17 Auditor's Reports

Question 1

Standard Report

Answer 1

States that audit was performed in conformity with generally accepted auditing standards and expresses an opinion that client’s financial statements are presented fairly and in conformity with GAAP.

Cannot issue if:

• Conditions of FAAP which readers should be informed about, Ex. Lack of consistent application
• Material Departures from GAAP
• Not enough audit evidence

Question 2

Financial Statements

Answer 2

Disclosures = supplement info on the financial statement, not correct improper parts. These do not compensate for error. FASB, GASB, FASAB, SEC have issued pronouncements that add disclosure requirements)

Comparative Financial Statements = statements of prior periods, compare with current period. Auditor’s report covers all financial statements that are presented.

• Parent corporation statements are usually consolidated with subsidiaries
• Statements usually prepared using a “general-purpose” framework, GAAP

Question 3

Standard Report (Public & Non-Public)

Answer 3

–

Question 4

Expression of an Opinion

Answer 4

Unmodified-standard
Unmodified-with emphasis of matter
Unmodified- with other matter
Unmodified-on group financial statements
Qualified 
Adverse
Disclaimer