AUDIT REPORT

Common examinable areas

1. Appraise the suitability of a given set of audit report in the scenario.

2. The implication of a given scenario or scenarios on the audit report.

3. Suggest audit procedures that can be carried out to avoid the audit qualification seen in
the scenario.

4. Matters to discuss with those charged with governance pertaining to the proposed audit
adjustments.

Common confusions among students

1.
Modified Report Qualified Report

Refers to report that contains deviation
from the standard wordings seen in the
unqualified audit report.
Refers to report where auditor includes
reservation in the opinion expressed due
either to misstatement in the client’s
financial statement or inability to obtain
sufficient appropriate evidence.

Why? This is because ‘Key Audit Matter’, ‘Emphasis of matters’ and ‘Material uncertainty
relating to going concern’ are examples of deviations from the unqualified report but the
opinion expressed can still be ‘True and Fair’.

Qualified Report Modified Report

Why? This is because qualified report will always deviate from the standard unqualified
report due to the inclusion of additional information in the ‘Basis for opinion’ paragraph
and the opinion expressed will not be the same.
2.
Qualified opinion Qualified report

Qualified opinion or ‘Except for’ opinion is one of the several types of reporting for
qualified report.

Qualified report Qualified opinion

This is because besides qualified opinion, disclaimer of opinion and adverse opinion are
other examples of qualified report.

Information to be included in ‘Basis for opinion paragraph’ of qualified report

1. Details of the event or events that led to the qualification.

2. Quantification of the impact of the misstatement or the failure to obtain sufficient

appropriate evidence on the financial statement.