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Auditors' report modified effective Dec. 31, 2006

Auditors' report modified effective Dec. 31, 2006

In February 2006, the Auditing & Assurance Standards Council (AASC) approved the adoption of Philippine Standard on Auditing (PSA) 700 (Revised), The Independent Auditor’s Report on a Complete Set of General Purpose Financial Statements.

PSA 700 (Revised) was approved by the Board of Accountancy and the Professional Regulation Commission in June 2006 and was adopted by the Securities and Exchange Commission as part of its rules and regulations through the SEC Memorandum Circular No. 12, Series of 2006 issued on October 30, 2006.

PSA 700 (Revised) introduced a number of important changes to the auditing standard covering independent auditor’s report that contain unqualified opinion, the most significant of which is the new wording for the auditor’s report. PSA 700 (Revised) is effective for auditor’s reports dated on or after December 31, 2006. This means that auditor’s reports on financial statements for the year ending December 31, 2006 will use the new auditor’s report wording.

The changes introduced in PSA 700 (Revised) are of great importance not only to independent auditors who report on financial statements audited by them but also to management of companies whose financial statements are being reported on. This is because the new auditor’s report wording includes, among others, a better explanation of the responsibilities of management for the financial statements. For this reason, it will be important for management to also have an appreciation of the changes made to the wording for the auditor’s report that will accompany their audited financial statements.

Please open the attachment for the revised wording of the auditor's report.