Modified Opinion

Question 1

List the 4 types of modification

Answer 1

1. Qualified (scope limitation)
2. Qualified (Material Misstatment)
3. Adverse
4. Disclaimer of Opinion

Question 2

Qualifications for qualified and adverse/disclaimer

Answer 2

Qualified: material Not Pervasive

Adverse/Disclaimer: Material AND pervasive

Question 3

Circumstances for qualified opinion/disclaimer of opinion

Answer 3

inability to obtain sufficient appropriate audit evidence

Question 4

Changes to Report as a result of qualified opinion

Answer 4

Auditors responsibility - add the word qualified to last sentence
Add Basis for Qualified Opinion paragraph
Modified opinion paragraph

Question 5

Qualified opinion wording

Answer 5

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of December 31, 20X1 and 20X0, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America

Question 6

Adverse Opinion wording

Answer 6

In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph, the consolidated financial statements referred to above do not present fairly the financial position of ABC Company and its subsidiaries as of December 31, 20X1, or the results of their operations or their cash flows for the years then ended.

Question 7

Disclaimer of opinion reporting changes

Answer 7

Intro paragraph
- we were engaged to audit
Auditors responsibility
- revise this section to consist of the following 2 sentences: "Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with auditing standards generally accepted in the United States of America. Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion."
Add Basis for Disclaimer paragraph
Add Disclaim of Opinion paragraph

Question 8

Disclaimer of opinion paragraph wording

Answer 8

“Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on these financial statements.”

Question 9

Auditor responsibility paragraph wording for disclaimer of opinion

Answer 9

“Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with auditing standards generally accepted in the United States of America. Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.”

Question 10

What paragraph is omitted in a disclaimer of opinion report

Answer 10

Scope (2nd paragraph of auditors responsibility)