Illustrative Auditors Reports Bulletin March 2020 V1 2 4

Bulletin
Financial Reporting Council
March 2020
BULLETIN:
Illustrative Auditor’s Reports On United
Kingdom Private Sector Financial
Statements
The Financial Reporting Council (FRC) is the UK’s independent
regulator responsible for promoting high quality corporate
governance and reporting to foster investment. The FRC sets
the UK Corporate Governance and Stewardship Codes and UK
standards for accounting and actuarial work; monitors and takes
action to promote the quality of corporate reporting; and operates
independent enforcement arrangements for accountants and
actuaries. As the Competent Authority for audit in the UK the FRC
sets auditing and ethical standards and monitors and enforces
audit quality.
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BULLETIN: ILLUSTRATIVE AUDITOR’S REPORTS ON UNITED
KINGDOM PRIVATE SECTOR FINANCIAL STATEMENTS
Contents Page (s)

Introduction 2
Opinion 2
Modifications to the auditor’s opinion 3
Opinion in respect of an additional financial reporting 4
framework
Basis for opinion 4
Our application of materiality 5
Conclusions relating to going concern 6
Emphasis of matter and other matter paragraphs 8
Other legal and regulatory matters we are required to 8

address
Corporate governance statement 9

Corporate governance statement included as a separate report 11
Location of the description of auditor’s 11

responsibilities for the audit
of the financial statements
Other matters the auditor is required to address 13
Alternative presentation options for financial 13

statements of a group
References to IFRS as adopted by the European Union 14

post-EU Exit
Appendices 1 – 7B: Illustrative Auditors Reports 15 – 43
Appendix 8: Auditor’s Responsibilities 44
Introduction
1
1. This compendium of illustrative auditor’s reports is applicable to United Kingdom private
sector financial statements. The auditor’s reports set out in the Appendices
illustrate how the requirements of ISA (UK) 700 (Revised November 2019) and other
reporting requirements of the ISAs (UK) could be applied. They also illustrate the
requirements of the law and regulations applicable to the particular type of entity to which
the illustration applies.
2. The reports included within this compendium are illustrative and other approaches may be
adopted provided that the form and content of the auditor’s report meets the requirements of
ISA (UK) 700 (Revised November 2019), other relevant standards and applicable legal and
regulatory requirements. The FRC supports profession-led innovation in auditor reporting
which promotes audit quality, transparent and accessible auditor’s reports for users of the
audited financial statements.
3. The auditor’s report is the key deliverable of the audit process for users of the audited
financial statements, many of whom are not auditors and who’s technical knowledge of the
audit standards may be limited. It is therefore important that the auditor’s report is written in
clear and unambiguous language so that it is understandable for such users.
Opinion
4. In accordance with ISA (UK) 700 (Revised November 2019), the Opinion section of the
auditor’s report shall refer to the applicable financial reporting framework used to prepare
the financial statements.
5. In the UK, the applicable financial reporting framework is usually one of the following:
International Financial Reporting United Kingdom Generally Accepted

Standards (IFRSs) as adopted by the Accounting Practice (UK GAAP)
European Union
International Financial Reporting Standards

UK GAAP comprises applicable UK law and
(IFRSs) as adopted by the European Union,
includes one of the following UK Accounting
and the national law that is applicable when
Standards as issued by the FRC; FRS 102,
using IFRSs and, in the case of
FRS 101 (when a qualifying entity has opted
consolidated financial statements of publicly
to apply) or FRS 105 (when an eligible entity
traded companies, Article 4 of the IAS
has opted to apply).
Regulation (1606/2002/EC).
6. Section 408 of the Companies Act 2006 allows a company that prepares group accounts to
omit the parent company’s profit and loss account from the company’s financial statements
provided that:
• the parent company’s balance sheet shows the parent company’s profit or loss for the
financial year determined in accordance with the Companies Act 2006; and
• it is disclosed in the parent company’s financial statements that the exemption applies.
7. Where the Section 408 exemption is taken, the opinion wording is amended to address this.
Appendices 2 and 5 contains examples of this opinion wording.
Modifications to the auditor’s opinion
2
8. In the course of their work, an auditor may:
• conclude that, based on the audit evidence obtained, the financial statements as a
whole are not free from material misstatement; or
• might be unable to obtain sufficient appropriate audit evidence to conclude that the
financial statements as a whole are free from material misstatement.
9. Where either of these situations arises, the auditor is required to modify their opinion in the
auditor’s report in accordance with ISA (UK) 705 (Revised June 2016). The table below
illustrates the impact on the auditors report where a modification to the auditor’s opinion is
required:
Scenario Requirement ISA (UK) 705 Relevant

Reference Illustrative
Report (s)
The auditor, having obtained sufficient The auditor Paragraph 7 The Appendix of
appropriate audit evidence, concludes shall express ISA (UK) 705
that misstatements, individually or in a qualified (Revised June
the aggregate, are material, but not opinion 2016) contains
pervasive, to the financial statements. illustrations of
auditor’s reports
OR
with modifications
The auditor is unable to obtain to the opinion.
sufficient appropriate audit evidence Whilst these
on which to base the opinion, but the auditor’s reports
auditor concludes that the possible have not been
effects on the financial statements of tailored for the
undetected misstatements, if any, UK, they illustrate
could be material but not pervasive. the requirements
of the ISA (UK)
where the auditor
The auditor, having obtained sufficient The auditor Paragraph 8 is required to
appropriate audit evidence, concludes shall express modify or disclaim
that misstatements, individually or in an adverse their opinion.
the aggregate, are both material and opinion
pervasive to the financial statements.
The auditor is unable to obtain The auditor Paragraphs 9 and 10

sufficient appropriate audit evidence shall disclaim
on which to base the opinion, and the an opinion
auditor concludes that the possible
effects on the financial statements of
undetected misstatements, if any,
could be both material and pervasive.
OR
3
in extremely rare circumstances
involving multiple uncertainties, the
auditor concludes that,
notwithstanding having obtained
sufficient appropriate audit evidence
regarding each of the individual
uncertainties, it is not possible to form
an opinion on the financial statements
due to the potential interaction of the
uncertainties and their possible
cumulative effect on the financial
statements.
10. The auditor also considers the impact of any modified opinion on the financial statements on
the auditor’s other reporting responsibilities (including those on which they are required to
report by exception). For example, if the auditor has been unable to obtain sufficient
appropriate audit evidence to conclude that the financial statements as a whole are free from
material misstatement and issues a qualified or disclaimer of opinion arising from that
limitation, the auditor considers whether a modified conclusion should be expressed on
whether adequate accounting records have been maintained.1
Opinion in respect of an additional financial reporting framework
11. The financial statements of some companies may be prepared in accordance with two
financial reporting frameworks (for example IFRSs as adopted by the European Union and
IFRSs as issued by the IASB).
12. In such circumstances, each framework is considered separately when forming the auditor’s
opinion on the financial statements and the auditor’s opinion refers to both frameworks.
13. These opinions may be expressed separately or in a single sentence.
Appendix 6 illustrates where the opinion in respect of an additional financial reporting

framework is expressed separately.
Basis for Opinion

14. In accordance with ISA (UK) 700 (Revised November 2019) a Basis for Opinion section shall
directly follow the Opinion section and shall include the following:
• A statement that the audit was conducted in accordance with International Standards
on Auditing (UK) and applicable law;
• A reference to the section of the auditor's report that describes the auditor's
responsibilities under the ISAs (UK);
1
Similarly, paragraph A58-3 of ISA (UK) 700 (Revised June 2016) sets out the circumstances where a modified conclusion in respect of
other reporting responsibilities (including those on which they are required to report by exception) leads to a modification of the auditor’s
opinion on the financial statements.
4
• Includes a statement that the auditor is independent of the entity in accordance with
the relevant ethical requirements relating to the audit and has fulfilled the auditor's
other ethical responsibilities in accordance with these requirements. The statement
shall identify the jurisdiction of origin of the relevant ethical requirements which in the
UK is the FRC’s Ethical Standard concerning the integrity, objectivity and
independence of the auditor, as well as the ethical pronouncements established by
the auditor's relevant professional body; and
• States whether the auditor believes that the audit evidence the auditor has obtained
is sufficient and appropriate to provide a basis for the auditor's opinion.
Application of materiality
15. Materiality is a key concept and one which it is important for stakeholders to have a clear
understanding of. As such, when key audit matters are communicated in line with ISA (UK)
701 (Revised November 2019), paragraph 16-1 requires that the auditor states the following
in respect of materiality and performance materiality:
Item Requirement ISA (UK) 701 Relevant Illustrative

Reference (s) Report (s)
Materiality The threshold used by the Paragraph 16-1 Appendices 3 – 7B

auditor as being materiality for
the financial statements as a
whole and provide an
explanation of the significant
judgements made by the
auditor in determining this
threshold
Performance The threshold used by the Paragraph 16-1 Appendices 3 – 7B
Materiality auditor as being performance
materiality for the financial
statements as a whole and
provide an explanation of the
significant judgements made
by the auditor in determining
this threshold
16. In meeting the above requirements, the auditor may include, but is not limited to, discussion of
the following matters:2
• A description of how the concept of materiality was applied in planning and

performing the audit;
• The rationale for determining performance materiality;
• Materiality level or levels for those classes of transactions, account balances or
disclosures where such materiality levels are lower than materiality for the financial
statements as a whole;
• Any significant revisions made to materiality thresholds made during the course of
the audit; and
• The threshold used for reporting unadjusted differences to the audit committee.
2 ISA (UK) 570, Paragraph A59-2
5
Conclusions relating to going concern
17. The reporting requirements in respect of going concern are detailed within ISA (UK) 570
(Revised September 2016).
18. ISA (UK) 570 (Revised September 2019) paragraph 17-1 requires that the auditor concludes
on:
• If, in the auditors judgement, a material uncertainty relating to going concern exists
and;
• The appropriateness of management's use of the going concern basis of accounting.
19. Below is a summary of the requirements contained within ISA (UK) 570 relating to all entities:
Scenario Impact on auditor’s report ISA (UK) 570 Relevant

Reference (s) Illustrative Report
(s)
Financial statements Where the auditor concludes that Paragraph 21-1 Appendices 1, 2, 3,
have been prepared on management’s use of the going 5, 6, 7A and 7B
a going concern basis concern basis of accounting is
and there is no material appropriate in the circumstances and
uncertainty in relation to no material uncertainty has been
going concern identified, the auditor is required to
report on such matters in a section
headed “Conclusions relating to
Going Concern”.
Financial statements Where the auditor concludes that a Paragraph 22 Appendix 4

have been prepared on material uncertainty exists and
a going concern basis, management has appropriately
but a material disclosed that fact in the financial
uncertainty has been statements, the auditor is required to
identified express an unmodified opinion and
include a separate section under the
heading “Material Uncertainty
Related to Going Concern”
Financial statements The auditor shall express an adverse Paragraph 21 N/A

have been prepared on opinion.
a going concern basis
but, in the auditors
judgement, the use of
the going concern basis
of accounts is
inappropriate.
6
Appropriate disclosure The auditor shall express a qualified Paragraph 23 N/A
about a material or adverse opinion, as appropriate in
uncertainty relating to accordance with ISA (UK) 705 and in
going concern is not the Basis for Qualified (Adverse)
made in the financial Opinion section of the report state
statements. that a material uncertainty exists and
that the matter is not appropriately
disclosed in the entity’s financial
statements.
20. Below is a summary of the requirements contained within ISA (UK) 570 relating to specific
entity types:
Scenario Reporting Requirement ISA (UK) 570 Relevant Illustrative

Reference (s) Report (s)
Entity is a public interest The auditor shall include Paragraph 21-1 Appendices 5, 6, 7A and
entity, an other listed entity, an explanation of how (d) 7B
an entity that is required, or they evaluated
has chosen voluntarily, to management's
report on how they have assessment of the
applied the UK Corporate entity's ability to continue
Governance Code, or an as a going concern and,
other entity subject to the where relevant, key
governance requirements observations arising with
of The Companies respect to that
(Miscellaneous Reporting) evaluation.
Regulations 2018.
Entity applies the UK The auditor reports on Paragraph 21-1 Appendices 6, 7A and 7B
Corporate Governance whether they have (c)
Code, voluntarily or anything material to add
otherwise or draw attention to in
relation to the directors Paragraph 16-1
statements in the
financial statements
about if they consider it
appropriate for the entity
to adopt the going
concern basis of
accounting in preparing
The level of detail
provided is a matter of
professional judgement,
but the description should
be sufficiently detailed
such that users can
understand which factors
the auditor considered
most relevant in their
7
assessment, the
procedures performed
and the outcome of those
procedures.
Emphasis of matter and other matter paragraphs
21. ISA (UK) 706 (Revised June 2016) deals with additional communication in the auditor’s report
when the auditor considers it necessary to:
• Draw users’ attention to a matter or matters presented or disclosed in the financial

statements that are of such importance that they are fundamental to users’
understanding of the financial statements (known as an Emphasis of Matter); or
• Draw users’ attention to any matter or matters other than those presented or disclosed
in the financial statements that are relevant to users’ understanding of the audit, the
auditor’s responsibilities or the auditor’s report (known as an Other Matter).
Other legal and regulatory matters the auditor is required to address

22. In addition to forming an opinion on the financial statements, there are other legal and
regulatory matters that the auditor is required to address. These, along with the reporting
responsibility of the auditor are described below:
Relevant Section of the Relevant Appendices

Annual Report Auditor’s Reporting Responsibility
The auditor’s responsibility is to read the other Appendices 1 – 7B

Other Information
information and, in doing so, consider whether
this other information is materially inconsistent
with the financial statements or the knowledge
obtained in the course of the audit.
The opinion on the financial statements does

not cover the other information and, except to
the extent otherwise explicitly stated in the
audit report, no assurance conclusion is
formed thereon.
For entities which are required to prepare a
Directors & Strategic Appendices 1 – 7B
directors’ report and/or a strategic report, the
Reports
auditor is required to express an opinion on
whether the information in the directors report
and/or the strategic report is consistent with
the financial statements and whether those
reports have been prepared in accordance with
the applicable legal requirements.
The auditor is also required to state whether, in

the light of the knowledge and understanding
of the entity and its environment obtained in
the course of the audit, the auditor has
identified any material misstatements in those
reports.
8
Quoted companies are required to prepare a Appendices 5,6 and
Director’s Remuneration
directors’ remuneration report and the auditor 7B
Reports
has to report on certain aspects of that Report.
Companies should describe clearly within the
directors’ remuneration report which
disclosures have been audited.
Section 497 of the Companies Act 2006

requires the auditor to report to the company’s
members on whether the auditable part of the
directors’ remuneration report has been
properly prepared in accordance with the Act.
Section 498 of the Companies Act 2006 also

requires the auditor to report on whether the
auditable part of the directors' remuneration
report is not in agreement with the accounting
records and returns.
The auditor is required to report by exception

Other matters on which the Appendices 1 – 7B
in respect of the following matters in relation to
auditor is required to report
which the Companies Act 2006 requires them
by exception
to report to if, in their opinion:
• adequate accounting records have not

been kept, or returns adequate for our
audit have not been received from
branches not visited by us; or
• the financial statements are not in
agreement with the accounting records
and returns; or
• certain disclosures of directors’
remuneration specified by law are not
made; or
• we have not received all the information
and explanations we require for our
audit; or
• the directors were not entitled to
prepare the financial statements in
accordance with the small companies
regime and take advantage of the small
companies’ exemptions in preparing
the directors’ report and from the
requirement to prepare a strategic
report.
Corporate Governance Statement

23. ISA (UK) 720 (Revised November 2019) paragraphs 22-3 and 22-4 require that, for entities
that report on how they have applied the UK corporate governance code, the auditor shall
include a separate section headed, “Corporate Governance Statement” under which the
9
requirements of ISA (UK) 720 should be addressed. This is required even when application
of the code is voluntary.
24. Within this section the auditor should include a conclusion on if the following items are
materially consistent with the financial statements and the auditor’s knowledge obtained
during the course of the audit:
• In respect of the Listing Rule requirement for the auditor to review the statement by the
directors regarding going concern and longer-term viability:
o The directors' statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting in
preparing the financial statements and the directors' identification of any material
uncertainties to the entity's ability to continue to do so over a period of at least
twelve months from the date of approval of the financial statements;
o The Board's explanation in the annual report as to how it has assessed the
prospects of the entity, over what period it has done so and why it considers that
period to be appropriate, and its statement as to whether it has a reasonable
expectation that the entity will be able to continue in operation and meets its
liabilities as they fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary qualifications or
assumptions;
• In respect of the Listing Rule requirement for the auditor to review the parts of the
Corporate Governance Statement relating to the entity's compliance with the provisions
of the UK Corporate Governance Code specified for review by the auditor:
o The statement given by the directors that they consider the annual report and
financial statements, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for shareholders to assess the entity's
position, performance, business model and strategy;
o The Board's confirmation in the annual report that it has carried out a robust
assessment of the entity's emerging and principal risks and the disclosures in the
annual report that describe the principal risks and the procedures in place to
identify emerging risks and explain how they are being managed or mitigated;
o The section of the annual report that describes the review of the effectiveness of
entity's risk management and internal control systems, covering all material
controls, including financial, operational and compliance controls;
o The section of the annual report that describes the work of the audit committee,
including the significant issues that the audit committee considered relating to the
financial statements, and how these issues were addressed.
Appendices 6, 7A and 7B contain examples of this statement.
25. Where the company is required to prepare a corporate governance statement, Section 498A
of the Companies Act 2006 also requires the auditor to report by exception on whether or not
the company has prepared such a statement. Appendix 6 contains an example of this
requirement.
10
Corporate governance statement included as a separate report
26. If the corporate governance statement is not included in the directors’ report or included via
a cross-reference, the Companies Act 2006 imposes specific reporting responsibilities on the
auditor with respect to the corporate governance statement.
27. Section 497A of the Companies Act 2006 requires the auditor to report on the following where
the corporate governance statement is included as a separate report:
Section of the Additional Requirement Relevant

auditor’s report Appendices
Opinions on other The auditor shall report on, if in their opinion, based Appendix 6
matters prescribed on the work undertaken in the course of the audit:
by the Companies
Act 2006 • the information about internal control and risk
management systems in relation to financial
reporting processes and about share capital
structures, given in compliance with rules
7.2.5 and 7.2.6 in the Disclosure Rules and
Transparency Rules sourcebook made by the
Financial Conduct Authority (the FCA Rules),
is consistent with the financial statements and
has been prepared in accordance with
applicable legal requirements; and
• information about the company’s corporate
governance code and practices and about its
administrative, management and supervisory
bodies and their committees complies with
rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which The auditor shall report on, if, in light of the Appendix 6
we are required to knowledge and understanding of the company and its
report by environment obtained in the course of the audit, the
exception auditor has not identified material misstatements in:
• the information about internal control and risk
management systems in relation to financial
reporting processes and about share capital
structures, given in compliance with rules
7.2.5 and 7.2.6 of the FCA Rules.
Location of the description of auditor’s responsibilities for the audit

of the financial statements
28. A (UK) 700 (Revised November 2019) permits the description of the auditor’s responsibilities
for the audit of the financial statements to be included either:
• Within the body of the auditor’s report;

• Within an appendix to the auditor’s report, in which case the auditor’s report includes
a reference to the location of the appendix; or
• By a specific reference within the auditor’s report to the location of such a description
on a website of an appropriate authority. This is the approach taken in the appendices
to this compendium.
11
29. Further descriptions of the auditor’s responsibilities are required to be included (either in the
auditor’s report, in an appendix or by cross-reference) when they are relevant to the
circumstances of the particular audit as follows:
Scenario Additional Statement Required by the Relevant Appendices

Auditor
Appendix 8
Group accounts are The auditor shall include within their
prepared or ISA (UK) 600 responsibilities a statement which explains
(Revised November 2019) that it is their responsibility:
otherwise applies
• To obtain sufficient and appropriate
audit evidence regarding the
financial information of the entities
or business activities within the
group to express an opinion on
the[consolidated] financial
statements; and
• To direct, supervise and monitor the
performance of the groups audit;
and
• That they remain solely responsible
for their audit opinion.
Appendix 8
Key audit matters are The auditor includes within their
communicated in responsibilities a statement which explains:
accordance with ISA (UK)
From the matters communicated with those
701 (Revised January
charged with governance, the auditor
2020)
determines those matters that were of most
significance in the audit of the consolidated
financial statements of the current period
and are therefore the key audit matters.
That the auditor describes these matters in

their auditor’s report unless law or regulation
precludes public disclosure about the matter
or when, in extremely rare circumstances,
they determine that a matter should not be
communicated in our report because the
adverse consequences of doing so would
reasonably be expected to outweigh the
public interest benefits of such
communication.
Appendix 8
Entity is listed3 The auditor includes within their
responsibilities a statement which explains:
• That they have provided those
charged with governance a
statement that they have complied
3 “Listed entity” is defined in paragraph 7(g) of ISA (UK) 220 (Revised June 2016) Quality Control for an Audit of Financial Statements.
12
with relevant ethical requirements
regarding independence, and
communicated with them all
relationships and other matters that
may reasonably be thought to bear
on their independence, and where
applicable, related safeguards
This statement may be included in either
the section of the auditor’s report
addressing the auditor’s responsibilities, or
the section headed “Other Matters the
auditor is required to address
30. ISA (UK) 700 (Revised November 2019) requires that auditors report on the extent to which
the audit was considered capable of detecting irregularities, including fraud. The auditor
considers how this is tailored to each entity’s individual circumstances. Paragraphs A39-1 to
A39-5 of the ISA contain additional guidance in relation to applying this requirement,
including factors which might be considered in preparation of an appropriate statement. The
definition of irregularities, including fraud, is deemed to correspond to the definition of non-
compliance in paragraph 12 of ISA (UK) 250A (Revised November 2019). This requirement
may also be addressed in the “Other matters the auditor is required to address” section of
the auditors report.
Other matters the auditor is required to address
31. ISA 700 (UK) (Revised November 2019) requires that, for public interest entities, the following
is included in the audit report:
• Who, or which body, appointed the auditors;

• The date of the appointment and the total period of uninterrupted consecutive
appointments;
• Declare that the non-audit services prohibited by the FRC’s ethical standard were not
provided and that the firm remined independent. Where such services were
inadvertently provided, additional disclosure is required in relation to the nature of the
breach, the auditors assessment that independence has not been breached and the
actions taken to address any threat to independence;
• An indication of the services provided in addition to the audit which have not been
disclosed in the financial statements.
Alternative presentation options for financial statements of a group

32. Group and parent company financial statements may be prepared in accordance with
different financial reporting frameworks (for example IFRSs as adopted by the EU used for
the group financial statements and UK GAAP used for the parent company financial
statements).
33. Where the financial statements of the group and the parent company are presented in
accordance with different financial reporting frameworks the financial statements might be
presented separately within the annual report and in such circumstances separate auditor’s
reports might be provided.
34. Where separate auditor’s reports are provided on the group and parent company financial
statements, the requirements of ISA (UK) 701 (Revised November 2019) still apply to each
13
separate auditor’s report. Therefore, key audit matters and other audit planning and scoping
matters are required to be communicated in respect of both the group and the parent
company audits. The auditor may be able to avoid unnecessary duplication in respect of the
auditor’s reporting responsibilities by incorporating into the auditor’s report by cross-reference
the location of where such information can be accessed, so long as that cross-referenced
material is readily accessible. However, there is certain information required by law or
regulation that must be included in the auditor’s report to which the financial statements relate.
35. Appendices 2 and 6 illustrate an auditor’s reports where the report on the group financial
statements and the report on the parent company financial statements are presented as a
single auditor’s report
36. Appendices 7A and 7B illustrates auditor’s reports where the group and the parent company
financial statements are presented separately. In such cases, the auditor might provide
separate auditor’s reports on the group financial statements (see Appendix 7A) and on the
parent company financial statements (see Appendix 7B).
37. Where separate auditor’s reports are provided on the group and parent company financial
statements the illustrative examples assume that:
• The auditor’s responsibilities with respect to the corporate governance statement are
reported on in the auditor’s report on the group financial statements;
• The auditor’s responsibilities with respect to the UK Corporate Governance Code are
reported on in the auditor’s report on the group financial statements; and
• The directors’ remuneration report is reported on in the auditor’s report on the parent
company financial statements.
38. However, other approaches may be adopted providing they are fully compliant with the
relevant standards and applicable legal and regulatory requirements.
References to IFRS as adopted by the European Union post-EU Exit
39. This compendium has been revised using references from legislation passed by Parliament
as part of the EU Exit process. Until the end of the transition period, audit reports should
continue to refer to “IFRS as adopted by the European Union” as illustrated in Appendices 6
and 7A.
40. This is owing to SI 2019/685 The International Accounting Standards and European Public
Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019, Paragraph 4 which
states that those international accounting standards to be adopted for use in the United
Kingdom on exit day are those contained within Commission Regulation (EC) No. 1126/2008
adopting international standards in accordance with Regulation (EC) No. 1606/2002. As such
a refence to “IFRS as adopted by the European Union” remains appropriate within the
transitional period.
14
Appendices 1 – 7B: Illustrative Auditors Report
Appendix 1: Non-publicly traded company preparing financial statements under the

small companies regime
Appendix 2 - Non-publicly traded company preparing group and parent company

financial statements under UK GAAP
Appendix 3 - Publicly traded AIM listed company preparing financial statements

under IFRSs
Appendix 4 - Unlisted public interest entity preparing financial statements under UK

GAAP with a material uncertainty related to going concern
Appendix 5 - Publicly traded standard listed company preparing group financial

statements under IFRSs and parent company financial statements under UK GAAP
Appendix 6 - Publicly traded premium listed company preparing group and parent
company financial statements under IFRSs
Appendix 7A - Publicly traded premium listed company preparing group financial

statements under IFRSs (reported on separately from the parent company financial
statements)
Appendix 7B - Publicly traded premium listed company preparing parent company

financial statements under UK GAAP (reported on separately from the group
financial statements)
15
Appendix 1 - Non-publicly traded company preparing financial statements under the
small companies regime
• Company qualifies as a small company and is not a public interest entity

• Financial statements are prepared in accordance with FRSs 100 and 102 (UK GAAP)
• Directors take advantage of the small companies’ exemption in preparing the directors’ report
and from the requirement to prepare a strategic report
• Company does not prepare group financial statements or ISA (UK) 600 (Revised June 2016)
does not otherwise apply
• Auditor is not required, and has otherwise not decided, to communicate key audit matters in
accordance with ISA (UK) 701 (Revised November 2019)
Independent auditor’s report to the members of [XYZ Limited]

Opinion
We have audited the financial statements of [XYZ Limited] (the ‘company’) for the year ended [date] which
comprise [specify the titles of the primary statements] and notes to the financial statements, including
significant accounting policies. The financial reporting framework that has been applied in their preparation
is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting
Practice).
In our opinion, the financial statements:
• give a true and fair view of the state of the company’s affairs as at [date] and of its [profit/loss] for the
year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice;
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard[, and the provisions available for small entities, in the
circumstances set out in note [X] to the financial statements], and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.

In auditing the financial statements, we have concluded that the director's use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the [entity]'s ability to continue as
a going concern for a period of at least twelve months from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
16
Other Information
The other information comprises the information included in the annual report other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the directors’ report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of
the audit, we have not identified material misstatements in the directors’ report. We have nothing to report in
respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• the directors were not entitled to prepare the financial statements in accordance with the small
companies regime and take advantage of the small companies’ exemptions in preparing the directors’
report and from the requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement [set out on page …], the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error. In preparing the financial
statements, the directors are responsible for assessing the company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s Responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the group financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
group financial statements.
17
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
[Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud.]
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
[website link] [See Appendix 8] This description forms part of our auditor’s report.
[Signature]
Michelle Roberts
(Senior Statutory Auditor)
For and on behalf of ABC LLP, Statutory Auditor
[Address][Date]
18
Appendix 2 - Non-publicly traded company preparing group and parent company
financial statements under UK GAAP
• Company either does not qualify as a small company or qualifies as a small company but
chooses not to prepare its financial statements under the small companies regime
• Company is not a public-interest entity
• Company prepares group financial statements
• Section 408 exemption taken for parent company’s own profit and loss account
• Auditor is not required, and has otherwise not decided, to communicate key audit matters in
accordance with ISA (UK) 701 (Revised November 2019)

Opinion
We have audited the financial statements of [XYZ Limited] (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended [date] which comprise [specify the titles of the primary statements] and notes to
the financial statements, including significant accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS
102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom
Generally Accepted Accounting Practice).
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at [date] and
of the group’s [profit/loss] for the year then ended;
Practice;
• have been prepared in accordance with the requirements of the Companies Act 2006
Basis for opinion

group in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the [entity]'s ability to continue as
a going concern for a period of at least twelve months from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
19
Other Information
• the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements

In the light of the knowledge and understanding of the company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit.
but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
20
[website link] [see Appendix 8] This description forms part of our auditor’s report.
[Signature]
Michelle Roberts
[Address][Date]
21
Appendix 3 - Publicly traded AIM listed company preparing financial statements
under IFRSs
• Company is an AIM-listed company, an unquoted company and not a public-interest entity

• Financial statements are prepared in accordance with IFRSs as adopted by the EU

Opinion
is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union.
year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
Basis for opinion

company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.

accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors
assessment of the entity’s ability to continue to adopt the going concern basis of accounting included
[Explanation of how the auditor evaluated management’s assessment and the key observations arising with
respect to that evaluation].
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the [entity]'s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report
22
Our approach to the audit
[Overview of the scope of the audit]
Key Audit Matter How our scope addressed this matter

[Description of each key audit matter in accordance with [Explanation of how the scope addressed each key
ISA (UK) 701. (Revised November 2019). The audit matter and was influenced by the auditor’s
significant judgements made be the engagement team application of materiality]
with respect to each key audit matter should be
explained. The auditor should include a description of
the most significant assessed risks of material
misstatement, a summary of their response and any key
observations arising in relation to those risks]
Our application of materiality

[Explanation of how the auditor applied the concept of materiality in planning and performing the audit. This is
required to include the threshold used by the auditor as being materiality for the financial statements as a
whole, as well as the threshold used by the auditor as being performance materiality but may include other
relevant disclosures. The significant judgments made by the auditor in determining both of these thresholds
should also be explained.]
Other Information

requirements

In the light of the knowledge and understanding of the company and its environment obtained in the course of
the audit, we have not identified material misstatements in the strategic report or the directors’ report.
23
• we have not received all the information and explanations we require for our audit;
but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial
statements.
[Signature]
Michelle Roberts
[Address][Date]
24
Appendix 4 - Unlisted public interest entity preparing financial statements under UK
GAAP with a material uncertainty related to going concern
• Company is a public interest entity

• Based on the audit evidence obtained, the auditor has concluded that a material uncertainty
exists related to events or conditions that may cast significant doubt on the company’s ability to
continue as a going concern. The disclosure of the material uncertainty in the financial statements
is adequate.

Opinion
is applicable law and United Kingdom Accounting Standards, including FRS 101 Reduced Disclosure
Framework (United Kingdom Generally Accepted Accounting Practice).
year then ended;
Practice; and
Basis for opinion

applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are independent of the company in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern

We draw attention to note [X] in the financial statements, which indicates that [brief description of events or
conditions identified that may cast significant doubt on the entity’s ability to continue as a going concern]. As
stated in note [X], these events or conditions, along with the other matters as set forth in note [X], indicate that
a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
relevant sections of this report.
25

[Explanation of how the auditor applied the concept of materiality in planning and performing the audit. This
is required to include the threshold used by the auditor as being materiality for the group financial statements
as a whole, as well as the threshold used by the auditor as being performance materiality but may include
other relevant disclosures. The significant judgments made by the auditor in determining both of these
thresholds should also be explained.]
Other Information
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to
a material misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that
fact.
requirements

In the light of the knowledge and understanding of the company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
26
but to do so.

expected to influence the economic decisions of users taken on the basis of these financial statements.
Other matters which we are required to address

We were appointed by [state by whom or which body the auditor(s) was appointed] on [date]. The period of
total uninterrupted engagement including previous renewals and reappointments of the firm is [X] years.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the company and we
remain independent of the company in conducting our audit.
[Indicate any services, in addition to the audit, which were provided by the firm to the company that have
not been disclosed in the financial statements or elsewhere in the annual report.]
Our audit opinion is consistent with the additional report to the audit committee.
[Signature]
Michelle Roberts (Senior Statutory Auditor)
[Address][Date]
27
Appendix 5 - Publicly traded standard listed company preparing group financial
statements under IFRSs and parent company financial statements under UK GAAP
• Company is a standard listed company, a quoted company and a public-interest entity

• Company prepares group financial statements under IFRSs as adopted by the EU and
parent company financial statements under UK GAAP (FRSs 100 and 101)
• Section 408 exemption taken in respect of parent company’s own profit and loss account
• Corporate governance statement is incorporated into the directors’ report either directly or
by incorporation by reference
Independent auditor’s report to the members of [XYZ Plc]

Opinion
We have audited the financial statements of [XYZ Limited] (the ‘parent company)’ and its subsidiaries (the
‘group’) for the year ended [date] which comprise [specify the titles of the primary statements] and notes to
the financial statements, including significant accounting policies. The financial reporting framework that has
been applied in the preparation of the group financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is applicable law and United
Kingdom Accounting Standards, including FRS 101 Reduced Disclosure Framework (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs
as at [date] and of the group’s [profit/loss] for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act
2006; and, as regards the group financial statements, Article 4 of the IAS Regulation.
Basis for opinion

Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the
group and the parent company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
28
issue.
relevant sections of this report

[Overview of the scope of the parent company and group audits]


[Explanation of how the auditor applied the concept of materiality in planning and performing both the parent
company and group audits. This is required to include the threshold used by the auditor as being materiality
for the group financial statements as a whole, as well as the threshold used by the auditor as being
performance materiality but may include other relevant disclosures. The significant judgments made by the
auditor in determining both of these thresholds should also be explained.]
Other Information
29
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
requirements

In the light of the knowledge and understanding of the group and the parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
• adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the parent company financial statements and the part of the directors’ remuneration report to be
audited are not in agreement with the accounting records and returns; or
but to do so.

30
We were appointed by [state by whom or which body the auditor was appointed] on [date] to audit the financial
statements for the period ending [date]. Our total uninterrupted period of engagement is [X] years, covering
the periods ending [date] to [date].
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent
company and we remain independent of the group and the parent company in conducting our audit.
[Indicate any services, in addition to the audit, which were provided by the firm to the group that have not been
disclosed in the financial statements or elsewhere in the annual report.]
[Signature]
[Address][Date]
31
Appendix 6 - Publicly traded premium listed company preparing group and parent
company financial statements under IFRSs
• Company is a premium listed company, a quoted company and a public interest entity
• Financial statements are prepared in accordance with IFRSs as adopted by the EU and
are also prepared in accordance with IFRSs as issued by the IAASB
• Section 408 exemption not taken in respect of parent company’s own profit and loss
account
• Corporate governance statement not incorporated into the strategic report or the directors’
report, either directly or by incorporation by cross-reference

Opinion
We have audited the financial statements of [XYZ Plc] (the ‘parent company’) and its subsidiaries (the ‘group)
’ for the year ended [date] which comprise [specify the titles of the primary statements] and notes to the
financial statements, including significant accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
In our opinion the financial statements:
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at [date] and
of the group’s and the parent company’s [profit/loss] for the year then ended;
• have been properly prepared in accordance with [IFRSs as adopted by the European Union]; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the
group financial statements, Article 4 of the IAS Regulation.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note [X] to the group financial statements, the group in addition to complying with its legal
obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs
as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements give a true and fair view of the consolidated financial position of
the group as at [date] and of its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with IFRSs as issued by the IASB.
Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
32
accounting in the preparation of the financial statements is appropriate. Our evaluation of the director’s
issue.
In relation to the entities reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements
about whether the director’s considered it appropriate to adopt the going concern basis of accounting.

[Overview of the scope of the parent company and group audits]


[Explanation of how the auditor applied the concept of materiality in planning and performing the parent
company and group audits. This is required to include the threshold used by the auditor as being materiality for
the group financial statements as a whole, as well as the threshold used by the auditor as being performance
materiality but may include other relevant disclosures. The significant judgments made by the auditor in
determining both of these thresholds should also be explained.]
Other Information
The other information comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
33

In our opinion, the part of the directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
• the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements and
those reports have been prepared in accordance with applicable legal requirements;
• the information about internal control and risk management systems in relation to financial
reporting processes and about share capital structures, given in compliance with rules 7.2.5
and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made by the
Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and
has been prepared in accordance with applicable legal requirements; and
• information about the company’s corporate governance code and practices and about its
administrative, management and supervisory bodies and their committees complies with
rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.

In the light of the knowledge and understanding of the group and the parent company and its
environment obtained in the course of the audit, we have not identified material misstatements in;
• the strategic report or the directors’ report; or
• the information about internal control and risk management systems in relation to financial
reporting processes and about share capital structures, given in compliance with rules 7.2.5
and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the parent company financial statements and the part of the directors’ remuneration report to
be audited are not in agreement with the accounting records and returns; or
• we have not received all the information and explanations we require for our audit; or
• a corporate governance statement has not been prepared by the parent company.
Corporate governance statement

The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating to the [entity]'s compliance with the provisions of
the UK Corporate Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the Corporate Governance Statement is materially consistent with the financial statements or our knowledge
obtained during the audit:
• Directors' statement with regards the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identified [set out on page …];
• Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers
and why they period is appropriate [set out on page …].
• Directors' statement on fair, balanced and understandable [set out on page …];
• Board’s confirmation that it has carried out a robust assessment of the e-merging and principal risks [set
out on page …];
34
• The section of the annual report that describes the review of effectiveness of risk management and
internal control systems [set out on page …]; and;
• The section describing the work of the audit committee [set out on page …]
but to do so.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below:
A further description of our responsibilities is available on the Financial Reporting Council’s website at: [website
link] [see Appendix 8] This description forms part of our auditor’s report.
Following the recommendation of the audit committee, we were appointed by [state by whom or which body the
auditor was appointed] on [date] to audit the financial statements for the year ending [date] and subsequent
financial periods. The period of total uninterrupted engagement is [X] years, covering the years ending [date] to
[date].
[Signature]
Michelle Roberts
[Address] [Date]
35
Appendix 7A - Publicly traded premium listed company preparing group financial
statements under IFRSs (reported on separately from the parent company financial
statements)
• Company is a premium listed company, a quoted company and a public interest entity
• Corporate governance statement incorporated into the directors’ report, either directly or by
incorporation by cross-reference and reported on in the auditor’s report on the group financial
statements
• UK Corporate Governance Code reported on in the auditor’s report on the group financial
statements
• Directors’ Remuneration Report reported on in the auditor’s report on the parent company

Opinion
We have audited the group financial statements of [XYZ Plc] for the year ended [date] which comprise [specify
the titles of the primary statements] and notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion the group financial statements:
• give a true and fair view of the state of the group’s affairs as at [date] and of its [profit/loss] for the year
then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the
IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the audit
of the group financial statements section of our report. We are independent of the group in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and

going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the entity’s reporting on how they have applied the UK Corporate Governance Code, we have
36

[Overview of the scope of the group audit]


[Explanation of how the auditor applied the concept of materiality in planning and performing the group audit.
This is required to include the threshold used by the auditor as being materiality for the group financial
statements as a whole, as well as the threshold used by the auditor as being performance materiality but may
include other relevant disclosures. The significant judgments made by the auditor in determining both of these
thresholds should also be explained.]
Other Information
The other information comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.

group financial statements are prepared is consistent with the financial statements; and
requirements.

37
• the parent company financial statements and the part of the directors’ remuneration report to be audited
are not in agreement with the accounting records and returns; or

out on page …];
but to do so.
Our objectives are to obtain reasonable assurance about whether the group financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
expected to influence the economic decisions of users taken on the basis of these group financial statements.
detailed below:
link] [see Appendix 8]. This description forms part of our auditor’s report.
38
[date].
We have reported separately on the parent company financial statements of [XYZ Plc] for the year ended [date].
[That report includes details of the parent company key audit matters; how we applied the concept of materiality
in planning and performing our audit; and an overview of the scope of our audit.] [That report includes a
statement on a material uncertainty related to going concern.] [That report includes an emphasis of matter.]
[The opinion in that report is [qualified / an adverse opinion / a disclaimer of opinion].]
[Signature]
[Address] [Date]
39
Appendix 7B - Publicly traded premium listed company preparing parent company
financial statements under UK GAAP (reported on separately from the group
financial statements)
• Company is a premium listed company, a quoted company and a public-interest entity

• Corporate governance statement incorporated into the directors’ report, either directly or by
incorporation by cross-reference and reported on in the auditor’s report on the group financial
statements
• UK Corporate Governance Code reported on in the auditor’s report on the group financial
statements
• Directors’ remuneration report reported on in the auditor’s report on the parent company

Opinion
We have audited the parent company financial statements of [XYZ Plc] for the year ended [date] which
is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting
Practice).
In our opinion the parent company financial statements:
• give a true and fair view of the state of the parent company’s affairs as at [date] [and of its [profit/loss]
for the year then ended];
Practice; and
Basis for opinion
applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the audit of the parent company financial statements section of our report. We are independent of the parent
company in accordance with the ethical requirements that are relevant to our audit of the parent company
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

issue.
40



[Explanation of how the auditor applied the concept of materiality in planning and performing the audit. This is
required to include the threshold used by the auditor as being materiality for the group financial statements as
a whole, as well as the threshold used by the auditor as being performance materiality but may include other
relevant disclosures. The significant judgments made by the auditor in determining both of these thresholds
should also be explained.]

issue.
Other Information
41

In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
parent company financial statements are prepared is consistent with the financial statements; and
requirements.

• the parent company financial statements and the part of the directors’ remuneration report to be audited
are not in agreement with the accounting records and returns; or

Directors' statement with regards the appropriateness of adopting the going concern basis of accounting and
any material uncertainties identified [set out on page …];
out on page …];
42
but to do so.

detailed below:
link] [see Appendix 8] This description forms part of our auditor’s report.

[date].
We have reported separately on the group financial statements of [XYZ Plc] for the year ended [date]. [That
report includes details of the group key audit matters; how we applied the concept of materiality in planning and
performing our audit; and an overview of the scope of our audit.] [That report includes a statement on a material
uncertainty related to going concern.] [That report includes an emphasis of matter.] [The opinion in that report
is [qualified / an adverse opinion / a disclaimer of opinion].]
[Signature]
For and on behalf of ABC LLP, Statutory Auditor [Address] [Date]
43
Appendix 8 – Auditors Responsibilities for the audit of the financial statements
Description of the auditor’s responsibilities for the audit of the financial statements
The auditor’s objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes the auditor’s opinion. Reasonable assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with International Standards on Auditing (UK) (ISAs (UK)) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK), the auditor exercises professional judgment and maintains
professional scepticism throughout the audit. The auditor also:
• Identifies and assesses the risks of material misstatement of the entity’s (or where relevant, the
consolidated) financial statements, whether due to fraud or error, designs and performs audit
procedures responsive to those risks, and obtains audit evidence that is sufficient and appropriate to
provide a basis for the auditor’s opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtains an understanding of internal control relevant to the audit 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 entity’s (or where relevant, the group’s) internal control.
• Evaluates the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Concludes on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the entity’s (or where relevant, the group’s) ability to
continue as a going concern. If the auditor concludes that a material uncertainty exists, the auditor is
required to draw attention in the auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify the auditor’s opinion. The auditor’s conclusions are
based on the audit evidence obtained up to the date of the auditor’s report. However, future events or
conditions may cause the entity (or where relevant, the group) to cease to continue as a going
concern.
• Evaluates the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation (i.e. gives a true and fair view). 4
• Where the auditor is required to report on consolidated financial statements, obtains sufficient
appropriate audit evidence regarding the financial information of the entities or business activities
within the group to express an opinion on the consolidated financial statements. The group auditor is
responsible for the direction, supervision and performance of the group audit. The group auditor
remains solely responsible for the audit opinion.
The auditor communicates with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that the auditor identifies during the audit.
For listed entities and public interest entities, the auditor also provides those charged with governance with a
statement that the auditor has complied with relevant ethical requirements regarding independence,
including the FRC’s Ethical Standard, and communicates with them all relationships and other matters that
may reasonably be thought to bear on the auditor’s independence, and where applicable, related
safeguards.
4 Only applicable with respect to fair presentation (or true and fair) frameworks
44
Where the auditor is required to report on key audit matters, from the matters communicated with those
charged with governance, the auditor determines those matters that were of most significance in the audit of
the financial statements of the current period and are therefore the key audit matters. The auditor describes
these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, the auditor determines that a matter should not be communicated in
the auditor’s report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Reporting on the financial statements

The auditor’s report is required to contain a clear expression of opinion on the financial statements taken as
a whole.
To form an opinion on the financial statements the auditor concludes as to whether:

• sufficient appropriate audit evidence has been obtained;
• uncorrected misstatements are material, individually or in aggregate;
• the financial statements, including the disclosures, give a true and fair view;5 and
• the financial statements are prepared, in all material respects, in accordance with the requirements of
the applicable financial reporting framework, including the requirements of applicable law.
In particular, forming an opinion on and reporting on the financial statements involves evaluating whether :
• the financial statements adequately refer to or describe the applicable financial reporting framework;
• the financial statements appropriately disclose the significant accounting policies selected and
applied. In making this evaluation, the auditor considers the relevance of the accounting policies to
the entity (or where relevant, the group) and whether they have been presented in an understandable
manner;
• the accounting policies selected and applied are consistent with the applicable financial reporting
framework, and are appropriate;
• the accounting estimates made by the directors are reasonable;
• the information presented in the financial statements is relevant, reliable, comparable and
understandable. In making this evaluation, the auditor considers whether:
o the information that should have been included has been included, and whether such
information is appropriately classified, aggregated or disaggregated, and characterised; and
o the overall presentation of the financial statements has been undermined by including
information that is not relevant or that obscures a proper understanding of the matter
disclosed;
o the financial statements provide adequate disclosures to enable the intended users to
understand the effect of material transactions and events on the information conveyed in the
financial statements;
o the terminology used in the financial statements, including the title of each financial statement
is appropriate.
When the financial statements are prepared in accordance with a fair presentation framework, the auditor also
evaluates whether the financial statements achieve fair presentation (i.e. gives true and fair view) including
consideration of:
• the overall presentation, structure and content of the financial statements; and
• whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation (or gives a true and fair view).
Unmodified opinions
An unmodified opinion is expressed when the auditor is able to conclude that the financial statements give a
true and fair view and comply in all material respects with the applicable financial reporting framework.
5 This conclusion is required only with respect to financial statements which have been prepared in accordance with a fair presentation (or
true and fair) framework (examples are International Financial Reporting Standards as adopted by the European Union and United
Kingdom Generally Accepted Accounting Practice)
45
Modified opinions
The auditor modifies the opinion when either:
• the auditor concludes that, based on the audit evidence obtained, the financial statements as a whole
are not free from material misstatement; or
• the auditor is unable to obtain sufficient appropriate audit evidence to conclude that the financial
statements as a whole are free from material misstatement.
The auditor expresses a qualified opinion when either:
• misstatements, individually or in the aggregate, are material but not pervasive to the financial
statements; or
• the possible effects on the financial statements of undetected misstatements, arising from an inability
to obtain sufficient appropriate audit evidence, could be material but not pervasive.
The auditor expresses an adverse opinion when the auditor, having obtained sufficient appropriate audit
evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to
The auditor disclaims an opinion when either:
• the possible effects of undetected misstatements, arising from an inability to obtain sufficient
appropriate audit evidence, could be both material and pervasive to the financial statements; or
• in extremely rare circumstances involving multiple uncertainties, the auditor concludes that
notwithstanding having obtained sufficient appropriate audit evidence regarding each of the individual
uncertainties, it is not possible to form an opinion on the financial statements due to the potential
interaction of the uncertainties and their possible cumulative effect on the financial statements.
Emphasising certain matters without modifying the opinion

In certain circumstances an auditor’s report includes an emphasis of matter paragraph to draw attention to a
matter presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance
that it is fundamental to users’ understanding of the financial statements. An emphasis of matter paragraph
does not modify the auditor’s opinion.
Communicating "other matters"

If the auditor considers it necessary to communicate a matter other than those that are presented or disclosed
in the financial statements that, in the auditor’s judgment, is relevant to users’ understanding of the audit, the
auditor’s responsibilities or the auditor’s report, the auditor does so in a separate section in the auditor’s report
with the heading “Other Matter” or other appropriate heading.
Other information included in the annual report

The auditor is required to read all financial and non-financial information (other information) included in the
annual report and to identify whether the other information is materially inconsistent with the financial
statements or the auditor’s knowledge obtained in the audit or otherwise appears to be materially misstated.
If the auditor identifies material inconsistencies or apparent material misstatements, the auditor determines
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. Where the auditor concludes that there is an uncorrected material misstatement of the other
information, the auditor is required to report this in the auditor’s report.
Other legal and regulatory requirements

The auditor may be required to address other legal and regulatory requirements relating to other auditor’s
responsibilities in the auditor’s report.
46
Financial Reporting Council
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London
EC2Y 5AS
+44 (0)20 7492 2300
www.frc.org.uk

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Contents Page (s)

Basis for opinion 4

Our application of materiality 5

Conclusions relating to going concern 6

Emphasis of matter and other matter paragraphs 8

Other legal and regulatory matters we are required to 8

Corporate governance statement 9

Location of the description of auditor’s 11

Other matters the auditor is required to address 13

Alternative presentation options for financial 13

References to IFRS as adopted by the European Union 14

Appendices 1 – 7B: Illustrative Auditors Reports 15 – 43

Appendix 8: Auditor’s Responsibilities 44

International Financial Reporting United Kingdom Generally Accepted

International Financial Reporting Standards

Appendices 2 and 5 contains examples of this opinion wording.

Modifications to the auditor’s opinion

Scenario Requirement ISA (UK) 705 Relevant

The auditor is unable to obtain The auditor Paragraphs 9 and 10

Opinion in respect of an additional financial reporting framework

13. These opinions may be expressed separately or in a single sentence.

Appendix 6 illustrates where the opinion in respect of an additional financial reporting

Basis for Opinion

Item Requirement ISA (UK) 701 Relevant Illustrative

Materiality The threshold used by the Paragraph 16-1 Appendices 3 – 7B

• A description of how the concept of materiality was applied in planning and

2 ISA (UK) 570, Paragraph A59-2

Scenario Impact on auditor’s report ISA (UK) 570 Relevant

Financial statements Where the auditor concludes that a Paragraph 22 Appendix 4

Financial statements The auditor shall express an adverse Paragraph 21 N/A

Scenario Reporting Requirement ISA (UK) 570 Relevant Illustrative

Emphasis of matter and other matter paragraphs

• Draw users’ attention to a matter or matters presented or disclosed in the financial

Other legal and regulatory matters the auditor is required to address

Relevant Section of the Relevant Appendices

The auditor’s responsibility is to read the other Appendices 1 – 7B

The opinion on the financial statements does

The auditor is also required to state whether, in

Section 497 of the Companies Act 2006

Section 498 of the Companies Act 2006 also

The auditor is required to report by exception

• adequate accounting records have not

Corporate Governance Statement

Appendices 6, 7A and 7B contain examples of this statement.

Section of the Additional Requirement Relevant

Location of the description of auditor’s responsibilities for the audit

• Within the body of the auditor’s report;

Scenario Additional Statement Required by the Relevant Appendices

That the auditor describes these matters in

• Who, or which body, appointed the auditors;

Alternative presentation options for financial statements of a group

Appendix 1: Non-publicly traded company preparing financial statements under the

Appendix 2 - Non-publicly traded company preparing group and parent company

Appendix 3 - Publicly traded AIM listed company preparing financial statements

Appendix 4 - Unlisted public interest entity preparing financial statements under UK

Appendix 5 - Publicly traded standard listed company preparing group financial