Audit Opinions

Concept

Four Types

(1) Unmodified (Clean) — financial statements are fairly presented in all material respects. (2) Qualified — fairly presented EXCEPT FOR a specific issue. (3) Adverse — financial statements are NOT fairly presented. (4) Disclaimer — the auditor cannot form an opinion due to scope limitations.

Example

Decision Matrix

Material but NOT pervasive → Qualified. Material AND pervasive misstatement → Adverse. Material AND pervasive scope limitation → Disclaimer. No material issues → Unmodified.

Key Point

Going Concern

If substantial doubt exists about an entity's ability to continue as a going concern (next 12 months), the auditor adds an emphasis-of-matter paragraph after the opinion paragraph in an otherwise unmodified report.

The Audit Process

Fraud & Professional Ethics

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