ISA 700 (Revised) — Forming an Opinion and Reporting on Financial Statements: Complete Guide

Q: What is the difference between 'present fairly' and 'give a true and fair view'?

ISA 700 (Revised) treats these phrases as equivalent. 'Present fairly, in all material respects' and 'give a true and fair view' both indicate that the financial statements faithfully represent the underlying transactions, events, and conditions. The specific phrase used depends on the jurisdiction and the applicable legal or regulatory framework.

Key Takeaways

ISA 700 (Revised) is the cornerstone reporting standard — it governs how the auditor forms an opinion on the financial statements and prescribes the structure and content of the auditor's report.
To form an opinion, the auditor must conclude whether reasonable assurance has been obtained that the financial statements as a whole are free from material misstatement and prepared in accordance with the applicable framework.
An unmodified opinion is expressed when the auditor concludes the financial statements are prepared in accordance with the framework. For fair presentation frameworks, the opinion states the financial statements "present fairly, in all material respects" (or "give a true and fair view").
The auditor's report follows a prescribed structure: title, addressee, Opinion, Basis for Opinion, Going Concern, Key Audit Matters, responsibilities of management, responsibilities of the auditor, other reporting responsibilities, signature, date, and address.
The Opinion section comes first in the report — a deliberate design choice to put the most important information upfront for users.
All other reporting standards (ISA 701, 705, 706, 710) modify or supplement the report structure established by ISA 700.

What is ISA 700 (Revised)?

ISA 700 (Revised), titled "Forming an Opinion and Reporting on Financial Statements," is the standard that brings the entire audit to its conclusion. Every audit procedure performed under every other ISA ultimately feeds into this moment: the auditor evaluates the accumulated evidence and expresses an opinion.

The standard serves two functions. First, it establishes how the auditor forms the opinion — the evaluation process that considers everything from the sufficiency of evidence to the appropriateness of accounting policies to the adequacy of disclosures. Second, it prescribes the form and content of the auditor's report — the document that communicates that opinion to users.

Forming the Opinion

The evaluation process

ISA 700.10–15 requires the auditor to evaluate, before forming an opinion:

Sufficient appropriate audit evidence. Whether enough evidence has been obtained to support the opinion (ISA 330).

Uncorrected misstatements. Whether uncorrected misstatements are material, individually or in aggregate (ISA 450).

Accounting policies. Whether they are appropriate for the entity's circumstances and consistent with the applicable framework, whether accounting estimates are reasonable, whether the information is relevant, reliable, comparable, and understandable.

Disclosures. Whether the financial statements provide adequate disclosures to enable users to understand the effect of material transactions, events, and conditions.

Terminology. Whether appropriate terminology is used, including the title of the financial statements.

Fair presentation. For fair presentation frameworks, whether the financial statements achieve fair presentation — which may, in rare circumstances, require the auditor to conclude that departures from the framework are necessary.

Unmodified vs. modified opinion

If the auditor concludes the financial statements are prepared, in all material respects, in accordance with the applicable framework, the auditor expresses an unmodified opinion. If not, the auditor modifies the opinion under ISA 705 (Revised).

The Auditor's Report: Structure and Elements

The ISA 700 (Revised) report follows this structure:

Section	Content
Title	Must include "Independent" (e.g., "Independent Auditor's Report")
Addressee	As required by the circumstances (typically shareholders/members)
Opinion	The opinion itself, identification of the entity, the financial statements audited, the framework, and the period
Basis for Opinion	Statement that audit was conducted under ISAs, reference to ethical requirements and independence, confirmation that evidence obtained is sufficient and appropriate
Material Uncertainty Related to Going Concern	When applicable (ISA 570)
Key Audit Matters	For listed entities and when required/decided (ISA 701)
Responsibilities of Management	Description of management's responsibilities for preparing the financial statements and for internal control
Auditor's Responsibilities	Description of the auditor's objectives, reasonable assurance, materiality, and key aspects of an audit under ISAs
Other Reporting Responsibilities	When the auditor has additional reporting obligations (e.g., under law or regulation)
Signature	Name of the engagement partner (for listed entities) and/or firm
Date	Not earlier than the date the auditor has obtained sufficient appropriate evidence
Address	Location where the auditor practises

Fair presentation vs. compliance frameworks

The opinion wording differs:

Fair presentation framework (e.g., IFRS): "In our opinion, the financial statements present fairly, in all material respects, ... in accordance with International Financial Reporting Standards." Some jurisdictions use "give a true and fair view" — both phrasings are equivalent under ISA 700.

Compliance framework (e.g., certain statutory frameworks): "In our opinion, the financial statements are prepared, in all material respects, in accordance with [Framework]."

The opinion section comes first — by design

Before the 2016 reporting reforms, the auditor's report buried the opinion at the end, after lengthy boilerplate about scope and responsibilities. ISA 700 (Revised) deliberately places the Opinion section first, immediately after the addressee. This is a user-focused design decision — the opinion is what readers need most, and it should not require scrolling past paragraphs of standard text. When drafting or reviewing reports, ensure the opinion is prominent and the reader reaches it immediately.

Interaction with Other Reporting Standards

ISA 700 (Revised) is the foundation; other standards modify or supplement it:

ISA 701 — Adds a Key Audit Matters section (mandatory for listed entities). Placed after Basis for Opinion and any Material Uncertainty Related to Going Concern section.

ISA 705 (Revised) — Modifies the Opinion section when the auditor expresses a qualified, adverse, or disclaimer of opinion. Changes the heading and adds a "Basis for..." section explaining why.

ISA 706 (Revised) — Adds Emphasis of Matter or Other Matter paragraphs to draw attention to matters that do not modify the opinion but are fundamental to users' understanding.

ISA 570 (Revised) — Adds a "Material Uncertainty Related to Going Concern" section when applicable, or (under the 2024 revision) a "Going Concern" section in all reports.

ISA 710 — Affects how the opinion references prior-period comparative information and how the report handles predecessor auditors.

ISA 720 (Revised) — Adds a section on other information (annual report) and the auditor's responsibilities regarding it.

ISA 700 (Revised) in Your Jurisdiction

Netherlands. COS 700 follows ISA 700 (Revised) with additional Dutch requirements. The controleverklaring (auditor's report) must include specific elements required by Dutch law, including reporting on the management report (bestuursverslag) under Part 9 of Book 2 of the Dutch Civil Code. For OOBs (organisations of public interest), KAM disclosure is mandatory. The NBA has issued guidance on the Dutch-specific report structure.

Germany. IDW PS 400 adapts ISA 700 (Revised). The German Bestätigungsvermerk follows the ISA 700 structure but includes additional elements required by HGB §322, including reporting on the Lagebericht (management report) and, for PIEs, the supplementary Prüfungsbericht (long-form audit report). The auditor must express an opinion on whether the management report is consistent with the financial statements.

United Kingdom. ISA (UK) 700 extends the international standard significantly. UK auditor's reports include explicit conclusions on going concern, statement on directors' responsibilities, reporting on the strategic report and directors' report, and (for PIEs) confirmation that the audit opinion is consistent with the additional report to the audit committee. The UK report is notably longer and more detailed than the international baseline.

France. NEP 700 implements ISA 700 (Revised) within the French statutory framework. The rapport du commissaire aux comptes includes the opinion (certification), a justification des appréciations (justification of assessments — similar to KAM but predating ISA 701 and required for all entities, not just listed entities), and specific verifications required by law.

Frequently Asked Questions

What is the difference between "present fairly" and "give a true and fair view"?

ISA 700 (Revised) treats these phrases as equivalent. "Present fairly, in all material respects" and "give a true and fair view" both indicate that the financial statements faithfully represent the underlying transactions, events, and conditions. The specific phrase used depends on the jurisdiction and the applicable legal or regulatory framework.

Can the auditor express an opinion on only part of the financial statements?

ISA 700 applies to a complete set of general purpose financial statements. ISA 805 deals with audits of single financial statements or specific elements — which is a separate engagement.

When is the auditor's report dated?

The report is dated no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence on which to base the opinion. This includes evidence that all statements comprising the financial statements have been prepared and that those with recognised authority have asserted responsibility for them.

Does ISA 700 require the engagement partner to be named?

For audits of listed entities, yes — the name of the engagement partner must be included in the report. For other entities, inclusion is determined by law, regulation, or the auditor's judgment.