Unmodified (Unqualified) opinion

Question 1

An Auditor’s responsibility to express an OPINION in the financial statements of a non-issuer under U.S. auditing standard is

Answer 1

• Represented in the Auditor’s responsibility paragraph.
• States in the first paragraph, “Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
• Indicates the nature of the engagement , financial statement covered, name of the entity whose financial statements have been audited and dates covered by each Financial statement
• Identify the applicable financial reporting framework and its origin.

Question 2

When circumstances indicate that a financial presentation in accordance with U.S. GAAP would be misleading, a departure from US GAAP is Permissible.

Answer 2

In such case the auditor should issue an unmodified opinion because the financial statements are not materially misstated.

Question 3

If the collective effect of proposed adjustments by the auditor is immaterial,

Answer 3

An unmodified opinion should be expressed and no disclosure is required.

Question 4

How does an auditor of a non issuer make the following representations when issuing the unmodified audit opinion on comparative financial statements?

Answer 4

1- Consistency is implicit in the auditor’s report, and will be explicitly mentioned in an emphasis of a matter paragraph only if there are issues with consistency.

Within the auditor’s responsibility section of the report, the following statement is explicitly made. “ Such procedures include examining on a test basis, evidence regarding the amounts and disclosures in the financials statements.”

Question 5

Basic Element of the auditor’s report under U.S. auditing standard.

Answer 5

In performing an audit in accordance with GAAS, we evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management.

Question 6

For a single year financial statements are presented, an auditor would express an unmodified opinion with no emphasis of matter

Answer 6

Since only single-year financial statements were audited by another CPA whose report expressed an unmodified opinion is not presented. Because
You wouldn’t report an unmodified opinion with an Emphasis of matter of the fact another CPA audited the prior year Financials. It is not relevant.

What would be relevant to the point you express an unmodified opinion with an emphasis of matter is :
1- An accounting matter affecting the comparability of the financial statements with those of prior year
2- Entity declines to present a statement of cash flows with its balance sheet & related statements of income & retained earnings
3- Auditor unable to obtain audited financial statements supporting the entity’s investments in foreign affiliate.

Question 7

The responsibility of the auditor and the responsibility of management are stated:

Answer 7

Explicitly in the auditor’s report of a non issuer.
There is a management’s responsibility section and an auditor’s responsibility section.

Question 8

A CPA’s report on audited financial statements under U.S auditing standards would

Answer 8

1- Include an explanation that management is responsible for the preparation and fair presentation of the financial statements.
2- Include evaluation and appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Mentioned in the auditor’s responsibility paragraph

Question 9

The Paragraph of a non-issuer auditor’s report on financial statements under U.S auditing standard should refer to GAAP

Answer 9

Expresses an opinion the financials statements conformity with GAAP in the opinion section & the management’s responsibility section that management is responsible for the preparation and fair presentation of thE financials statements in accord with GAAP

Question 10

After the Basis of opinion section comes the?

Answer 10

Critical Audit Matters section.

Question 11

Critical audit matters that was communicated or is required to be communicated to the audit committee and

Answer 11

Involves an especially challenging judgement made by the auditor