Enquiry:

We request you to please give your valuable opinion in the following matter:

a) What is the significance of an initialed audit report.

b) The client did not return the initialed audit report with qualified opinion to us for full signature although the audited account, i.e. Balance Sheet and Income Expenditure have been signed by the management. We request you to clarify that can an initialed audit report be changed from qualified opinion to disclaimer although these accounts have been signed by the management as during the audit of subsequent years we found that the initialed audit report with qualified opinion given by us in previous years is not suitable under the circumstance and hence Disclaimer must be given.

We request you to give us your precious opinion that can we change the initialed audit report to a disclaimer opinion (although these have been signed by management) when we sign the audit report which is issued by us.

Opinion:

The Companies Ordinance 1984 and ISAs do not have a requirement to initial the audit  report. This practice was originated as evidence that audit has been completed subject to satisfactory clearance of outstanding matters described in the covering letter.

Accordingly, the audit report is not issued until it has been signed by the auditor. However, those charged with governance/ Board of Directors must be properly communicated about the subsequent change in auditor’s opinion according to the provisions of ISA 260 ‘Communication with those charged with Governance’.

(March 19, 2014)