## SA 700: Forming an Opinion and Reporting on Financial Statements

### Objective of SA 700

To guide the auditor in forming an opinion on the financial statements (FS).
To prescribe the form and content of the audit report.

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### Elements / Contents of the Audit Report (14 Elements)

#	Element	Key Note
1	Title	Must be clear (e.g., "Independent Auditor's Report")
2	Addressee	Usually shareholders / those appointing auditor
3	Opinion Paragraph	The core conclusion on FS
4	Basis for Opinion	Explains how opinion was formed
5	Material Uncertainty — Going Concern	Per SA 570, if applicable
6	Key Audit Matters	Per SA 701, for listed entities
7	Responsibilities of Management	Preparation of FS
8	Auditor's Responsibilities	Conducting the audit
9	EMP & OMP	Emphasis of Matter / Other Matter per SA 706
10	Other Reporting Responsibilities	e.g., Companies Act requirements
11	Signature of Auditor	With membership number
12	Place of Signature	City where signed
13	Date of Audit Report	Not before date of sufficient evidence
14	UDIN	Unique Document Identification Number

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### Unmodified Opinion

An unmodified opinion is expressed when the auditor concludes the FS are prepared, in all material respects, in accordance with the Applicable Financial Reporting Framework (AFRF).

#### Matters Required in the Opinion Paragraph

1. Name of the entity whose FS have been audited

2. Description of the FS

3. Titles of components (e.g., Balance Sheet, P&L, Cash Flow)

4. Reference to notes and significant accounting policies

5. Period covered by the FS

6. The actual opinion expressed

#### Matters Required in the Basis for Opinion Paragraph

1. Audit conducted as per Standards on Auditing (SAs)

2. Brief statement of auditor's responsibilities

3. Compliance with ethical requirements (Code of Ethics)

4. Auditor obtained Sufficient and Appropriate Audit Evidence (S&A AE) for the opinion

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### Decision Tree: Unmodified vs. Modified Opinion

```

Obtain S&A AE → Draw conclusions → Are FS free from Material Misstatement?

YES ────────────────────── NO

| |

Unmodified Opinion Modified Opinion

(Qualified / Adverse / Disclaimer)

```

Worked example

### Example 1

Example 1 — Opinion Para vs. Basis for Opinion Para:

A student confuses what goes in the Opinion paragraph versus the Basis for Opinion paragraph.

Opinion Para: States WHAT the auditor found — e.g., 'The financial statements give a true and fair view...'
Basis for Opinion Para: States HOW the auditor arrived at that conclusion — conducted per SAs, obtained S&A AE, complied with ethics.

Mnemonic: Opinion = WHAT | Basis = HOW

### Example 2

Example 2 — UDIN Requirement:

XYZ Ltd.'s auditor signs the audit report but forgets to include the UDIN. Is the report complete?

Answer: No. UDIN (Unique Document Identification Number) is a mandatory element (element #14) of the audit report under SA 700. Its omission renders the report incomplete. The UDIN is generated on the ICAI portal and serves as a verification mechanism against fake audit certificates.

⚠️ Common exam mistakes

Listing only 10–12 elements and missing UDIN (#14) or EMP/OMP (#9) in exam answers.
Confusing 'Opinion paragraph' contents with 'Basis for Opinion paragraph' contents — both look similar but serve different purposes.
Writing that unmodified opinion means 'no errors found' — it means FS are free from MATERIAL misstatement, not all errors.
Forgetting that the date of the audit report cannot be before the date on which sufficient appropriate audit evidence was obtained.
Omitting 'Place of Signature' as a separate element — students often merge it with the signature.

Reference: — SA 700 (Revised) — Forming an Opinion and Reporting on Financial Statements (ICAI)

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SA 700 — Audit Report: Elements and Unmodified Opinion

Worked example

⚠️ Common exam mistakes