ISA 700 Forming an Opinion: The Completion Checklist Before You Sign

You're sitting at your desk on a Friday afternoon. The file is thick, fieldwork wrapped two weeks ago, and the partner wants the report signed by Monday. But something doesn't feel finished. You can't point to a missing procedure, yet the file doesn't quite cohere into a clean opinion. That feeling is the completion gap, and it's where ISA 700 lives.

Under ISA 700.10-15, the auditor forms an opinion by evaluating whether sufficient appropriate audit evidence has been obtained, whether uncorrected misstatements are material (individually or in aggregate), and whether the financial statements are prepared in accordance with the applicable financial reporting framework, including fair presentation where relevant.

What ISA 700.10-15 actually requires before you form an opinion

ISA 700.10 states the objective plainly: form an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. The word "all" is doing real work there. A partial opinion or a conditional opinion is not an option under this standard.

ISA 700.11 goes further. The auditor must conclude whether reasonable assurance has been obtained that the financial statements as a whole are free from material misstatement, whether due to fraud or error. This conclusion draws on every piece of evidence gathered across the entire engagement. It is not a checkbox at the end of fieldwork. It is the product of every judgment made since planning.

The standard then sets out the evaluation requirements in ISA 700.12-13. The auditor evaluates whether the financial statements are prepared in accordance with the requirements of the applicable financial reporting framework. This includes considering the accounting policies selected, how they were applied, whether disclosures are adequate, the terminology used, and whether the financial statements achieve fair presentation (for fair presentation frameworks) or are not misleading (for compliance frameworks).

ISA 700.14-15 address the auditor's evaluation of whether the financial statements adequately refer to or describe the applicable financial reporting framework. This sounds administrative, but inspectors flag it regularly. A set of financial statements that says "prepared in accordance with IFRS" but actually applies local GAAP with IFRS presentation is a framework mismatch. That mismatch affects the opinion.

The four questions that determine your opinion

Before signing anything, the engagement team needs to answer four questions. Getting even one wrong produces a deficient opinion.

Have all planned audit procedures been performed?

This is not the same as asking whether the audit programme is complete. Procedures can be ticked off without being performed to the standard the risk assessment demanded. ISA 330.25-26 requires the auditor to conclude whether sufficient appropriate evidence has been obtained to reduce audit risk to an acceptably low level. Cross-reference the risk assessment to the procedures actually performed, not just the procedures listed.

A missing procedure discovered at completion is not automatically fatal. ISA 300.A13 permits the auditor to update the audit plan. But an updated plan performed after field exit, under time pressure, and without the client's finance team available, rarely produces evidence of the same quality.

Is the audit evidence sufficient and appropriate?

Sufficiency is quantity. Appropriateness is quality (relevance and reliability). ISA 500.A4 makes the distinction. A file with 200 confirmation responses but no substantive testing of estimates is not sufficient for a manufacturing client. A file with extensive analytical procedures but no external evidence for a cash-intensive business is not appropriate.

The engagement partner's evaluation under ISA 220.30 overlaps here. The partner must determine whether sufficient appropriate evidence has been obtained before the opinion is formed. This is personal. It cannot be delegated.

Do uncorrected misstatements require a modification?

ISA 450.11 requires the auditor to communicate all accumulated misstatements to management and request correction. ISA 450.12-13 then requires evaluation of whether uncorrected misstatements (individually or in aggregate) are material. If they are, the opinion must be modified.

The evaluation is not purely quantitative. ISA 450.A16 requires consideration of the size, nature, cause, and circumstances of misstatements. A €50,000 misstatement in a €200 million revenue company is quantitatively immaterial at any reasonable threshold. But if that €50,000 represents an undisclosed related party transaction, or turns a reported profit into a loss, it may be qualitatively material. The misstatement tracker helps teams accumulate and evaluate these judgments consistently.

Is the financial reporting framework acceptable?

ISA 700.12(a) requires the auditor to evaluate whether the financial statements have been prepared in accordance with the applicable framework. ISA 210.6(a) covers the acceptability assessment at engagement acceptance, but ISA 700 requires a second look at completion. Has anything changed? Did the client switch from Dutch GAAP to IFRS mid-year without updating the engagement letter? Did the framework itself change (new IFRS standard effective this period) and the client failed to adopt it?

Unmodified, qualified, adverse, disclaimer: how ISA 700.16-19 determines the form

ISA 700.16 permits an unmodified opinion when two conditions are met: the financial statements are prepared in accordance with the applicable framework, and the auditor has obtained sufficient appropriate evidence. If either condition fails, you move to ISA 705.

ISA 700.17 specifies the unmodified opinion wording for fair presentation frameworks: the financial statements present fairly, in all material respects, the financial position, financial performance, and cash flows in accordance with the framework. For compliance frameworks, ISA 700.18 uses different wording: the financial statements are prepared, in all material respects, in accordance with the framework.

The difference is not cosmetic. "Present fairly" imports a judgment that goes beyond mechanical compliance with individual standards. "Prepared in accordance with" is narrower. It tests compliance with the framework's requirements without a separate fair presentation overlay.

ISA 700.19 prohibits the auditor from issuing an unmodified opinion when any of the ISA 705 conditions exist. These conditions split into two categories.

Material misstatement exists (or the auditor concludes misstatements are material). If the effect is material but not pervasive, ISA 705.7(a) requires a qualified opinion. If the effect is material and pervasive, ISA 705.8(a) requires an adverse opinion.

Inability to obtain sufficient appropriate evidence. If the possible effects are material but not pervasive, ISA 705.7(b) requires a qualified opinion. If the possible effects are material and could be pervasive, ISA 705.9 requires a disclaimer.

The word "pervasive" carries specific meaning under ISA 705.5(a). An effect is pervasive when it is not confined to specific elements, accounts, or items; when it represents a substantial proportion of the financial statements even if confined; or when it is fundamental to users' understanding of the financial statements with respect to disclosures. A single material misstatement in inventory is not pervasive. A fundamental disagreement over revenue recognition policy that affects every period presented likely is.

What goes in the auditor's report under ISA 700.20-37

ISA 700.20-37 prescribes the structure and ordering of the auditor's report. Each element has a defined location.

The report title must indicate it is the report of an independent auditor (ISA 700.21). The addressee follows local law or engagement terms (ISA 700.22). The opinion section comes first in the report, states the entity name, describes what was audited, references the financial reporting framework, and includes the opinion itself (ISA 700.23-26).

The basis for opinion section immediately follows (ISA 700.27-28). It states that the audit was conducted in accordance with ISAs, cross-references the auditor's responsibilities section, confirms independence, and states that sufficient appropriate evidence was obtained.

Material uncertainty related to going concern, when applicable under ISA 570, appears next (ISA 700.29). Key audit matters follow (where ISA 701 applies) under ISA 700.30. Then come other information (ISA 720), responsibilities of management and those charged with governance (ISA 700.31-33), and auditor's responsibilities (ISA 700.34-37).

The ordering matters. ISA 700.A40 explains the rationale: the opinion section appears first because it is the most important information for users. Everything that follows supports or explains the opinion. Rearranging these sections (placing the scope paragraph before the opinion, for instance) does not comply with ISA 700.

One area that catches smaller firms: ISA 700.34-37 requires the auditor's responsibilities section to describe the auditor's obligations regarding fraud, going concern, group audits (where applicable), and communication with those charged with governance. These are not optional paragraphs. Omitting the fraud responsibility description (which ISA 700.35(b) requires) is a common inspection finding.

When to modify: the ISA 705 triggers you assess at completion

The completion process under ISA 700 always includes a modification assessment. ISA 705.6 requires the auditor to modify the opinion when the auditor concludes that the financial statements as a whole are not free from material misstatement, or when the auditor is unable to obtain sufficient appropriate evidence to conclude that they are free from material misstatement.

The first trigger (material misstatement) arises from the misstatement evaluation. If the accumulated uncorrected misstatements exceed overall materiality and management refuses to correct them, the auditor has a factual basis for modification. But the trigger also fires when the auditor disagrees with management on an accounting policy, a disclosure, or the application of a standard. A disagreement over the classification of a lease under IFRS 16, where the auditor concludes the entity misclassified an operating lease as a right-of-use asset, is a potential qualification if the effect is material.

The second trigger (inability to obtain evidence) arises from the sufficiency evaluation. A client that restricts access to records, an external confirmation that never arrives, a component auditor that cannot complete procedures on time, a fire that destroyed source documents. Each of these may prevent the auditor from obtaining evidence for a specific assertion. ISA 705.7(b) requires a qualified opinion if the possible effect is material but not pervasive. ISA 705.9 requires a disclaimer if the possible effect could be pervasive.

The distinction between qualified and adverse (or disclaimer) is not academic at completion. It determines the wording of the report, the additional paragraphs required (basis for qualified opinion, basis for adverse opinion, basis for disclaimer of opinion), and the communication with those charged with governance. ISA 705.30 requires the auditor to communicate with governance the circumstances that led to the modification. This communication must happen before the report is finalised.

One practical point that completion checklists often miss: an emphasis of matter paragraph under ISA 706 is not a modification. It draws attention to a matter already disclosed in the financial statements that is fundamental to users' understanding. Adding an emphasis of matter paragraph does not change the opinion from unmodified to modified. Teams sometimes confuse the two, either treating a necessary modification as something that can be resolved with an emphasis paragraph, or modifying the opinion when an emphasis paragraph would have been sufficient.

Smaller entity considerations under ISA 700.A1-A4

ISA 700.A1-A4 address considerations for audits of entities where the applicable financial reporting framework includes fewer disclosure requirements or where the entity's circumstances are less involved. These application paragraphs do not reduce the requirements of ISA 700. They contextualise how the requirements apply.

ISA 700.A2 notes that for smaller entities, the financial statements may include fewer notes and simpler accounting policies. The auditor's evaluation under ISA 700.12 still applies in full, but the nature of the evaluation reflects the entity's financial reporting framework.

For a Dutch BV reporting under RJ (Raad voor de Jaarverslaggeving), the disclosure requirements differ from full IFRS. The auditor evaluates compliance against RJ requirements, not IFRS requirements. This seems obvious, but inspection files sometimes reveal auditors applying IFRS disclosure checklists to RJ financial statements, producing findings that are not findings under the actual framework.

ISA 700.A4 addresses the auditor's report for smaller entities where there are fewer matters to report. The report structure under ISA 700.20-37 remains unchanged. The content within each section may be shorter, but the sections themselves are all required.

Worked example: Jansen Techniek B.V.

Scenario: Jansen Techniek B.V. is a Dutch mechanical engineering company with €38 million revenue, reporting under RJ. The audit is nearing completion. The engagement team needs to form an opinion under ISA 700.

1. Review of planned procedures against risk assessment. The engagement team compares the risk assessment (ISA 315) to the audit programme. All planned procedures have been performed. One additional procedure (a supplier confirmation for a new major vendor representing €2.1 million in payables) was added during fieldwork and completed.

   Documentation note: Record in the completion memorandum that all procedures from the audit plan were performed, noting the additional supplier confirmation added during fieldwork with rationale (new vendor, material balance, no prior relationship).

2. Sufficiency and appropriateness evaluation. The partner reviews the evidence obtained for each significant risk. Revenue (€38 million) was tested through a combination of substantive detail testing and analytical procedures. Receivables were confirmed. Inventory (€6.2 million) was attended at count and roll-forward tested. The one area flagged for further consideration: a €400,000 provision for warranty claims where the estimate relied on management's historical claim rate.

   Documentation note: Document the partner's assessment of evidence sufficiency for each significant account. For the warranty provision, note the specific evidence obtained (historical claim data for three years, industry comparables, client's methodology review) and why it is sufficient.

3. Uncorrected misstatement evaluation. The summary of uncorrected misstatements shows two items: a €15,000 overstatement of prepayments (classification) and a €22,000 understatement of accrued expenses (cut-off). Combined: €37,000 net. Performance materiality was set at €285,000. Overall materiality is €380,000. Both individually and in aggregate, the misstatements are not material.

   Documentation note: Record the evaluation of uncorrected misstatements against both performance materiality and overall materiality, with explicit conclusion that no modification to the opinion is required on quantitative grounds. Note any qualitative considerations evaluated (neither misstatement involves fraud, related parties, or covenant compliance).

4. Framework acceptability check. Jansen Techniek reports under RJ. The engagement letter specifies RJ as the applicable framework. The financial statements reference RJ. No framework changes occurred during the period. The auditor confirms the framework is acceptable per ISA 210.6(a) and that the financial statements properly identify the framework per ISA 700.14.

   Documentation note: Confirm in the completion memorandum that the framework referenced in the financial statements matches the engagement letter and is an acceptable general purpose framework.

5. Opinion formed. All four conditions are satisfied: procedures complete, evidence sufficient and appropriate, no material uncorrected misstatements, framework acceptable. The auditor forms an unmodified opinion under ISA 700.16. The report follows the ISA 700.20-37 structure, with the opinion section stating that the financial statements present fairly (RJ is a fair presentation framework) the financial position and cash flows of Jansen Techniek B.V.

   Documentation note: The completion memorandum concludes with the opinion determination, referencing the four evaluations above, signed by the engagement partner before the report is issued.

A reviewer opening this file would see a clear chain: risk assessment to procedures to evidence to misstatement evaluation to opinion. No gap in the logic. No unsigned evaluations.

Pre-signing completion checklist

1. Confirm that every procedure in the audit programme has been performed and that any additional procedures added during fieldwork are documented with rationale (ISA 300.A13, ISA 330.25-26).

2. Verify the engagement partner has personally evaluated whether sufficient appropriate audit evidence has been obtained for each significant risk, with that evaluation documented and signed (ISA 220.30, ISA 700.11).

3. Review the summary of uncorrected misstatements and confirm the evaluation covers both quantitative materiality and qualitative factors, with an explicit conclusion on whether modification is required (ISA 450.11-13).

4. Check that the financial reporting framework referenced in the financial statements matches the engagement letter, that no framework changes during the period were missed, and that the framework is acceptable for the entity's circumstances (ISA 210.6(a), ISA 700.14-15).

5. Confirm the auditor's report includes every element required by ISA 700.20-37 in the correct order, including the fraud responsibility description under ISA 700.35(b) and going concern responsibilities under ISA 700.35(a).

6. Where any of the four evaluations above produces doubt, assess whether an ISA 705 modification is triggered before signing. A qualified opinion issued proactively is always preferable to an unmodified opinion that cannot be defended at inspection.

Common mistakes

• The FRC's inspection reports have repeatedly identified auditor's reports that omit or truncate the auditor's responsibilities section under ISA 700.34-37. The fraud responsibility paragraph (ISA 700.35(b)) is particularly prone to deletion from templates carried forward from pre-revision reports.

• Engagement partners sign the opinion without a documented evaluation of uncorrected misstatements. The ISA 450.11-13 evaluation exists in the file, but the link to the ISA 700 opinion determination is missing. Inspectors treat this as a failure to form the opinion on a proper basis.

• Teams apply IFRS disclosure checklists to entities reporting under local frameworks (RJ, HGB, Belgian GAAP), generating spurious "findings" that do not correspond to actual deficiencies in the financial statements and obscuring genuine framework compliance issues.

Related content

• Audit opinion. Glossary entry covering the types of audit opinion and when each applies under ISA 700 and ISA 705.
• ISA 450 misstatement tracker. Tool for accumulating and evaluating misstatements, directly supporting the ISA 700.10-15 opinion formation process.
• How to write key audit matters: ISA 701 worked examples by industry. Once the opinion is formed, ISA 701 determines what additional matters appear in the report. [FUTURE POST]