Modified Reports

Various issues arising during the course of an audit may cause the auditor to modify the report

Different modifications have different levels of significance

1) May have no effect on assurances given by auditor
·1 Emphasis of a
matter
Division of responsibility

2) May reduce assurances-qualified opinion

3) May negate
assurances
Disclaimer of opinion
Adverse opinion

4)
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Emphasis of a Matter
1) Auditor has corroborated management's assertions regarding the matter

P & D- The item is adequately disclosed & is presented on the financial statements in
conformity with GAAP
·2 E or 0- The item does exist or the transaction did occur
R & 0- The company has the rights or obligations indicated by the related items on the
financial statements
·3 C-AII transactions, events, or circumstances that relate to the item occurring during the
current period have been taken into account
V-The auditor accepts the amount at which the item is reported
5) Auditor expresses unqualified opinion with standard introductory, scope, & opinion para-
graphs
6) Auditor believes users will better understand information in financial statements or report
with additional information
7) Auditor adds explanatory paragraph, after opinion paragraph to emphasize the matter

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8)