are properly prepared in accordance with the Companies Acts 1963 to 2005. We also report to you whether in our opinion: proper books of account have been kept by the

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company; whether, at the balance sheet date, there exists a financial situation requiring the convening of an extraordinary general meeting of the company; and whether the information given in the Directors’ Report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the company’s Balance Sheet and its Profit and Loss Account are in agreement with the books of account. We report to the shareholders if, in our opinion, any information specified by law regarding directors’ remuneration and directors’ transactions is not disclosed, and where practicable, include such information in our report. We read the Directors’ Report and consider the implications for our report if we become aware of any apparent misstatement within it. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OPINION In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at………….. and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at …………… a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. Emphasis of matter- possible outcome of a lawsuit In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note x to the financial statements

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concerning the possible outcome of a lawsuit, alleging infringement of certain patent rights and claiming royalties and punitive damages, where the company is the defendant. The company has filed a counter action, and preliminary hearings and discovery proceedings on both actions are in progress. The ultimate outcome of the matter cannot presently be determined, and no provision for any liability that may result has been made in the financial statements. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 7 – Qualified opinion- Disagreement, inappropriate accounting treatment of debtors.


• The debtors shown on the balance sheet include an amount of €y due from a company which has ceased trading. XXX Limited has no security for this debt.

• The auditor’s opinion is that the company is unlikely to receive any payment and full provision of €y should have been made

• The auditor does not believe that the effect of the disagreement is so material and pervasive that the financial statements as a whole are misleading and issues a qualified opinion – except for disagreement about the accounting treatment of debtors.

• The auditor concludes that it is still possible to express the “financial situation” opinion

QUALIFIED OPINION ARISING FROM DISAGREEMENT ABOUT ACCOUNTING TREATMENT Included in the debtors shown on the balance sheet is an amount of €y due from a company which has ceased trading. XXX Limited has no security for this debt. In our opinion the company is unlikely to receive any payment and full provision of €y should have been made. Accordingly, debtors should be reduced by €y, deferred taxes should be reduced by €x and profit for the year and retained earnings should be reduced by €z. Except for the financial effect of not making the provision referred to in the preceding paragraph, In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at………….. and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at …………… a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 8 – Qualified opinion- Disagreement, prior period qualification unresolved and results in a modification of the auditor’s report regarding the current period figures.


• Included in the debtors shown on the balance sheet of 31 December 20x4 and 31 December 31 20x5 is an amount of €y which is the subject of litigation and against which no provision has been made. The auditor considers that a full provision of €y should have been made in the year ended 31 December 20x4.

• The auditor concludes that it is still possible to express the “financial situation” opinion.

QUALIFIED OPINION ARISING FROM DISAGREEMENT ABOUT ACCOUNTING TREATMENT Included in the debtors shown on the balance sheets of 31 December 20x4 and 31 December 20x5 is an amount of €y which is the subject of litigation and against which no provision has been made. In our opinion, full provision of €y should have been in the year ended 31 December 20x4. Accordingly, debtors at 31 December 20x4 and 20x5 should be reduced by €y, deferred income taxes at 31 December 20x4 and 20x5 should be reduced by €x, and the profit for the year ended 31 December 20x4 and the retained earnings at 31 December 20x4 and 20x5 should be reduced by €z. In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the company’s profit(loss) for the year ended 31 December 20x5 Except for the financial effect of not making the provision referred to in the preceding paragraph, In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x5 and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at …………… a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 9 – Qualified opinion- Limitation on scope. Auditor not appointed at the time of the stock take.


• The evidence available to the auditor was limited because they did not observe the counting of the physical stock as at 31 December 20x1, since that date was prior to the time the auditor was initially engaged as auditor for the company. Owing to the nature of the company’s records, the auditor was unable to satisfy themselves as to stock quantities by other audit procedures.

• The limitation in audit scope causes the auditor to issue a qualified opinion except for any adjustments that might have been found to be necessary had they been able to obtain sufficient evidence concerning stock.

BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board except that the scope of our work was limited as explained below. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. However, with respect to stock having a carry amount of €x the evidence available to us was limited because we did not observe the counting of the physical stock as of 31 December 20x1, since that date was prior to our appointment as auditors of the company. Owing to the nature of the company’s records, we were unable to obtain sufficient appropriate audit evidence regarding the stock quantities by using other audit procedures. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. QUALIFIED OPINION ARISING FROM DISAGREEMENT ABOUT ACCOUNTING TREATMENT Except for the financial effects if such adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves as to physical stock quantities, In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x1and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. In respect solely of the limitation on our work relating to stocks:

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• We have not obtained all the information and explanations that we considered necessary for our audit; and

• We were unable to determine whether proper accounting records had been maintained.

The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 December 20x1a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 10 – Disclaimer of opinion. Unable to observe all physical stock and confirm trade debtors


• The evidence available to the auditor was limited because the auditor was not able to observe all physical stock and confirm trade debtors due to limitations placed on the scope of the auditor’s work by the company.

• As a result, the auditor has been unable to form a view on the financial statements and issues a modified opinion disclaiming the view given by the financial statements.

BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board except that the scope of our work was limited as explained below. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. However, the evidence available to us was limited because we were unable to observe the counting of physical stock having a carrying amount of €x and send confirmation letters to trade debtors having a carrying amount of €y due to limitations placed on the scope of our work by the company. As a result of this we have been unable to obtain sufficient appropriate audit evidence concerning both stock and trade debtors. Because of the significance of these items, we have been unable to form a view on the financial statements. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. QUALIFIED: DISCLAIMER ON VIEW GIVEN BY FINANCIAL STATEMENTS Because of the possible effect of the limitation in evidence available to us, we are unable to form an opinion as to whether the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at …………and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. Whether there did or did not exist at …… a financial situation under Section 40(1) of the Companies (Amendment) Act, 1983 would require the convening of an extraordinary general meeting of the company In respect solely of the limitation on our work referred to above:

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• We have not obtained all the information and explanations that we

considered necessary for our audit; and • We were unable to determine whether proper books of account have

been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 11 – Adverse opinion. No provision made for losses expected to arise on certain long term contracts


• No provision has been made for losses expected to arise on certain long-term contracts currently in progress, as the directors consider that such losses should be offset against amounts recoverable on other long-term contracts.

• In the auditor’s opinion, provision should be made for foreseeable losses on individual contracts as required by (specify accounting standards)

• The auditor issues an adverse opinion due to the failure to provide for the losses and quantifies the impact on the profit for the year, the contract work in progress, and deferred taxes payable at the year-end.

• The auditor concludes that it is still possible to express the “financial situation” opinion

ADVERSE OPINION As more fully explained in note x to the financial statements no provision has been made for losses expected to arise on certain long-term contracts currently in progress, as the directors consider that such losses should be off-set against amounts receivable on other long-term contracts. In our opinion, provision should be made for foreseeable losses on individual contracts as required by (specify accounting standards)….. If losses has been so recognised the effect would have been to reduce the carrying amount of contract work in progress by €x, deferred taxes payable by €y, and profit for the year and the retained earnings at 31 December 20x1 by €z. In view of the effect of the failure to provide for the losses referred to above, in our opinion the financial statements DO NOT give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended. In all other respects, in our opinion the financial statements have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations which we consider necessary for the purposes of our audit. In our opinion proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements.

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The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 December 20x1a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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SECTION 3 MODIFIED AUDITOR’S REPORTS ARISING FROM GOING CONCERN ISSUES – EXTRACTS FROM MODIFIED REPORTS.

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Example 12 – Unqualified opinion- Emphasis of matter. Material uncertainty about the Company’s ability to continue as a going concern.


• The company incurred a net loss of €x during the year ended 31 December 20x1 and, as of that date, the company’s current liabilities exceeded its total assets by €y

• These conditions, along with other matters set forth in the notes to the financial statements, indicate the existence of a material uncertainty, which may cast significant doubt the company’s ability to continue as a going concern.

• The company makes relevant disclosures in the financial statements • The auditor issues an unqualified auditor’s report with an emphasis of

matter paragraph setting out the basis of the auditor’s opinion, describing the situation giving rise to the emphasis of matter and its possible effects on the financial statements, including (where practicable) quantification.

BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. OPINION In our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 December 20x1 a financial situation which, under section 40(1) of the

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Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. Emphasis of matter- Going concern In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note x to the financial statements concerning the company’s ability to continue as a going concern. The company incurred a net loss of €x during the year ended 31 December 20x1 and, at that date the company’s current liabilities exceeded its total assets by €y. These conditions, along with the other matters explained in note x to the financial statements, indicate the existence of a material uncertainty which may cast doubt about the company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 13 – Qualified opinion – Disagreement. Irish GAAP financial statements where the going concern period considered by directors does not comply with FRS 18 but is disclosed.


• In assessing whether it is appropriate to prepare the financial statements on a going concern basis, the directors have paid particular attention to a period ending 30 September 20x3 which is less than one year from the date of approval of the financial statements on 31 October 20x2.

• The directors have not disclosed this fact in the financial statements breaching the requirements of paragraph 61(b) of Financial Reporting Standard 18 “Accounting policies”. FRS 18 requires the disclosure of the fact that “the foreseeable future considered by the directors has been limited to a period of less than one year from the date of approval of the financial statements”.

• Although the auditors have concluded that there is no significant level of concern about going concern, the failure to disclose the fact that the foreseeable future considered by the directors has been limited to a period of less than one year from the date of approval of the financial statements is a breach of FRS 18 and the auditors issue a qualified “except for” opinion describing the disagreement over the departure from FRS 18

QUALIFIED OPINION ARISING FROM DEPARTURE FROM FRS 18 “ACCOUNTING POLICIES” In assessing whether it is appropriate to prepare the financial statements on a going concern basis the directors have paid particular attention to a period on 30 September 20x3 which is less than twelve months from the date of approval of the financial statements. This fact has not been disclosed in the financial statements, contrary to the requirements of Financial Reporting Standard 18 “Accounting Policies” Except for the absence of the disclosure referred to above in our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements.

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The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 December 20x1 a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 14 – Qualified opinion – Disagreement. Non-disclosure of going concern problems.


• The financial statements do not disclose that the Company’s financing arrangements expire and amounts outstanding are payable on 19 July 20x2 and that the Company has been unable to re-negotiate or obtain replacement financing.

• The situation indicates the existence of a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

• The auditor concludes that there is a significant level of concern about going concern and disagrees with the failure to disclose this information in the financial statements. The auditors issue a qualified except for opinion describing the disagreement.

QUALIFIED OPINION ARISING FROM OMISSION OF INFORMATION CONCERNING GOING CONCERN The company’s financing arrangements expire and amounts outstanding are payable on 19 July 20x2. The company has been unable to re-negotiate or obtain replacement financing. This situation indicates the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements (and notes thereto) do not disclose this fact. Except for the omission of the information included in the preceding paragraph in our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations we consider necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements.

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Example 15 – Qualified opinion- Limitation of scope. Evidence available to auditor regarding going concern status was limited because cash flow forecasts were only prepared for a period of nine months from approval of financial statements.


• The evidence available to the auditor was limited because the company had prepared cash flow forecasts and other information needed for the assessment of the appropriateness of the going concern basis of preparation of the financial statements only for a period of nine months from the date of approval of the financial statements.

• Although this fact is disclosed in the financial statements had the information been available the auditor might have formed a different opinion. The auditor considers that those charged with governance have not taken adequate steps to satisfy themselves that it is appropriate for them to adopt the going concern basis.

• The auditor does not consider that the future period to which those charged with governance have paid particular attention in assessing going concern is reasonable in the entity’s circumstances. The auditor considers that the particular circumstances of the company and the nature of the company’s business require that such information be prepared, and reviewed by the directors and auditor for a period of at least twelve months from the date of approval of the financial statements.

• The auditor issues an “except for” qualified opinion referring to the adjustments that might have been found to be necessary had they obtained sufficient evidence concerning appropriateness of the going concern basis of preparation of the financial statements

BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board, except that the scope of our work was limited as explained below. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. However, the evidence available to us was limited because the company has prepared cash flow forecasts and other information needed for the assessment of the appropriateness of the going concern basis of preparation of the financial statements for a period of only nine months from the date of approval of these financial statements. We consider that the directors have not taken adequate steps to satisfy themselves that it is appropriate for them to adopt the going concern basis because the circumstances of the company and the nature of the business require that such information be prepared, and reviewed by the

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directors and ourselves, for a period of at least twelve months from the date of approval of the financial statements. Had this information been available to us we might have formed a different opinion. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. QUALIFIED OPINION ARISING FROM LIMITATION IN AUDIT SCOPE Except for any adjustment that might have been found to be necessary had we been able to obtain sufficient evidence concerning the appropriateness of the going concern basis of preparation of the financial statements, in our opinion the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. In respect solely of the limitation on our work relating to the assessment of the appropriateness of the going concern basis of preparation of the financial statements we have not obtained all the information and explanations that we considered necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 December 20x1 a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 16 – Disclaimer of opinion. Going concern – company has not prepared profit or cash flow projections for an appropriate period subsequent to the balance sheet date.


• The evidence available to the auditor to confirm the appropriateness of preparing the financial statements on the going concern basis was limited because the company has not prepared profit or cash flow projections for an appropriate period subsequent to the balance sheet date.

• The auditor considers that the circumstances of the company and the nature of the company’s business requires that such information be prepared, and reviewed by the directors and the auditor, for a period of at least twelve months from the date of approval of the financial statements.

• The auditor concludes that the possible effect of this limitation on scope is so material and pervasive that the auditor has been unable to obtain sufficient appropriate audit evidence and accordingly is unable to form an opinion on whether or not it is appropriate to prepare the financial statements on a going concern basis. As a result, the auditor issues an opinion disclaiming the view given by the financial statements.

BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board, except that the scope of our work was limited as explained below. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. However, the evidence available to us to confirm the appropriateness of preparing the financial statements on the going concern basis was limited because the company has not prepared any profit or cash flow projections for an appropriate period subsequent to the balance sheet date. As a result, and in the absence of any alternative evidence available to us, we have been unable to form a view as to the applicability of the going concern basis, the circumstances of which, together with the effect on the financial statements should this basis be inappropriate, are set out in note x to the financial statements. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

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OPINION: DISCLAIMER ON VIEW GIVEN BY THE FINANCIAL STATEMENTS Because of the possible effect of the limitation in evidence available to us, we are unable to form an opinion as to whether the financial statements, give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended and have been properly prepared in accordance with the Companies Acts 1963 to 2005. In respect solely of the limitation on our work referred to above we have not obtained all the information and explanations that we considered necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 December 20x1 a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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Example 17 – Adverse opinion. Significant level of concern about the company’s ability to continue as a going concern that is not disclosed in the financial statements


• Although there is a significant level of concern about the company’s ability to continue as a going concern the financial statements and notes do not disclose this fact and the directors have prepared the financial statements on the going concern basis.

• The auditor considers that the financial statements should disclose that there is a material uncertainty, which may cast doubt on the company’s ability to continue as a going concern.

• The effect of this disagreement is so material and pervasive to the amounts included within the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.

• The auditor issues an adverse opinion stating that, because the material uncertainty regarding going concern is not disclosed, the financial statements do not give a true and fair view.

ADVERSE OPINION As explained in note x to the financial statements the company’s financing arrangements expired and the amount outstanding was payable on 31 December 20x1. The company has been unable to re-negotiate or obtain replacement financing and is considering entering insolvency proceedings. These events indicate a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements (and notes thereto) do not disclose this fact and have been prepared on the going concern basis. In our opinion, because of the omission of the information mentioned above, the financial statements do not give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of the company’s affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended. In all other respects, in our opinion the financial statements have been properly prepared in accordance with the Companies Acts 1963 to 2005. We have obtained all the information and explanations which we consider necessary for the purposes of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ Report is consistent with the financial statements.

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