Unmodified audit opinon (nonissuers)

The auditor of a nonissuer should express an unmodified opinion when the auditor concludes that the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. The auditor's report should be in writing. Note that non issuers use the term unmodified and issuers use the term  unqualified.

The basic elements of the unmodified audit opinion are the following:

Reference to Auditing Standards in the Auditor's Report

If the audit was conducted in accordance with two sets of auditing standards in their entirety, the auditor may indicate that the audit was conducted in accordance with another set of auditing standards (e.g., International Standards on Auditing or government auditing standards). Additional language should be added to the basis for opinion paragraph to  describe this situation:

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS) and in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.

When conducting an audit of financial statements in accordance with the standards of the PCAOB and the audit is not required to be conducted in accordance with those  standards, the auditor is required to also follow GAAS. In addition, the auditor should:

• Use the report required by the PCAOB.

• Amend the PCAOB (issuer) report to state the audit was also conducted in accordance with GAAS.

Key Audit Matters

Key audit matters (KAMs) are those matters that were of most significance in the audit of the financial statements of the current period. Such matters are selected from the  matters communicated with those charged with governance. Entities (non issuers) have the option of whether to engage the auditor to communicate key audit matters but should consider the needs of the users of the financial statements when making th is determination.

When deciding which matters, if any, should be communicated as KAMs, the auditor should consider the items that required significant auditor attention and consider the following:

• areas with a higher assessed risk of material misstatement;

• areas requiring significant auditor and management judgment, including accounting estimates having high estimation uncertainty; and

• significant events or transactions.

The determination of which matters to include as a KAM is ultimately a matter of professional judgment. The auditor may focus his or her consideration on areas that are complex or subjective, contain uncorrected misstatements or control deficiencies, required the attention of specialists, or where the auditor encountered difficulties in applying procedures or evaluating results.

When the auditor is engaged to communicate key audit matters, a description of each matter must be included in a separate section of the auditor's report. The following language, including the section title "Key Audit Matters", should be included in the auditor's report in proximity of the "Opinion" and "Basis for Opinion" sections:

Key Audit Matters

Key audit matters are those matters that were communicated with those charged with governance and, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

[Description of each key audit matter]

Unqualified audit opinion (issuers)

The auditor of an issuer should express an unqualified opinion when the auditor concludes that the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework (e.g., generally accepted accounting principles). The report should be in writing.

The basic elements of the unqualified audit opinion are the following:

Critical Audit Matters (CAMs)

The auditor's report must include any critical audit matters (CAMs) arising from the current period's audit of the financial statements, or state that the auditor determined that there were no CAMs. It is expected that, in most audits, the auditor would identify at least one CAM.

A critical audit matter is defined as a matter that was communicated or required to be communicated to the audit committee and that 

1. relates to accounts or disclosures that are material to the financial statements; and

2. involved especially challenging, subjective, or complex auditor judgment.

When determining whether a matter involved especially challenging, subjective, or complex auditor judgment, the auditor takes into account certain factors, including the auditor's assessment of the risks of material misstatement, areas of significant judgment or estimation by management, nature and timing of unusual transactions, the degree of subjectivity in applying audit procedures, and the extent of specialized skill or knowledge regarding a matter.

The following language, including the section title "Critical Audit Matters," should precede critical audit matters communicated in the auditor's report:

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be  communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

[Include critical audit matters]

Required Auditor Reporting of Certain Audit Participants

The auditor of an issuer must file Form AP with the PCAOB for each audit report issued. This form includes information about the audit, such as:

• Name of the firm.

• Name of the issuer whose financial statements are audited.

• Date of the audit report.

• The end date of the most recent period's financial statements identified in the audit report.

• The name of the engagement partner on the most recent period's audit and his or her current and prior ID number(s).

• The city and state (or city and country) of the office of the firm issuing the audit report.

• Whether the audit report is dual-dated.

• Whether other accounting firms participated in the audit.

• Whether the firm divided responsibility for the audit.

• Signature of partner or authorized officer.

Form AP must be filed by the 35th day after the audit report is first filed in a document with the SEC or within 10 days if the audit report is included in a registration statement.