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The document ceased to be valid since   February 12, 2019 according to the Order of the Ministry of Finance of the Russian Federation of January 9, 2019 No. 2n

Appendix No. 10

to the Order of the Ministry of Finance of the Russian Federation of November 9, 2016 No. 207n

The international standard of audit 700 (reviewed) "Forming of opinion and creation of the conclusion about the financial reporting"

The International Standard of Audit (ISA) 700 (reviewed) "Forming of opinion and creation of the conclusion about the financial reporting" should be considered together with MCA 200 "Main objectives of the independent auditor and carrying out audit according to International standards of audit".

Introduction

Scope of this standard

1. This International Standard of Audit (ISA) establishes the auditor's obligations on forming of opinion on the financial reporting. Besides, in it are described form and content of the audit opinion issued as a result of financial records audit.

2. MCA 701 <1> establishes the auditor's obligations on informing on key questions of audit in audit opinion. The question of how expression by the auditor of the modified opinion or inclusion in audit opinion of the Sections "Important Circumstances" or "Other Data" influences form and content of audit opinion, is considered in MCA 705 <2> (reviewed) and MCA 706 <3> (reviewed). Some other MSA also contain the requirements applicable to creation and release of audit opinion.

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<1> MCA 701 "Informing on key questions of audit in audit opinion".

<2> MCA 705 (reviewed) "The modified opinion in audit opinion".

<3> MCA 706 (reviewed) "the Sections "Important Circumstances" and "Other Data" in audit opinion".

3. This standard is applied to audit of complete set of general purpose financial statements and is stated in this context. The feature of financial records audit prepared according to the concept of special purpose are considered in MCA 800 <1>. Features of audit of the separate report of the financial reporting or separate element, group of Articles or the financial statement item are considered in MCA 805 <2>. This standard is also applicable to audit which is booked based on MCA 800 or MCA 805.

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<1> MCA 800 of "The feature of financial records audit prepared according to the concept of special purpose".

<2> MCA 805 "Feature of audit of separate reports of the financial reporting and separate elements, groups of Articles or financial statement line items".

4. Requirements of this standard are directed to achievement of proper balance between need of ensuring the sequence and comparability of audit opinions around the world and need of increase in value of audit opinions by representation in audit opinion of information, more urgent for users. This standard is directed to respect for the principle of the sequence in audit opinion, but at the same time recognizes need of ensuring the flexibility allowing to consider specific circumstances separate jurisdictions. Respect for the principle of the sequence in audit opinion when carrying out audit according to International standards of audit increases trust to audit in the world market, identifying cases of carrying out the audit executed according to the standards recognized in the world. Besides, the principle of the sequence promotes the best understanding users of audit opinions and to identification of unusual circumstances in case of their origin.

The effective date

5. This standard becomes effective concerning financial records audit for the periods which are coming to an end on December 15, 2016 or after this date.

Purposes

6. The purpose of the auditor consists in that:

(a) create opinion on the financial reporting based on assessment of the conclusions drawn proceeding from the obtained auditor evidence;

(b) accurately to express this opinion in the form of the written conclusion.

Determinations

7. For the purposes of International standards of audit the following terms have the stated below values:

(a) general purpose financial statements - the financial reporting prepared according to the concept of general purpose;

(b) the concept of general purpose - the concept of preparation of the financial reporting developed for the purpose of satisfaction of total requirements in financial information of wide range of users. The concept of preparation of the financial reporting can be presented in the form of the concept of fair presentation or the concept of compliance.

The term "concept of fair presentation" is used for designation of the concept of preparation of the financial reporting which provides compliance to requirements of this concept, and also:

- recognizes in obvious form or implies that providing fair presentation of the financial reporting can demand from management of disclosure of information in bigger amount, than it is provided by this concept, or;

- recognizes in obvious form that from management departure from requirements of the concept can be required to provide fair presentation of the financial reporting. It is supposed that such departures can be required only in exclusively rare circumstances.

8. The term "concept of compliance" is used for designation of the concept of preparation of the financial reporting which provides compliance to requirements of this concept, but does not contain the approvals stated above in Items (i) or (ii) <1>;

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<1> MCA 200 "Main objectives of the independent auditor and carrying out audit according to International standards of audit", Item 13(a).

(c) unmodified opinion - the opinion expressed by the auditor in which the conclusion is drawn that the financial reporting in all essential aspects is prepared according to requirements of the applicable concept of preparation of the financial reporting <1>.

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<1> In Items 25 - 26 the formulations used for expression of opinion in cases of application of the concept of fair presentation and the concept of compliance are considered.

8. The term "financial reporting" in this standard means "complete set of general purpose financial statements with the corresponding notes" <1>. Form and content of the financial reporting, and also structure of complete set of the financial reporting are determined by requirements of the applicable concept of preparation of the financial reporting. The corresponding notes usually contain the brief summary of basic provisions of accounting policy and other explanatory information.

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<1> Item 13(f) MCA 200 "Main objectives of the independent auditor and carrying out audit according to International standards of audit" establishes contents of the financial reporting.

9. The reference to the International Accounting Standards (IAS) in this standard means the International accounting standards issued by Council for international accounting standards, and the reference to International accounting standards for the organizations of the public sector means the International accounting standards for the organizations of the public sector (MSFOOS) issued by Council for international accounting standards for the organizations of the public sector.

Requirements

Forming of opinion on the financial reporting

10. The auditor shall create opinion on whether the financial reporting in all essential aspects according to the applicable concept of preparation of the financial reporting <1>, <2> is prepared.

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<1> MSA 200, Item 11.

<2> In Items 25 - 26 the formulations used for expression of opinion in cases of application of the concept of fair presentation and the concept of compliance are considered.

11. To create this opinion, the auditor shall draw conclusion on whether it is received during audit reasonable confidence that the financial reporting does not contain essential misstatements owing to unfair actions or mistakes. At the same time it is necessary to take into account:

(a) the auditor's conclusions about whether sufficient competent auditor evidences according to MCA 330 were obtained; <1>

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<1> MCA 330 "Audit procedures in response to the estimated risks", Item 26.

(b) the auditor's conclusions about whether the uncorrected misstatements taken separately or in total, essential according to MCA 450 <1> are;

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<1> MCA 450 "Assessment of the misstatements revealed during audit", Item 11.

(c) results of assessment which are required according to Items 12 - 15.

12. The auditor shall estimate whether the financial reporting in all essential aspects according to requirements of the applicable concept of preparation of the financial reporting is prepared. When evaluating by the auditor high-quality aspects of accounting practice of the organization, including signs of possible bias of judgments of management shall be considered (see the Items A1 - A 3).

13. The auditor shall, in particular, taking into account requirements of the applicable concept of preparation of the financial reporting estimate the following:

(a) whether in a due way the chosen and applied basic provisions of accounting policy are opened in the financial reporting. When implementing this assessment the auditor shall consider compliance of accounting policy to nature of the organization and whether clearly it is prepared (see Item A 4);

(b) whether there correspond the chosen and applied provisions of accounting policy of the applicable concept of preparation of the financial reporting and whether they are proper;

(c) whether the estimative values calculated by management, reasonable are;

(d) whether information provided in the financial reporting, pertinent, reliable, comparable and clear is. When implementing such assessment the auditor shall consider:

- whether information which shall be included is included, and also whether in a proper way this information is classified, grouped or ungrouped and characterized;

- whether general idea of the financial reporting is undermined by inclusion of information which is inappropriate or does unevident proper understanding of the opened questions (see Item A 5);

(e) whether the financial reporting provides proper disclosure of information which will allow expected users to understand influence of essential transactions and events on information provided in the financial reporting (see Item A 6);

(f) whether proper terminology, including the name of each report as a part of the financial reporting is used in the financial reporting.

14. If the financial reporting is prepared according to the concept of fair presentation, then assessment required according to Items 12 - 13, shall include also assessment of whether the financial reporting provides fair presentation. Assessment by the auditor of whether the financial reporting provides fair presentation, shall include consideration (see the Items A7 - A 9):

(a) general idea of the financial reporting, its structure and content;

(b) whether the financial reporting with the corresponding notes represents the transactions which are its cornerstone and events so that their fair presentation was provided.

15. The auditor shall estimate whether the financial reporting contains the proper reference to the applicable concept of preparation of the financial reporting or its description (see the Items A10 - A 15).

Form of auditor opinion

16. The auditor shall express unmodified opinion if he comes to conclusion that the financial reporting in all essential aspects is prepared according to the applicable concept of preparation of the financial reporting.

17. If auditor:

(a) based on the obtained auditor evidence draws conclusion that the financial reporting considered in general contains essential misstatements, or;

(b) cannot obtain sufficient competent auditor evidences to draw conclusion that the financial reporting considered in general does not contain essential misstatements

it shall modify opinion in audit opinion according to provisions MCA 705 (reviewed).

18. If the financial reporting prepared according to requirements of the concept of fair presentation does not provide fair presentation, then the auditor shall discuss this circumstance with management and depending on requirements of the applicable concept of preparation of the financial reporting and how the matter will be resolved, to determine whether there is need to modify opinion in audit opinion according to MCA 705 (reviewed) (see Item A 16).

19. If the financial reporting is prepared according to the concept of compliance, from the auditor it is not required to carry out assessment of whether the financial reporting provides fair presentation. However, in extremely exceptional cases if the auditor draws conclusion that such financial reporting misleads, he shall discuss this circumstance with management and how this issue will be resolved, to determine whether it is necessary to give this information in audit opinion and if it is necessary how (see Item A 17).

Audit opinion

20. The audit opinion shall be in writing (see the Items A18 - A 19).

Audit opinion by results of the audit booked according to International standards of audit

Heading

21. The audit opinion shall have the heading which is accurately specifying that this document is the conclusion of the independent auditor (see Item A 20).

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