Types Of Audit Opinion Flashcards
What is the unmodified opinion
This is the audit opinion that you will see in most audit reports. It simply states that the financial statements open “present fairly “. There are no ifs or buts
And auditors report within on modified opinion may however include any (all) of the following
Emphasis of matter paragraph
Material uncertainty related to going concern
Other matter paragraph
These matters do not affect the audit opinion
What is a modified audit opinion
With respect to modified opinions there are two potential reasons for modification
The financial statements include one or more materials misstatements
The auditor has been unable to obtain sufficient appropriate order evidence
How to account for material misstatement in regards to audit opinions
If the misstatements is not material The orders opinion would not be modified, so the first hurdle is a disagreements must be for the material amount. In such a case the auditor would put a paragraph in report saying that “except for certain items, or other respects the financial statements are presented fairly“ (I.e. the opinion has been qualified)
If however the misstatements are so significant that renders the financial statements as a whole useless the audit audit issue an adverse opinion stating that the financial statements are not presented fairly
How to accounts for a lack of sufficient evidence within the auditors opinion
If the order has not been given all the information required to draw the conclusion and the information missing is material in order to will qualify his opinion using “except for paragraph”
If however the missing information is so significant not the auditor is unable to form an opinion, the auditor must give a disclaimer of opinion
