The Council of the Institute in its 188th meeting held on March 30, 2007 has decided to adopt the International Standard on Auditing (ISA) 701 ‘Modifications to the Independent Auditor’s Report’.

Background and salient features
1. ISA 701 is primarily a “Conforming Amendment” resulting from the revision of ISA 700 – The Independent Auditor’s Report on a Complete Set of General Purpose Financial Statements (previously The Auditor’s Report on Financial Statements).
2. ISA 701 establishes standards and provides guidance to be applied when the independent auditor’s report should be modified, while ISA 700 (Revised) establishes standards and provides guidance to be applied when the auditor is able to express an unqualified opinion and no modification to the auditor’s report is necessary.
3. This ISA contains paragraphs 29-46 of the previous ISA 700 – The Auditor’s Report on Financial Statements.
4. The underlying standards and guidance have not been changed.
5. The text taken from previous ISA 700 has been amended only to conform the wording of the auditor’s reports in the illustrative examples in this ISA with the wording of the auditor’s report in the illustrative example in ISA 700 (Revised), and to specify how modifications to the auditor’s report would be positioned in relation to the auditor’s description of and reporting on any other responsibilities in addition to the auditor’s report on the financial statements.

Effective Date
The standard will be effective for assurance reports issued on or after July 1, 2007.
The standard is available in the ‘Handbook of International Auditing and Assurance Pronouncements and Code of Ethics for Chartered Accountants’ published by the Institute. The above documents can also be downloaded from ICAP website using the following link: