Unqualified audit opinion Flashcards
What is the title?
Independent Auditor’s Report
Who is addressed to?
Audit client; Typically Board of Directors and Stockholders, ABC Company
What is the introductory paragraph? Is it titled?
We have audited the accompanying consolidated financial statements of ABC Company and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 20X1 and 20X0, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the years then ended, and the related notes to the financial statements.
(Only if there is no reference to other legal and regulatory requirements; otherwise, the paragraph would be titled Report on Financial Statements)
What is the section after the introduction titled?
Management’s Responsibility for the Financial Statements
What is the wording of Management’s Responsibility for the Financial Statements?
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
What is the section after management’s responsibility titled?
Auditor’s Responsibility
What is the wording of the first paragraph of the auditor’s responsibility section?
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
What is the wording of the second paragraph of the auditor’s responsibility section?
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
What is the wording of the third paragraph of the auditor’s responsibility section?
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
What is the section after the auditor’s responsibility titled?
Opinion
What is the wording of the unmodified opinion?
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ABC Company and its subsidiaries as of December 31, 20X1 and 20X0, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
What comes after the opinion paragraph in an unmodified report?
Auditor’s signature (firm name, signed by audit engagement partner)
Auditor’s city and state
Date of the auditor’s report (when the auditor has obtained sufficient appropriate audit evidence as a reasonable basis for the opinion)
