In which of the following circumstances an auditor Cannot give an unmodified opinion?
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The auditor’s report should have an appropriate title to distinguish the auditor’s report from reports that might be issued by others. Introductory Paragraph The auditor’s report should identify the financial statements of the entity that have been audited, including the date of and period covered by the financial statements. The report should include a statement that the financial statements are the responsibility of the entity’s management and a statement that the responsibility of the auditor is to express an opinion on the financial statements based on the audit. Scope Paragraph The auditor’s report should describe the scope of the audit by stating that the audit was conducted in accordance with generally accepted auditing standards or in accordance with relevant national standards or practices as appropriate. The report should include a statement that the audit was planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement.The auditor’s report should describe the audit as including:
The report should include a statement by the auditor that the audit provides a reasonable basis for the opinion. Opinion Paragraph The opinion paragraph of the auditor’s report should clearly state the auditor’s opinion as to whether the financial statements are presented fairly, in all material respects, in accordance with generally accepted accounting principles and, where appropriate, whether the financial statements comply with statutory requirements. Date of Report The auditor should date the report as of the completion date of the audit. The Auditor’s Reports Unqualified Report Modified Reports Matters that Do Not Affect the Auditor’s Opinion Certain circumstances, while not affecting the auditor’s unqualified opinion, may require that the auditor add an explanatory paragraph (or other explanatory language) to the standard report. These circumstances include:The auditor’s opinion is based in part on the report of another auditor.
Matters that Do Affect the Auditor’s Opinion An auditor may not be able to express an unqualified opinion when either of the following circumstances exists and, in the auditor’s judgment, the effect of the matter is or may be material to the financial statements:
The circumstances described in (a) could lead to a qualified opinion or a disclaimer of opinion. The circumstances described in (b) could lead to a qualified opinion or an adverse opinion. Qualified Opinion Disclaimer of Opinion Adverse Opinion Whenever the auditor expresses an opinion that is other than unqualified, a clear description of all the substantive reasons should be included in the report and, unless impracticable, a quantification of the possible effect(s) on the financial statements. This information would be set out in a separate paragraph preceding the opinion or disclaimer of opinion on the financial statements and may include a reference to a more extensive discussion, if any, in a note to the financial statements. Effective dateThis Statement is effective from 31 December, 1999. In which of the following circumstances would an auditor not express an unmodified opinion?In which of the following circumstances would an auditor not express an unmodified opinion? The auditor is unable to obtain audited financial statements of a consolidated investee.
Which case would an unmodified opinion not be appropriate?In which case would an unmodified opinion not be appropriate? A material related party transaction has occurred and has been accounted for appropriately, but it has not been adequately disclosed in the financial statements.
In which of the following circumstances would the auditor most likely issue an unmodified opinion?The auditor may issue an unmodified opinion when a material departure from GAAP exists. --Although this situation is unusual, if a departure from GAAP is justified, the auditor may issue an unmodified opinion with an emphasis-of-matter paragraph.
What are the circumstances requiring modification of audit opinion?For example: When an auditor is unable to obtain sufficient and appropriate audit evidence regarding investment made in a foreign company. We consider the auditor's inability to obtain sufficient and appropriate audit evidence material but not pervasive. Auditor's opinion is Qualified for the misstatement.
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