CPA Guidance: Sample Auditors Reports Effective for accounting periods ending on or after

15th December 2005.

April 2006

The Institute of Certified Public Accountants in Ireland

Index
Introduction

Page
4

SECTION 1: UNMODIFIED AUDITORS REPORTS ON FINANCIAL

STATEMENTS

Example 1 Auditors report on individual company financial Statements. 6 Example 2 Auditors report on individual company financial Statements with the exemptions under PASE Availed of. 8
Example 3 Auditors report on individual company financial Statements. Financial Statements contain surround information other than directors report 11 Example 4 Auditors report on group and parent company Financial Statements. 13 Example 5 Auditors report on Abridged Financial Statements. 16 SECTION 2: MODIFIED AUDITORS 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 auditors 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 AUDITORS REPORTS ON FINANCIAL STATEMENTS

ARISING FROM GOING CONCERN ISSUES 2

Example 12 Unqualified opinion. Emphasis of matter. Material Uncertainty about the Companys 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 Companys ability to continue as a going concern that Is not disclosed in the financial statements. 43

Introduction
In January 2006, the Auditing Practices Board issued APB Bulletin 2006/1 Auditors 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 auditors 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 Auditors 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).

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

Example 1 Non-publicly traded company incorporated in the Republic of Ireland Auditors 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. As described made solely to the of Directors Responsibilities the accordance This report is in the Statement company's members as a body in companys directors with are responsible for the preparation of the 1963 to statements in accordance with RESPECTIVE RESPONSIBILITIESCompanies ActsAUDITORS 2005. Our audit work has been the requirements of the OF DIRECTORS AND financial applicable law that the accounting standards issued bymembers those matters that undertaken so and we might state to the company's the Accounting Standards Board. we are required to state to them in the audit report and for no other purpose. To the Our responsibility is to audit law,financial not accept in accordance with relevant fullest extent permitted by the we do statements or assume responsibility to legal and regulatory requirements and International Standards on Auditing (UK anyone and than the company or the companys members as a body for our audit work, other Ireland). for this report, or for the opinions we have formed. 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 6 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 companys 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 BASIS OF AUDIT OPINION become aware of any apparent misstatement within it. 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, andour opinion the financial statements give a true and fair view, in In of whether with accounting policies are appropriate to the companys accordance the circumstances, OPINION Generally Accepted Accounting Practice in Ireland, of the state of the consistently applied and adequately disclosed.

companys affairs as at.. and of its profit/(loss) for the informationended and We planned and performed our audit so as to obtain all the year then and have been which we considered necessary in order to provide us with explanations properly sufficient prepared in accordance with the Companies Acts 1963 to 2005.

evidence to give reasonable assurance that the financial statements are free from material misstatement, all the caused by fraud or other irregularitywe error. In We have obtained whether information and explanations or consider forming our opinion we also evaluated the overall adequacy of the presentation necessary for the of purpose of our audit. In our opinion, proper books of account have been information in the financial statements.

kept by the company. The financial statements are in agreement with the books of account.
ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. Date

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 7 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.

Example 2 Non-publicly traded company incorporated in the Republic of Ireland Auditors report on individual company financial statements
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. Thisdescribed made solely to the of Directors Responsibilities the accordance As report is in the Statement company's members as a body in companys with directors RESPECTIVE RESPONSIBILITIESCompanies ActsAUDITORS 2005. Our audit work has been the requirements ofthe preparation of the 1963 to statements in accordance with are responsible for the OF DIRECTORS AND financial undertakenlaw that the accounting standards issued bymembers those matters that applicable so and we might state to the company's the Accounting Standards we Board. are required to state to them in the audit report and for no other purpose. To the fullest extent permitted by law,financial not accept in accordance with relevant Our responsibility is to audit the we do statements or assume responsibility to anyone regulatory requirements and International Standards on Auditing (UK legal and other than the company or the companys members as a body for our audit work, and for Ireland). this report, or for the opinions we have formed. 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 8 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 companys 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 BASIS OF AUDIT OPINION become aware of any apparent misstatement within it. We conducted our audit in accordance with International Standards on Auditing (UK andour opinion the financial statements give a true and fair view, In Ireland) issued by the Auditing Practices Board. An audit includes examination, in a test basis, with on accordanceof evidence relevant to the amounts and disclosures in the Generally Accepted Accounting Practice in Ireland, of the state financial statements. It also includes an assessment of the significant estimates and of the companys judgements made by the directors in the preparation of the financial statements, affairs as at.. and of its profit/(loss) for the year then and ended and the been of whether haveaccounting policies are appropriate to the companys circumstances, properly prepared in accordance with the Companies Acts 1963 We have undertaken the audit in accordance with the requirements of the APB Ethical Standardsapplied and adequately disclosed. consistently Provisions Available for Small Entities, in the to 2005. 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) all the information We planned and performed our audit so as to obtain

and We have which we all the necessary in and explanations we explanations obtained considered information order to provide us with OPINION sufficient necessary for the consider evidence to give reasonable assurance that the financial statements are free from purpose of our audit. In our opinion, proper books of account material misstatement, whether caused by fraud or other irregularity or error. In have been kept by also forming our opinion wethe evaluated the overall adequacy of the presentation of company. The financial statements are in agreement with the information account. books of in the financial statements.

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) ABC & Co., of the Certified Public Accountants & Registered Auditors, Companies (Amendment) Act 1983, would require the convening of an 14 Green Street, Dublin 11. extraordinary Date general meeting of the company.

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Example 3 Non-publicly traded company incorporated in the Republic of Ireland Auditors report on individual company financial statements
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 RESPECTIVE RESPONSIBILITIESCompanies ActsAUDITORS 2005. Our audit work has been the requirements of the OF DIRECTORS AND 1963 to undertaken so that we might state preparing the Annual Reportthosethe financial The Directors Responsibilities for to the company's members and matters that we statements in accordance with applicable law and the accounting standards issued arethe Accounting Standardsin the audit set out and for no other purpose. To the by required to state to them Board are report in the Statement of Directors fullest extent permitted by law, we do not accept or assume responsibility to Responsibilities. anyone other than the companyaudit the financial statementsas aaccordance with relevant Our responsibility is to or the companys members in body for our audit work, for and regulatory requirements and International Standards on Auditing (UK legal this report, or for the opinions we have formed. 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 11 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 companys 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 other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises BASIS OF AUDIT OPINION only (the Directors Report and the Chairmans Statement and the Operating and Financial Review).audit consider the implications for ourStandards on Auditing We conducted our We in accordance with International report if we become aware of (UK any Ireland) issued by the or material inconsistencies with audit financial and apparent misstatement Auditing Practices Board. An the includes statements. examination, Ouraresponsibilities do not extend to any to theinformation. disclosures in the on test basis, of evidence relevant other amounts and financial In our opinion the financial statements give a true and fair view, in statements. It also includes an assessment of the significant estimates and accordancemade by the directors in the preparation of the financial statements, judgements with Generally Accepted Accounting Practice in Ireland, of the state of the and companys the accounting policies are appropriate to the companys of whether affairs circumstances, OPINION as at.. and of its profit/(loss) for the year then ended and consistently have been applied and adequately disclosed.

properly prepared in accordance with the Companies Acts 1963 to 2005.

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 We have obtained all the information and explanations we consider sufficient necessary for the evidence to give reasonable assurance that the financial statements are free from purposemisstatement, whether caused by fraud or booksirregularity orhave been material of our audit. In our opinion, proper other of account error. In kept by our opinion we also evaluated the overall adequacy of the presentation forming the company. The financial statements are in agreement with the books of of information in the financial statements. account.

In our opinion, the information given in the Directors Report is consistent with the ABC & Co., financial statements. Certified Public Accountants
& Registered Auditors, 14 Green Street, Dublin 11. Date

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 12 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.

Example 4 Non-publicly traded company incorporated in the Republic of Ireland Auditors report on group and Parent company financial statements parent company financial statements not present separately. Group and
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 companys 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.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

This report is made solely to the company's members as a body in accordance The Directors Responsibilities for preparing the Annual Report and the financial with statements in accordance with applicable law and the accounting standards issued the Accounting Standards the are set out in the Statement of Directors by therequirements of BoardCompanies Acts 1963 to 2005. Our audit work has been Responsibilities. so that we might state to the company's members those matters that undertaken we Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and other purpose. To the are required to state to them in the audit report and for no Ireland). fullest extent permitted by law, we do not accept or assume responsibility to We report to you our opinion as to whether the financial statements give a true and anyone fair view in accordance with Generally Accepted Accounting Practice in Ireland and other than the in accordance or the companys members as a are properly prepared company withtheCompanies Acts 1963 to 2005 and the body for our audit work, European Communities (Companies: Group Accounts) Regulations 1992. We also for report to you whether in our opinion: proper books of account have been kept by the this report, or the the opinions we have formed. company; whether, atfor 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 companys 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 opinion the financial statements give a true and fair view, In our it is consistent with the audited financial statements. This other information in accordance with comprises OPINION BASIS OF AUDIT Generally Accepted and the Chairmans Statement and the Operating and only (the Directors ReportAccounting Practice in Ireland, of the state We the groups and consider the implications for ourStandards on Auditing Financial Review).audit in accordance with International report if we become of conducted our We (UK aware of companys affairs as at.. and of the groups profit/ and Ireland) issued by the or material inconsistencies with audit financial any apparent misstatement Auditing Practices Board. An the includes (loss) for examination, statements. the year then on test basis, of evidence relevant to theinformation. disclosures in the ended and have been properly other amounts and Ouraresponsibilities do not extend to anyprepared in accordance with the financial Companies Acts statements. It also includes an assessment of the significant estimates and 1963 to 2005 the the European Communities (Companies: judgements made byand directors in the preparation of the financial statements, Group Accounts) and of whether the1992. Regulations, accounting policies are appropriate to the companys circumstances, OPINION consistently applied and adequately disclosed.

We have obtained all the information and explanations we We plannednecessary for the consider and performed our audit so as to obtain all the information and explanations which audit. In our opinion, in order books of account purpose of our we considered necessary proper to provide us with sufficient have been kept by the evidence to give reasonable assurance that the financial statements are free from company. The financial statements or other agreement with the material misstatement, whether caused by fraud are in irregularity or error. In forming of account. also evaluated the overall adequacy of the presentation books our opinion we
of information in the financial statements.

In our opinion, the information given in the Directors Report is consistent with the financial statements.

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ABC & Co., Certified Public Accountants & Registered Auditors, 14 net assets of TheGreen Street,the company, as stated in the balance sheet are more Dublin of than half11.
the amount of its called up share capital and, in our opinion, on that basis there did Date 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.

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Example 5 Non-publicly traded company incorporated in the Republic of Ireland Auditors 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 We have examined: THE COMPANIES (ADMENDMENT) ACT 1986 SECTION 18(4) OF
(i) the abridged financial statements for the year ended .. on pages . to.which the directors 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 Basis of opinion statements and to report our opinion to you.purpose of this report was limited to confirming The scope of our work for the 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 Opinion In our opinionbe laid before are entitled under Section 18 of the scope of our work statements to the directors the Annual General Meeting. The Companies (Amendment) Act 1986 to annex to the annual return of the company abridged for financial statements and those abridged financial statements havewith events after the purpose of this report does not include examining or dealing been properly prepared pursuant to the provisions of Sections 10 to 12 of that Act (exemptions the available to small and medium-sized companies)* date Co., ABC & of our report on the full financial statements.
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 reported, SECTION of XXX Limited,THE directors of the OF On .. we TO as auditors 18(3) to the COMPANIES (ADMENDMENT) ACT company 1986 copy of the abridged financial statements for the year ended.. on on the pagesto .and our report was as follows:
(i) the abridged financial statements for the year ended .. on pages . to.which the We have examined: directors 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 Basis of opinion statements and to report our opinion to you. 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 Opinion In our opinion the directors are entitled under Section 18 of the Companies statements to be laid before the Annual General Meeting. The scope of our work (Amendment) Act 1986 to annex to the annual return of the company abridged for financial statements and those abridged financial statements have been properly prepared pursuant to the provisions of Sectionsnot include Act (exemptions or dealing with events after the purpose of this report does 10 to 12 of that examining available to small and medium-sized companies). the date of information the full financial statements. Other our report on
On . we reported as auditors of XXX Limited, to the members on the companys 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 RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS fullest extent permitted by law, we do not accept or assume responsibility to As described in the Statement of Directors Responsibilities the companys anyone directors the company or the companys members as a body for our audit work, other than are responsible for the preparation of the financial statements in accordance with for applicable or and the accounting standards issued by the Accounting Standards this report, lawfor the opinions we have formed. 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 BASIS OF AUDIT OPINION at the balance sheet date, there exists a financial situation company; whether, requiring the convening of an extraordinary general meeting of the company; and We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, is consistent with the whether the information given in the Directors Report on a test basis, of evidence relevant to the amounts and disclosures in the financial financial statements. It also includes an assessment of the significant estimates and judgements made by theaddition,the preparation whether we have obtained all the information statements. In directors in we state of the financial statements, and of whether the accounting policies are appropriate to the companys circumstances, and consistently applied and adequately disclosed. explanations necessary for the purposes of our audit and whether the companys We planned and performed our audit so as to obtain all the information and Balance Sheet considered necessary in Loss Account are in agreement with the books of explanations which weand its Profit andorder to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from account.
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 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. 18 We read the Directors Report and consider the implications for our report if we become aware of any apparent misstatement within it.

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 companys 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 ABC & Co., Certified Public Accountants company. The financial statements are in agreement with the books of & Registered Auditors, account. 14 Green Street,
Dublin 11. Date

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.

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SECTION 2 MODIFIED AUDITORS REPORTS ON FINANCIAL STATEMENTS (EXCLUDING

GOING CONCERN ISSUES)

This section contains the following examples of modified auditors reports on Examples of reports where financial statements: the matter does not affect the auditors
opinion for example, emphasis of matter paragraphs; and Example of reports where the matter does affect the auditors 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 auditors 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 RESPECTIVE RESPONSIBILITIESCompanies ActsAUDITORS 2005. Our audit work has been the requirements of the OF DIRECTORS AND 1963 to undertaken so that of Directors state to the companys directors As described in the Statementwe mightResponsibilities thecompany's members those matters that are responsible for the preparation of the financial statements in accordance with we applicable law and the accounting standards issued by the Accounting Standards are required to state to them in the audit report and for no other purpose. To the Board. fullest extent permitted by law, we do not accept or assume responsibility to Our responsibility is to audit the financial statements in accordance with relevant anyone legal and regulatory requirements and International Standards on Auditing (UK and Ireland). than the company or the companys members as a body for our audit work, other for 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 this report, or for the opinions we have formed. 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 companys 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 We conducted our audit in accordance with International where practicable, include such information in our report. Standards on Auditing (UK and Ireland) issued Report Auditing Practices Board. An audit includes We read the Directorsby the and consider the implications for our report if we examination, of any apparent misstatement within it. become aware 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 companys circumstances, OPINION consistently appliedfinancial statements give a true and fair view, in accordance In our opinion the and adequately disclosed.
BASIS OF AUDIT OPINION

with We planned and performed our audit so as to obtain of the state of the companys Generally Accepted Accounting Practice in Ireland, all the information and explanations which we considered necessary in order then ended and have affairs as at.. and of its profit/(loss) for the year to provide us with sufficient been evidence prepared in accordance with the Companies Acts 1963 to 2005. from properly to give reasonable assurance that the financial statements are free material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of thenecessary for We have obtained all the information and explanations we consider presentation of the informationour the financial statements. purpose of in 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.
Emphasis of matter- possible outcome of a lawsuit In forming our opinion, which is not qualified, we havein the Directors In our opinion, the information given considered the adequacy of the disclosures made in note x to the financial statements

Report is consistent with

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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.

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.

Irish non-publicly traded company prepares Irish GAAP financial statements. 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 auditors 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 Included in the issues a qualified opinion the balance sheet is an amount of y due misleading and debtors shown on except for disagreement fromabout the accounting treatment ofceased trading. XXX Limited has no security for a company which has debtors. The auditor concludes that it is still possible to express the financial this debt. Inopinionopinion the company is unlikely to receive any payment and situation our

full provision of y should have been made. Accordingly, debtors should be reduced by y, deferred DISAGREEMENT ABOUT ACCOUNTING TREATMENT QUALIFIED OPINION ARISING FROM 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 companys 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. ABC & Co.,
Certified Public Accountants & Registered Auditors, In our opinion, the 14 Green Street, Dublin 11.

information given in the Directors Report is consistent

with the financial statements. Date The net assets of the company, as stated in the balance sheet are more than 24 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.

Included in the debtors shown on the balance sheets of 31 December 20x4 Example 8 Qualified opinion- Disagreement, prior period qualification and unresolved and results in a modification ofis theauditorsof litigation and 31 December 20x5 is an amount of y which the subject report regarding the against which no provision has been made. In our opinion, full provision of Irish period traded company currentnon-publiclyfigures. prepares Irish GAAP financial y statements. Included in the debtors shown on the balance sheet of December should have been in the year ended 3131 December 20x4. Accordingly, debtors December is of at 20x4 and 31 and against31 20x5no an amounthas y which is the subject of litigation which provision been made. The auditor considers that a full and 20x5 should have been made in by y, 31 December 20x4 provision of y should be reducedthe year deferred income taxes ended 31 December 20x4. at The auditor concludes that it is still possible to express the financial 31 December 20x4 and 20x5 should be reduced by x, and the profit for the situation opinion. year ended 31 December 20x4 and the retained earnings at 31 December QUALIFIED OPINION ARISING FROM DISAGREEMENT ABOUT ACCOUNTING TREATMENT 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 companys 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 companys 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.
ABC & Co., Certified Public Accountants In our opinion, & Registered Auditors, the information 14 Green Street, with the Dublin 11. Date financial statements.

given in the Directors Report is consistent

The net assets of the company, as stated in the balance sheet are more than 25 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.

Example 9 Qualified opinion- Limitation on scope. Auditor not appointed at the time of the stockcompany prepares Irish GAAP financial Irish non-publicly traded take.
statements. 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 companys 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 companys 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 companys 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 In respect solely of the limitation on our work relating to stocks: Ireland, of the state of the companys affairs as at 31 December 20x1and of its profit/ (loss) for the year then ended and have been properly prepared in 26 accordance with the Companies Acts 1963 to 2005.

 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 ABC & Co., Certified Public Accountants did & Registered Auditors, not exist at 31 December 20x1a financial situation which, under section 40(1) of 14 Green Street, Dublin 11. the Companies (Amendment) Act 1983, would require the convening of an Date extraordinary general meeting of the company.

27

Example 10 Disclaimer of opinion. Unable to observe all physical stock and confirm trade debtors Irish non-publicly traded company prepares Irish GAAP financial
statements. 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 auditors 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 companys 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, Whether there did or the companys affairssituation and of its profit/(loss) for of the state of did not exist at a financial as at under Section 40(1) of the Companies (Amendment) Act, 1983 would require the convening of the year an extraordinary general meeting of the company then ended and have been properly prepared in accordance with the In respect solely of the limitation on our work referred to above: Companies Acts 1963 to 2005.
28

 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 ABC & Co., Certified Publicstatements. financial Accountants
& Registered Auditors, 14 Green Street, Dublin 11. Date

29

Example 11 Adverse opinion. No provision made for losses expected to arise on certain long termcompany prepares Irish GAAP financial Irish non-publicly traded contracts
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 offset against amounts recoverable on other long-term contracts. In the auditors 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 In all other respects, in our opinion the financial statements offhave been properly set against amounts receivable on other long-term contracts. In our opinion, prepared in be made for foreseeable losses on individual contracts as provision should accordance with the Companies Acts 1963 to required by (specify accounting standards).. If losses has been so 2005. 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 We have obtained all the information and explanations the year and the retained earnings at 31 December 20x1 by z.

which we consider necessary In view ofpurposes of our audit. In our the losses referred to books for the the effect of the failure to provide for opinion proper above, in of account have been kept our opinion the financial statements DO NOT give a true and fair view, in by the company. The financial statements are in agreement accordance with Generally Accepted Accounting Practice in Ireland, of the state of the with the books of companys account.
affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended.

In our opinion, the information given in the Directors Report is consistent with the financial statements.
30

ABC & Co., Certified Public Accountants & Registered Auditors, 14 Green Street, Dublin 11. 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 Date 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.

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SECTION 3
MODIFIED AUDITORS 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 Companys ability to continuefinancialgoing concern. Irish non-publicly traded company prepares Irish GAAP as a
statements. The company incurred a net loss of x during the year ended 31 December 20x1 and, as of that date, the companys 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 companys ability to continue as a going concern. The company makes relevant disclosures in the financial statements The auditor issues an unqualified auditors report with an emphasis of matter paragraph setting out the basis of the auditors 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 companys circumstances, OPINION consistently applied and adequately disclosed. 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 companys affairs as at 31 December 20x1 and of its profit/(loss) for the year then ended and We planned and performed our audit so as to obtain all the have been properly prepared in accordance with the Companies Acts 1963 to 2005.

information and explanations which we considered necessary in order to provide us with We have obtained all the information and explanations we consider necessary for the sufficient purpose of our audit. In our opinion, proper books of account have been kept by the company. Theto give statements are in agreement withthat theof account. evidence financial reasonable assurance the books financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In In our opinion, the information given in the Directors Report is consistent with the financial statements. forming our opinion we also evaluated the overall adequacy of the presentation of 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 information in the financial statements.
not exist at 31 December 20x1 a financial situation which, under section 40(1) of the

33

Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of concern Emphasis of matter- Going the company.
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 companys 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 companys 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 companys 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

34

In assessing whether it is appropriate to prepare the financial statements on a going concern basis the directors have paid particular attention Qualified opinion Example 13 to a period on Disagreement. Irish GAAP financial statements where the going concern period considered by directors does not 30 September 20x3 which is less than twelve months from comply with FRS 18 but is disclosed. theIrish non-publicly traded company prepares Irish GAAP financial date of approval statements. of the financial statements. This fact has not been disclosed In assessing whether it is appropriate to prepare the financial in the financial concern basis, the directors have paid particular statements on a going attention to a period ending 30 September 20x3 which is less than one statements,date of approval of the to the requirements of Financial contrary financial statements on 31 October year from the 20x2. Reporting Standard 18 in the financial statements The directors have not disclosed this fact breaching the requirements of paragraph 61(b) of Financial Reporting Accounting Policies FRS 18 requires the disclosure of 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 QUALIFIED OPINION ARISING FROM DEPARTURE FROM FRS 18 ACCOUNTING POLICIES companys 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.
35
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

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 ABC & Co., 40(1) of the Certified Public Accountants & Registered Auditors, Companies (Amendment) Act 1983, would require the convening of an 14 Green Street, Dublin 11. extraordinary Date general meeting of the company.

36

The companys financing arrangements expire and amounts outstanding are payable on 19 July 20x2. The company has been unable to re-negotiate or Example 14 Qualified opinion Disagreement. Non-disclosure of going obtain replacement financing. This situation indicates the concern problems. Irish non-publicly traded existence of a company prepares Irish GAAP financial statements. material uncertainty which may cast significant doubt on The financial statements do not disclose that the Companys financing arrangements expire the companys and amounts outstanding are payable on 19 July ability 20x2 and that the Company has been unable to re-negotiate or obtain replacement financing. to The situation indicates the existence of a material uncertainty which therefore it may be continue as a going concern and may to realise its doubt on unablecast significanttherefore itthe Companys ability to continue as a going concern and may be unable to realise its assets and discharge its liabilities in the normal course of business. assets and dischargesignificant level of concern about the normal course of its liabilities in The auditor concludes that there is a going concern and business. The disagrees with the failure to disclose this information in the financial statements. The auditors issue a qualified except for statements disagreement. financial opinion describing the(and notes thereto) do not disclose this fact. QUALIFIED OPINION ARISING FROM OMISSION OF INFORMATION CONCERNING GOING
CONCERN

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 companys 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 37 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 ABC & Co., Certified Public Accountants Companies (Amendment) Act 1983, would require the convening of an & Registered Auditors, extraordinary 14 Green Street, Dublin 11. meeting of the company. general
Date

38

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.
Irish non-publicly traded company prepares Irish GAAP 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 entitys circumstances. The auditor considers that the particular circumstances of the company and the nature of the companys 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 companys 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

39

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 QUALIFIED OPINION ARISING FROM LIMITATION IN AUDIT SCOPE information in the financial statements. 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 In respect solely of the limitation on our work relating to the assessment of Generally the Accepted Accounting Practice in Ireland, of the state of the companys appropriateness of the going concern basis of preparation of the financial affairs as at statements we have not books of accountinformation kept explanations that obtained all the have been In our opinion, proper of its profit/(loss) for the yearand by the company. 31 December 20x1 and then ended and have we The been considered necessary for the purpose of our audit. properly statements accordance with with the books of 1963 to financial prepared in are in agreementthe Companies Actsaccount.2005.

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 Date 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.

40

Example 16 Disclaimer of opinion. Going concern company has not prepared profit or cash flow projections for an appropriate period subsequent Irish non-publicly traded date. to the balance sheet company prepares Irish GAAP financial
statements. 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 companys 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 companys 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.
41

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, In the statesolely of the limitation on as atwork referred 20x1 andwe its profit/ of respect of the companys affairs our 31 December to above of have not obtained all the information and explanations that we considered necessary (loss) for the year then ended and have been properly prepared in accordance for In our opinion, proper books of account have been kept by the company. the purpose of our audit. with the The Companies Acts 1963 to 2005.

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 Date 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.

42

The net assets of the opinion. Significant level theconcern about the more Example 17 Adverse company, as stated in of balance sheet are companys ability to continue as a going concern that is not disclosed in the than half of financial statements the amount of its called up share capital and, in our opinion, on that basis Irish non-publicly therestatements. traded company prepares Irish GAAP financial did exist there is significant level 20x1 about the companys not Although at 31a Decemberof concern a financial situation which, under section ABC & Co., ability to continue as a going concern the financial statements and 40(1)Public Accountants of the Certifiednotes do not disclose this fact and the directors have prepared the & Registered Auditors, financial statements on the going Companies (Amendment)concern basis. disclose that 14 Green Street, considers that the financial Act 1983, would require the convening of an The auditor statements should Dublin 11. there is a material uncertainty, which may cast doubt on the companys extraordinary ability to continue as going concern. Date The effect of this disagreement is so material and pervasive to the general meeting ofa the company.
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 companys 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 In all other respects, in our opinion the financial statements doubt have been properly on the companys ability to continue as a going concern and therefore it may In our opinion, realise its the omission discharge its liabilitiesActs 1963 to be unable toin accordance and of theinformation mentionedthe normal prepared because of assets with the Companies in above, the financial statements do not give a true and fair view, in accordance with course 2005. Generally The financial statements (and notes thereto) do not disclose this of business. Acceptedhave been prepared on Ireland, of concern basis. companys affairs as fact and Accounting Practice in the going the state of the at We have obtained all the information and explanations 31 December consider necessary for the year then ended. which we 20x1 and of its profit/(loss)

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 44 43 financial statements.