SINGAPORE

STANDARD
ON AUDITING

SSA 510

Initial Audit Engagements

Opening Balances
SSA 510 Initial Audit Engagements Opening Balances was
revised in January 2010. Auditors are required to comply with
the auditing standards contained in this SSA in respect of audits
of financial statements for periods beginning on or after 15
December 2009.
The Companies (Amendment) Act 2014 gave rise to conforming
amendments in this SSA in June 2015. These amendments
(terminology changes) will be effective for reports dated on or
after 1 July 2015.

SINGAPORE STANDARD ON AUDITING 510

INITIAL AUDIT ENGAGEMENTS OPENING BALANCES
(Effective for audits of financial statements for periods beginning on or after 15 December 2009)

CONTENTS
Paragraph
Foreword
Introduction
Scope of this SSA

Effective Date

Objective

Definitions

Requirements
Audit Procedures

5-9

Audit Conclusions and Reporting

10-13

Application and Other Explanatory Material

Audit Procedures

A1-A7

Audit Conclusions and Reporting

A8-A9

Appendix: Illustrations of Auditors Reports with Modified Opinions

Singapore Standard on Auditing (SSA) 510, Initial Audit EngagementsOpening Balances
should be read in conjunction with SSA 200, Overall Objectives of the Independent Auditor
and the Conduct of an Audit in Accordance with Singapore Standards on Auditing.

SINGAPORE
STANDARD
ON AUDITING

SSA 510

Foreword
i.

This Standard is based on International Standard on Auditing 510, with such amendments
as were considered appropriate for local adoption.

ii.

The major amendments are as follows:

Appendix: Illustrations of Auditors Reports with Modified Opinions

INDEPENDENT AUDITORS REPORT
[Appropriate Addressee]

Report on the Financial Statements

We have audited the accompanying financial statements of ABC Company, which comprise
the statement of financial position as at 31 December 20X1, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year then ended, and a summary of significant accounting policies and other explanatory
information.

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards, and for such
internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.

Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.

Basis for Qualified Opinion

We were appointed as auditors of the company on 30 June 20X1 and thus did not observe
the counting of the physical inventories at the beginning of the year. We were unable to
satisfy ourselves by alternative means concerning inventory quantities held at 31 December
20X0. Since opening inventories enter into the determination of the financial performance and
cash flows, we were unable to determine whether adjustments might have been necessary in
respect of the profit for the year reported in the income statement and the net cash flows from
operating activities reported in the cash flow statement.

Qualified Opinion
In our opinion, except for the possible effects of the matter described in the Basis for Qualified
Opinion paragraph, the financial statements present fairly, in all material respects, (or give a
true and fair view of) the financial position of ABC Company as of 31 December 20X1, and
of its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards.

Other Matter
The financial statements of ABC Company for the year ended 31 December 20X0 were
audited by another auditor who expressed an unmodified opinion on those statements on 31
March 20X1.

Report on Other Legal and Regulatory Requirements

[Form and content of this section of the auditors report will vary depending on the nature of
the auditors other reporting responsibilities.]
[Auditors signature]
[Date of the auditors report]
[Auditors address]
is replaced by

INDEPENDENT AUDITORS REPORT

[Appropriate Addressee]

Report on the Financial Statements

We have audited the accompanying financial statements of ABC Company, which
comprise the statement of financial position as at 31 December 20X1, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year then ended, and a summary of significant accounting policies and other explanatory
information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and
fair view in accordance with the provisions of the Singapore Companies Act, Chapter. 50
(the Act) and Singapore Financial Reporting Standards, and for devising and maintaining
a system of internal accounting controls sufficient to provide a reasonable assurance that
assets are safeguarded against loss from unauthorised use or disposition; and transactions
are properly authorised and that they are recorded as necessary to permit the preparation
of true and fair financial statements and to maintain accountability of assets.

Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation of financial statements that
give a true and fair view in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entitys internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.
Basis for Qualified Opinion
We were appointed as auditors of the Company on 30 June 20X1 and thus did not observe
the counting of the physical inventories at the beginning of the year. We were unable to
satisfy ourselves by alternative means concerning inventory quantities held at 31 December
20X0. Since opening inventories enter into the determination of the financial performance and
cash flows, we were unable to determine whether adjustments might have been
necessary in respect of the profit for the year reported in the income statement and the net cash
flows from operating activities reported in the cash flow statement.
Qualified Opinion
In our opinion, except for the possible effects of the matter described in the Basis for Qualified
Opinion paragraph, the financial statements are properly drawn up in accordance with the
provisions of the Act and Singapore Financial Reporting Standards so as to give a true and
fair view of the financial position of the Company as at 31 December 20X1 and the financial
performance, changes in equity and cash flows of the Company for the year ended on that
date.
Other Matter
The financial statements of ABC Company for the year ended 31 December 20X0 were
audited by another auditor who expressed an unmodified opinion on those statements on
31 March 20X1.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the
Company have been properly kept in accordance with the provisions of the Act.
[Form and content of this section of the auditors report will vary depending on the nature of
the auditors other reporting responsibilities.]
___________________ (Firm)
Public Accountants and
Chartered Accountants
Singapore
______________________ (Date)
5

Introduction
Scope of this SSA
1.

This Singapore Standard on Auditing (SSA) deals with the auditors responsibilities relating
to opening balances in an initial audit engagement. In addition to financial statement amounts,
opening balances include matters requiring disclosure that existed at the beginning of the
period, such as contingencies and commitments. When the financial statements include
1
comparative financial information, the requirements and guidance in SSA 710 also apply.
2
SSA 300 includes additional requirements and guidance regarding activities prior to starting
an initial audit.

Effective Date
2.

This SSA is effective for audits of financial statements for periods beginning on or after 15
December 2009.

Objective
3.

In conducting an initial audit engagement, the objective of the auditor with respect to opening
balances is to obtain sufficient appropriate audit evidence about whether:
(a)

Opening balances contain misstatements that materially affect the current periods
financial statements; and

(b)

Appropriate accounting policies reflected in the opening balances have been

consistently applied in the current periods financial statements, or changes thereto
are appropriately accounted for and adequately presented and disclo sed in
accordance with the applicable financial reporting framework.

Definitions
4.

For the purposes of the SSAs, the following terms have the meanings attributed below:
(a)

1
2

Initial audit engagement An engagement in which either:

(i)

The financial statements for the prior period were not audited; or

(ii)

The financial statements for the prior period were audited by a predecessor
auditor.

(b)

Opening balances Those account balances that exist at the beginning of the period.
Opening balances are based upon the closing balances of the prior period and reflect
the effects of transactions and events of prior periods and accounting policies applied
in the prior period. Opening balances also include matters requiring disclosure that
existed at the beginning of the period, such as contingencies and commitments.

(c)

Predecessor auditor The auditor from a different audit firm, who audited the
financial statements of an entity in the prior period and who has been replaced by the
current auditor.

SSA 710, Comparative Information Corresponding Figures and Comparative Financial Statements.
SSA 300, Planning an Audit of Financial Statements.

Requirements
Audit Procedures
Opening Balances
5.

The auditor shall read the most recent financial statements, if any, and the predecessor
auditors report thereon, if any, for information relevant to opening balances, including
disclosures.

6.

The auditor shall obtain sufficient appropriate audit evidence about whether the opening
balances contain misstatements that materially affect the current periods financial statements
by: (Ref: Para. A1A2)

7.

(a)

Determining whether the prior periods closing balances have been correctly brought
forward to the current period or, when appropriate, have been restated;

(b)

Determining whether the opening balances reflect the application of appropriate

accounting policies; and

(c)

Performing one or more of the following: (Ref: Para. A3A7)

(i)

Where the prior year financial statements were audited, reviewing the
predecessor auditors working papers to obtain evidence regarding the
opening balances;

(ii)

Evaluating whether audit procedures performed in the current period provide

evidence relevant to the opening balances; or

(iii)

Performing specific audit procedures to obtain evidence regarding the

opening balances.

If the auditor obtains audit evidence that the opening balances contain misstatements that
could materially affect the current periods financial statements, the auditor shall perform such
additional audit procedures as are appropriate in the circumstances to determine the effect on
the current periods financial statements. If the auditor concludes that such misstatements
exist in the current periods financial statements, the auditor shall communicate the
misstatements with the appropriate level of management and those charged with
governance in accordance with SSA 450.3

Consistency of Accounting Policies

8.

The auditor shall obtain sufficient appropriate audit evidence about whether the accounting
policies reflected in the opening balances have been consistently applied in the current
periods financial statements, and whether changes in the accounting policies have been
appropriately accounted for and adequately presented and disclosed in accordance with the
applicable financial reporting framework.

Relevant Information in the Predecessor Auditors Report

9.

3
4

If the prior periods financial statements were audited by a predecessor auditor and there was
a modification to the opinion, the auditor shall evaluate the effect of the matter giving rise to
the modification in assessing the risks of material misstatement in the current periods
financial statements in accordance with SSA 315.4

SSA 450, Evaluation of Misstatements Identified during the Audit, paragraphs 8 and 12.
SSA 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its
Environment.

Audit Conclusions and Reporting

Opening Balances
10.

If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening
balances, the auditor shall express a qualified opinion or disclaim an opinion on the financial
5
statements, as appropriate, in accordance with SSA 705. (Ref: Para. A8)

11.

If the auditor concludes that the opening balances contain a misstatement that materially
affects the current periods financial statements, and the effect of the misstatement is not
appropriately accounted for or not adequately presented or disclosed, the auditor shall
express a qualified opinion or an adverse opinion, as appropriate, in accordance with SSA
705.

Consistency of Accounting Policies

12.

If the auditor concludes that:

(a)

the current periods accounting policies are not consistently applied in relation to
opening balances in accordance with the applicable financial reporting framework; or

(b)

a change in accounting policies is not appropriately accounted for or not adequately

presented or disclosed in accordance with the applicable financial reporting
framework,

the auditor shall express a qualified opinion or an adverse opinion as appropriate in

accordance with SSA 705.

Modification to the Opinion in the Predecessor Auditors Report

13.

If the predecessor auditors opinion regarding the prior periods financial statements
includeda modification to the auditors opinion that remains relevant and material to the
current periods financial statements, the auditor shall modify the auditors opinion on the
current periods financial statements in accordance with SSA 705 and SSA 710. (Ref: Para.
A9)
***

SSA 705, Modifications to the Opinion in the Independent Auditors Report.

Application and Other Explanatory Material

Audit Procedures
Considerations Specific to Public Sector Entities (Ref: Para. 6)
A1

In the public sector, there may be legal or regulatory limitations on the information that the
current auditor can obtain from a predecessor auditor. For example, if a public sector entity
that has previously been audited by a statutorily appointed auditor (for example, an Auditor
General, or other suitably qualified person appointed on behalf of the Auditor General) is
privatized, the amount of access to working papers or other information that the statutorily
appointed auditor can provide a newly-appointed auditor that is in the private sector may be
constrained by privacy or secrecy laws or regulations. In situations where such
communications are constrained, audit evidence may need to be obtained through other
means and, if sufficient appropriate audit evidence cannot be obtained, consideration given to
the effect on the auditors opinion.

A2

If the statutorily appointed auditor outsources an audit of a public sector entity to a private
sector audit firm, and the statutorily appointed auditor appoints an audit firm other than the
firm that audited the financial statements of the public sector entity in the prior period, this is
not usually regarded as a change in auditors for the statutorily appointed auditor. Depending
on the nature of the outsourcing arrangement, however, the audit engagement may be
considered an initial audit engagement from the perspective of the private sector auditor in
fulfilling their responsibilities, and therefore this SSA applies.

Opening Balances (Ref: Para. 6(c))

A3

The nature and extent of audit procedures necessary to obtain sufficient appropriate audit
evidence regarding opening balances depend on such matters as:

The accounting policies followed by the entity.

The nature of the account balances, classes of transactions and disclosures and the
risks of material misstatement in the current periods financial statements.

The significance of the opening balances relative to the current periods financial
statements.

Whether the prior periods financial statements were audited and, if so, whether the
predecessor auditors opinion was modified.

A4

If the prior periods financial statements were audited by a predecessor auditor, the auditor
may be able to obtain sufficient appropriate audit evidence regarding the opening balances by
reviewing the predecessor auditors working papers. Whether such a review provides
sufficient appropriate audit evidence is influenced by the professional competence and
independence of the predecessor auditor.

A5

Relevant ethical and professional requirements guide the current auditors communications
with the predecessor auditor.

A6

For current assets and liabilities, some audit evidence about opening balances may be
obtained as part of the current periods audit procedures. For example, the collection
(payment) of opening accounts receivable (accounts payable) during the current period will
provide some audit evidence of their existence, rights and obligations, completeness and
valuation at the beginning of the period. In the case of inventories, however, the current
periods audit procedures on the closing inventory balance provide little audit evidence
regarding inventory on hand at the beginning of the period. Therefore, additional audit
procedures may be necessary, and one or more of the following may provide sufficient
appropriate audit evidence:
9

A7.

Observing a current physical inventory count and reconciling it to the opening

inventory quantities.

Performing audit procedures on the valuation of the opening inventory items.

Performing audit procedures on gross profit and cutoff.

For non-current assets and liabilities, such as property plant and equipment, investments and
long-term debt, some audit evidence may be obtained by examining the accounting records
and other information underlying the opening balances. In certain cases, the auditor may be
able to obtain some audit evidence regarding opening balances through confirmation with
third parties, for example, for long-term debt and investments. In other cases, the auditor may
need to carry out additional audit procedures.

Audit Conclusions and Reporting

Opening Balances (Ref: Para. 10)
A8.

SSA 705 establishes requirements and provides guidance on circumstances that may result
in a modification to the auditors opinion on the financial statements, the type of opinion
appropriate in the circumstances, and the content of the auditors report when the auditors
opinion is modified. The inability of the auditor to obtain sufficient appropriate audit evidence
regarding opening balances may result in one of the following modifications to the opinion in
the auditors report:
(a)

A qualified opinion or a disclaimer of opinion, as is appropriate in the circumstances;

or

(b)

Unless prohibited by law or regulation, an opinion which is qualified or disclaimed, as

appropriate, regarding the results of operations, and cash flows, where relevant, and
unmodified regarding financial position.

The Appendix includes illustrative auditors reports.

Modification to the Opinion in the Predecessor Auditors Report (Ref: Para. 13)
A9.

In some situations, a modification to the predecessor auditors opinion may not be relevant
and material to the opinion on the current periods financial statements. This may be the case
where, for example, there was a scope limitation in the prior period, but the matter giving rise
to the scope limitation has been resolved in the current period.

10

Appendix
(Ref: Para. A8)
Illustrations of Auditors Reports with Modified Opinions
Illustration 1:
Circumstances described in paragraph A8(a) include the following:

The auditor did not observe the counting of the physical inventory at the beginning
of the current period and was unable to obtain sufficient appropriate audit evidence
regarding the opening balances of inventory.

The possible effects of the inability to obtain sufficient appropriate audit evidence
regarding opening balances of inventory are deemed to be material but not
6
pervasive to the entitys financial performance and cash flows.

The financial position at year end is fairly presented.

In this particular jurisdiction, law and regulation prohibit the auditor from giving an
opinion which is qualified regarding the financial performance and cash flows and
unmodified regarding financial position.

INDEPENDENT AUDITORS REPORT

[Appropriate Addressee]

Report on the Financial Statements7

We have audited the accompanying financial statements of ABC Company, which comprise the
statement of financial position as at 31 December 20X1, and the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory information.

Managements8 Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and
Singapore Financial Reporting Standards, and for devising and maintaining a system of internal
accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against
loss from unauthorised use or disposition; and transactions are properly authorised and that they are
recorded as necessary to permit the preparation of true and fair financial statements and to maintain
8a
accountability of assets.

Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with Singapore Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
6

If the possible effects, in the auditors judgment, are considered to be material and pervasive to the entitys financial
performance and cash flows, the auditor would disclaim an opinion on the financial performance and cash flows.
7
The sub-title Report on the Financial Statements is unnecessary in circumstances when the second sub-title Report on
Other Legal and Regulatory Requirements is not applicable.
8
Or other term that is appropriate in the context of the legal framework in the particular jurisdiction.
8a
This wording is based on that found in SSA 700 Forming an Opinion and Reporting on Financial Statements.

11

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entitys preparation of financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
9
opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our qualified audit opinion.

Basis for Qualified Opinion

We were appointed as auditors of the company on 30 June 20X1 and thus did not observe the
counting of the physical inventories at the beginning of the year. We were unable to satisfy ourselves
by alternative means concerning inventory quantities held at 31 December 20X0. Since opening
inventories enter into the determination of the financial performance and cash flows, we were unable
to determine whether adjustments might have been necessary in respect of the profit for the year
reported in the income statement and the net cash flows from operating activities reported in the cash
flow statement.

Qualified Opinion
In our opinion, except for the possible effects of the matter described in the Basis for Qualified
Opinion paragraph, the financial statements are properly drawn up in accordance with the provisions
of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the
financial position of the Company as at ________ _____ (date) and the financial performance,
changes in equity and cash flows of the Company for the year ended on that date.

Other Matter
The financial statements of ABC Company for the year ended 31 December 20X0 were audited by
another auditor who expressed an unmodified opinion on those statements on 31 March 20X1.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company have
been properly kept in accordance with the provisions of the Act.
[Form and content of this section of the auditors report will vary depending on the nature of the
auditors other reporting responsibilities.]
__________________________ (Firm)
Public Accountants and
Chartered Accountants
Singapore
_________________________ (Date)

In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the financial statements, this sentence would be worded as follows: In making those risk
assessments, the auditor considers internal control relevant to the entitys preparation of financial statements that give a
true and fair view in order to design audit procedures that are appropriate in the circumstances.

12

Illustration 2:
Circumstances described in paragraph A8(b) include the following:

The auditor did not observe the counting of the physical inventory at the beginning of the
current period and was unable to obtain sufficient appropriate audit evidence regarding
the opening balances of inventory.

The possible effects of the inability to obtain sufficient appropriate audit evidence
regarding opening balances of inventory are deemed to be material but not pervasive to
the entitys financial performance and cash flows.10

The financial position at year end is fairly presented.

An opinion that is qualified regarding the financial performance and cash flows and
unmodified regarding financial position is considered appropriate in the circumstances.

INDEPENDENT AUDITORS REPORT

[Appropriate Addressee]

Report on the Financial Statements11

We have audited the accompanying financial statements of ABC Company, which comprise the
statement of financial position as at 31 December 20X1, and the statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory information.

Managements12 Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view
in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and
Singapore Financial Reporting Standards, and for devising and maintaining a system of internal
accounting controls sufficient to provide a reasonable assurance that assets are safeguarded
against loss from unauthorised use or disposition; and transactions are properly authorised and
that they are recorded as necessary to permit the preparation of true and fair financial statements
and to maintain accountability of assets. 13

Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with Singapore Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entitys preparation of financial statements that give a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
10

If the possible effects, in the auditors judgment, are considered to be material and pervasive to the entitys financial
performance and cash flows, the auditor would disclaim an opinion on the financial performance and cash flows.
11
The sub-title Report on the Financial Statements is unnecessary in circumstances when the second sub-title Report on
Other Legal and Regulatory Requirements is not applicable.
12
Or other term that is appropriate in the context of the legal framework in the particular jurisdiction.
13
This wording is based on that found in SSA 700 Forming an Opinion and Reporting on Financial Statements.

13

14

expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our unmodified opinion on the financial position and our qualified audit opinion on the
financial performance and cash flows.

Basis for Qualified Opinion on the Financial Performance and Cash Flows
We were appointed as auditors of the company on 30 June 20X1 and thus did not observe the
counting of the physical inventories at the beginning of the year. We were unable to satisfy
ourselves by alternative means concerning inventory quantities held at 31 December 20X0. Since
opening inventories enter into the determination of the financial performance and cash flows, we
were unable to determine whether adjustments might have been necessary in respect of the
profit for the year reported in the income statement and the net cash flows from operating activities
reported in the cash flow statement.

Qualified Opinion on the Financial Performance and Cash Flows

In our opinion, except for the possible effects of the matter described in the Basis for Qualified
Opinion paragraph, the Income Statement and Cash Flow Statement give a true and fair view of the
financial performance and cash flows of ABC Company for the year ended 31 December 20X1
in accordance with the provisions of the Act and Singapore Financial Reporting Standards.

Opinion on the Financial Position

In our opinion, the balance sheet gives a true and fair view of the financial position of ABC
Company as at 31 December 20X1 in accordance with the provisions of the Act and Singapore
Financial Reporting Standards.

Other Matter
The financial statements of ABC Company for the year ended 31 December 20X0 were audited by
another auditor who expressed an unmodified opinion on those statements on 31 March 20X1.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company have
been properly kept in accordance with the provisions of the Act.
[Form and content of this section of the auditors report will vary depending on the nature of the
auditors other reporting responsibilities.]
__________________________ (Firm)
Public Accountants and
Chartered Accountants
Singapore
_____________________ (Date)

14

In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the financial statements, this sentence would be worded as follows: In making those risk
assessments, the auditor considers internal control relevant to the entitys preparation of financial statements that give a true
and fair view in order to design audit procedures that are appropriate in the circumstances.

14