Overview of Auditor's Report

Question 1

How is an auditor’s unmodified audit report structured under the clarified auditing standards?

Answer 1

The unmodified auditor’s report is presented in four sections:

1. )Introduction (one sentence)
2. )Management’s responsibility section (one sentence).
3. )Auditor’s responsibility section (three paragraphs, consisting of nine sentences)
4. )Opinion (one sentence)

Question 2

List the reason(s) for which an entity may receive an adverse opinion.

Answer 2

Misstatement, such as a departure from generally accepted accounting principles (GAAP) (material and pervasive effect)

Question 3

List the reason(s) for which an entity may receive a disclaimer of opinion.

Answer 3

Scope limitation (material and pervasive effect)

Question 4

List the reason(s) for which an entity may receive a qualified opinion.

Answer 4

1. )Misstatement, such as a departure from generally accepted accounting principles (GAAP) (material, not pervasive effect)
2. )Scope limitation (material, not pervasive effect)

Question 5

List the four types of opinions that an auditor may give on financial statements.

Answer 5

1. )Unmodified
2. )Qualified
3. )Adverse
4. )Disclaimer

Question 6

Prior to the clarified auditing standards, how was an unqualified audit report structured?

Answer 6

An unqualified audit report was presented in three paragraphs:

1. )Introduction (three sentences)
2. )Scope (five sentences)
3. )Opinion (one sentence)