Lecture 2: Audit reports

Question 1

What are the two main types of audit opinions

Answer 1

1. Unmodified audit opinion
2. Modified audit opinion
   * qualified opinion
   *adverse opinion
   *Disclaimer of opinion

Question 2

What are any conditions that requires a modified report to be given

Answer 2

1. There is material misstatement due to:
   a) conflict between management and auditors and/OR conflict between AASB and corporations act
   OR:
   b) There is a scope limitation (not enough audit evidence can be collected)

Question 3

What are the characteristics of a qualified opinion

Answer 3

*Material misstatement
* not pervasive

Question 4

what are the characteristics of a adverse opinion?

Answer 4

*material misstatement
*pervasive

Question 5

what are the characteristics of a disclaimer of opinion

Answer 5

*material misstatement
* pervasive
Both characteristics are needed for the scope limitation if it falls underneath it

Question 6

What is the going concern assumption?

Answer 6

An entity can stay in business for the foreseeable future without any intention or necessity to liquidate or cease operations