categ of reports

Issued when

Criteria met / if not met/causes 1) All 4 fin stmt presented 2) 3 general stds of engagement-followed 3)sufficient evidence accumulated- 3 stds of field work met 4) fin stmt prepared as per GAAP 5)there are no circumstances requiring addnl para or modification of wording

Para

Modifications

Standard Unqualified

all 4 criteria -ok

None 1) acc. Principle consistent from last yr to this yr. 2) If material chnge occursdisclose 3)implied that auditor agrees with the change in acc priciples- if not-his opinion would become 'qualified'. doubts for going concern arise when: 1) signifi recurring losses and Working cap deficiencies 2) inability to pay for liabilities 3)uninsured sudden losses/outflows 4)legal proceeding cost/change in legislation not in favor of operations in unusual situations- departure from GAAP is agreeable to the auditor. The auditor must be able to state and explain that the departure form GAAP is justified, otherwiese cud lead be misleading . Reasons: 1)Existence of significant related party transac 2)important events occuring post B/S date 3) description affectig comparability 4)material uncertainties dsclosed in footnotes consistency versus comparability 1) if affect consistency but not comparabilty - n material==> disclose, explanatory para 2) if affecting only comparabilitynot consistency==> dont include in audit report. lack of sttement of Cash flows: there ust be a 3rd para stating the ommission and an 'except for' opinion qualification.

Clean report

1) Lack of consistent application of GAAP First 4 all requireExplanatory para reqd

Unqualified reports

2)substantial doubt abt going concern 1)Complete audit took place with satisfactory ____> results 2) fin stmt-fairly presented 3) but auditor believes3)auditor agrees with departure from addnl infor required promulgated acc principles

3 standards report para + seperate explanatory para after opinion ..>there should be complete exanation in 3rd para. Opinion=unqualifi ed except for the reference to 3rd para.

Disclaimer may be given in rare cases

Unqualified with expl. Para or modified wording

may not require qualified or adverse opinion.

Rule 203 of AICPA code of prefessional conduct allows this departure

4)emphasis on a matter

under certain circumstances- CPA intends to give an unqualified oinionbut would like to emplhasize on a matter.

categ of reports

Issued when

Criteria met / if not met/causes

Para

Modifications 3 options to principal auditor: 1) make no mention of other auditor- give std unqualified 2) mention- joint unqualified with modified wording 3) Qualify the opinion- Qualified opinion or disclaimer if princi audi is unwilling to consider other audi's portion of work.

5)reports involving other auditors

contains 3 para- all 3 modified

#2) when issuing shared unqualified report-no separate para for shared responsibility details -scope and oinion para- talk abt othe auditor -Portion auditor by other can be mentioned in -% or absolute amts Scope Restrictions: 1) by client - if material, give disclaimer. 2) beyond control - qualification of scope & Opinion. If auditor cannot follow some standards process he/she wants to and 1)if auditor satisfied with alternatives, unqualified opinion 2) no alternativequal. of scope & Opinion or Disclaimer.

qualified (use term 'Except for' in the opinion Para) That means -auditor satisfied with overall fin stmt, except for specific aspects. Departure from Unqualified reports when there is : 1) scope limitation 2)GAAP departure 3)Auditor-not independent

1) overall fin stmt fairly presented 2)scope materially restricted or 3) applicable acc. Standards not followed. Scope & Opinion Qualification can be given only when auditor unable to collect all info reqd by GAAS i. e scope estricted by client or beyond both control. Opinion qualification alone can be used only when fin stmts are not in accordance with GAAP. Scope restriction: Requires a Qualifying para preceding opinion to describ the restriction

Materiality affects what opinion is given. 3 levels of materiality in misstatements: 1) immaterial- unqualified opinion can be used only when: 1)auditor concludes that overall 2) Material but not overshadowing overall fin stmt- Qualified (except for) fin stmt are fairly presented. 3 Highly material and pervasive2)qualified report can bequalification of scope & Oinion or disclaimer or adverse. Materiality decission: opinion alone. Non GAAP condition- unqualified, 3) qualified opinion only or adverse Scope limitation- unqualified, qualied scope and opinion or disclaimer.

Adverse or disclaimer (A/D)

If auditor is not independentA) fin stmt not fairly Adverse opinion only when auditor believes stratight away presented that the fin stmts are so materially disclimer. Lack of D) Auditor no able to misstated or misleading, they do no fairly independence form opinion if fin stmt present the fin position or results of overrides any fairly presented operation. other scope D) Auditor- not Disclaimer of opinion when auditor is not limitation. No independent. able to satisfy himself /herself that the fin in Disclaimer: mention of stmt are fairly stated. i.e scope is severy entire scope para performance of restricted is excluded. any audit plus auditor is not independent. Only 3 para used. procedures.