Article Summary
This guidance note provides an overview of key considerations for tax professionals asked to provide input into financial statement audits. It explains the objectives, methodology and scope of audits so tax professionals understand how to effectively contribute. The note clarifies that audits aim to obtain reasonable assurance that financial statements are free of material misstatement. It highlights that audits use sampling and a risk-based approach, rather than 100% testing. This means tax numbers with higher risk may receive greater focus. It notes that auditors must remain alert to fraud risks and make enquiries of management about fraud. The guidance also covers the concept of materiality - auditors focus on misstatements that could influence users' judgements.For entities subject to Sarbanes-Oxley requirements, the guidance explains that auditors must also opine on internal controls over financial reporting. Control failures require remediation and may necessitate an adverse opinion on internal controls.Overall, this note provides useful context so tax professionals grasp the principles underpinning financial statement audits and can collaborate effectively with audit colleagues.