Study Unit 15 - Reports - Opinions And Disclaimers

Question 1

What are the elements of the auditor’s report for nonissuers?

Answer 1

1. Title (must include the work “independent”)
2. Addressee
3. Opinion
4. Basis for opinion
5. Management’’s responsibility for the financial statements
6. Auditor’s responsibility
7. Emphasis-of-matter paragraph (if applicable)
8. Other-matter paragraph (in applicable)
9. Auditor’s signature
10. Auditor’s address
11. Date of the report

Question 2

What are the elements of the auditor’s report for issuers?

Answer 2

1. Title
2. Addressee
3. Opinion
4. Basis of opinion
5. Explanatory paragraph (if applicable)
6. Critical audit matters
7. Auditor’s signature
8. Tenure
9. Auditor’s address
10. Date of the report

Question 3

What are the critical audit matter (CAMs) in the Critical Audit Matters section of an auditor’s report of an issuer?

Answer 3

A CAM is any matter resulting from the audit of the financial statements that
- Was communicated or required to be communicated to the audit committee
- Related to material accounts or disclosures
- Involved especially challenging, subjective, or complex auditor judgement

Question 4

Who are the addressees of the auditor’s report for (1) nonissuers and (2) issuers?

Answer 4

Nonissuers - should be addressed to those for whom the report is prepared

Issuers - Must be addressed to the
- Shareholders
- Board of directors
(others addresses may be added)

Question 5

What is the earliest date of the audit report?

Answer 5

The date of the audit report is no earlier that the date on which the auditor has obtained sufficient appropriate evidence to support the opinion.

Question 6

What is the required qualifying language for expressing a qualified opinion in the auditor’s report for both nonissuers and issuers?

Answer 6

In the auditor’s report, the paragraph describing the matters resulting in the qualification should include the words “…except for…the financial statements are presented fairly…”

Question 7

How should a qualified opinion of an audit engagement due to a scope limitation be indicated in the auditor’s report?

Answer 7

The auditor’s report should indicate that the qualification pertains to the possible effects on the financial statement, not to the scope limitation itself.

NOTE: The working “…except for the limitation on the scope of the audit…” is not acceptable.

Question 8

What is the required qualifying language for expressing an adverse opinion in the auditor’s report for nonissuers?

Answer 8

In the auditor’s report, the opinion should state that, because of the significance of the matter(s) described in the basis for adverse opinion section, the financial statements are not presented fairly in accordance with the framework.

Question 9

When an auditor who is not independent is required to report on financial statements, what should be the auditor’s response?

Answer 9

The auditor should disclaim an opinion and specifically state that (s)he is not independent.