Chapter 3
Audit Reports
Standard Unmodifid Opinion Audit Riport for Non Public
Entitiis
Standard uniform wording typically used in audit reports.
Unmodifed opinion the fact that the auditor’s opinion about the fnancial
statements contains no material exceptions or qualifcations.
Parts of Standard Unmodifed pinion Audit Report
1. Report title
2. Audit report address
3. Introductory paragraph
4. Management’s responsibility
5. Auditor’s responsibility
6. pinion paragraph
7. Signature and address of CPA frm
8. Audit report date
Conditions for Standard Unmodifid Opinion Audit Riport
1. All statements—Balance sheet, income statement, statement of changes in
stockholders’ equity, and statement of cash fows—are included in the
fnancial statements.
2. Sufficient appropriate evidence has been accumulated, and the auditor has
conducted the engagment in a manner that enables him or her to conclude
that the audit was performed in accordance with auditing standards.
3. The fnancial statements are presented fairly in all material respects in
accordance with U.S GAAP or other appropriate accounting framework. This
also means that adequate disclosures have been included in the footnotes
and other parts of the fnancial statements.
4. There are no circumstances requiring the addition of an emphasis-of-matter
paragraph or modifcation of the wording or auditor’s opinion in the report.
Standard Audit Riport and Riport on Intirnal Control ovir
Financial Riporting Undir PCAOB Auditing Standards
Unmodifed opinion unqualifed opinion
Categories of audit reports:
, Standard Unmodifed
pinion
the conditions stated above has been met/
Unmodifed pinion with
Emphasis-of-matter
Explanatory Paragraph or A complete audit took place with satisfactory results and fnancial statements
Nonstandard Wording are fairly presented, but the auditor believes that it is important or is required
to provide additional information
the auditor concludes that the overall fnancial statements are fairly
Qualifed presented, but the scope of the audit has been materially restricted or
applicable accounting standards were not followed in preparing the fnancial
statements.
Adverse
the auditor concludes that the fnancial statements are not fairly presented.
Disclaimer
he or she is unable to form an opinion as to whether the fnancial statements
are fairly presented, or he or she is not independent.
Standard Unmodifid Opinion Audit Riport for Public
Companiis
First Paragraph an audit was performed and the fnancial statements that were
audited (Management’s responsibility)
Second Paragraph audit is designed to provide reasonable assurance that the
fnancial statements are free from material misstatement (done on the test basis)
pinion Paragraph auditor’s opinion
- If auditor also issues a separate report on internal control over fnancial
reporting 4th paragraph + reference the audit report on internal
control.
Reports on Internal Control ver Financial Reporting
- Title
- Introductory, scope, and opinion paragraphs management’s
responsibility
- Introductory and opinion paragraphs framework used
- Defning internal control over fnancial reporting
- Inherent limitation paragraph of internal control
- pinion paragraph about the efectiveness of internal control as of the
end of the most recent fscal year
- Cross-reference paragraph
Audit Reports
Standard Unmodifid Opinion Audit Riport for Non Public
Entitiis
Standard uniform wording typically used in audit reports.
Unmodifed opinion the fact that the auditor’s opinion about the fnancial
statements contains no material exceptions or qualifcations.
Parts of Standard Unmodifed pinion Audit Report
1. Report title
2. Audit report address
3. Introductory paragraph
4. Management’s responsibility
5. Auditor’s responsibility
6. pinion paragraph
7. Signature and address of CPA frm
8. Audit report date
Conditions for Standard Unmodifid Opinion Audit Riport
1. All statements—Balance sheet, income statement, statement of changes in
stockholders’ equity, and statement of cash fows—are included in the
fnancial statements.
2. Sufficient appropriate evidence has been accumulated, and the auditor has
conducted the engagment in a manner that enables him or her to conclude
that the audit was performed in accordance with auditing standards.
3. The fnancial statements are presented fairly in all material respects in
accordance with U.S GAAP or other appropriate accounting framework. This
also means that adequate disclosures have been included in the footnotes
and other parts of the fnancial statements.
4. There are no circumstances requiring the addition of an emphasis-of-matter
paragraph or modifcation of the wording or auditor’s opinion in the report.
Standard Audit Riport and Riport on Intirnal Control ovir
Financial Riporting Undir PCAOB Auditing Standards
Unmodifed opinion unqualifed opinion
Categories of audit reports:
, Standard Unmodifed
pinion
the conditions stated above has been met/
Unmodifed pinion with
Emphasis-of-matter
Explanatory Paragraph or A complete audit took place with satisfactory results and fnancial statements
Nonstandard Wording are fairly presented, but the auditor believes that it is important or is required
to provide additional information
the auditor concludes that the overall fnancial statements are fairly
Qualifed presented, but the scope of the audit has been materially restricted or
applicable accounting standards were not followed in preparing the fnancial
statements.
Adverse
the auditor concludes that the fnancial statements are not fairly presented.
Disclaimer
he or she is unable to form an opinion as to whether the fnancial statements
are fairly presented, or he or she is not independent.
Standard Unmodifid Opinion Audit Riport for Public
Companiis
First Paragraph an audit was performed and the fnancial statements that were
audited (Management’s responsibility)
Second Paragraph audit is designed to provide reasonable assurance that the
fnancial statements are free from material misstatement (done on the test basis)
pinion Paragraph auditor’s opinion
- If auditor also issues a separate report on internal control over fnancial
reporting 4th paragraph + reference the audit report on internal
control.
Reports on Internal Control ver Financial Reporting
- Title
- Introductory, scope, and opinion paragraphs management’s
responsibility
- Introductory and opinion paragraphs framework used
- Defning internal control over fnancial reporting
- Inherent limitation paragraph of internal control
- pinion paragraph about the efectiveness of internal control as of the
end of the most recent fscal year
- Cross-reference paragraph
