A1-Modified Opinions Due to Audit Issues

Question 1

When will an auditor express a Qualified opinion due to GAAS issue?

Answer 1

When an auditor is unable to obtain sufficient appropriate audit evidence. The effects are ONLY material but NOT pervasive

Question 2

When will an auditor express a Disclaimer opinion due GAAS issue?

Answer 2

When an auditor is unable to obtain sufficient appropriate audit evidence. The effects are BOTH material AND pervasive. The disclaimer opinion should also be express if the auditor is not independent or if the FS are unaudited.

Question 3

what phrases will be included in the Opinion paragraph when issued a Qualified opinion due to GAAS problem?

Answer 3

• Nonissuers:…in our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section…
• Issuers:… in our opinion, except for the effects of the adjustments, if any,…we were unable to obtain audited FS supporting….. Then, in the Basis for Opinion,…except as discussed above,…

Question 4

what phrases will be included in the Opinion paragraph when issued a Disclaimer opinion due to GAAS problem?

Answer 4

• Nonissuers: we were engaged (not audited) to audit the FS… We do not express an opinion on the accompany FS…Because of the significance of the matters described in the Basis for Disclaimer of Opinion… Then, in the AUDITOR’S RESPONSIBILITIES paragraph,… because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence….
• Issuers: We were engaged to the audit…As described in the following paragraph, (state the GAAS issue in short),…we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the FS, and we DO NOT EXPRESS AN OPINION on these FS. CAM section is omitted.

Question 5

what opinion should an auditor express if the auditor lacks independence with respect to an audit client?

Answer 5

Disclaimer opinion must be expressed. A qualified opinion is not an option

Question 6

What are the scope limitation examples would likely result in a disclaimer opinion?

Answer 6

• CEO is unwilling to sign the management representation letter
• client refuses to permit auditor to confirm or apply alternative procedures to verify balances of AR
• auditor is unable to determine the amounts associated with an employee fraud scheme