Embedded Files
Financial statement issues: Qualified and adverse opinion
Financial statement issues: Qualified and adverse opinion
The auditor uses professional judgment to determine whether to issue a qualified opinion or an adverse opinion when audit evidence indicates that there is material misstatement of the financial statements.
A qualified opinion should be expressed when the auditor concludes that misstatements, individually or in the aggregate, are material but not pervasive to the financial statements.
An adverse opinion should be expressed when the auditor concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financialĀ statements.
Nature of misstatements
Nature of misstatements
A material misstatement of the financial statements may arise in relation to the following:
The appropriateness of accounting policies.
The application of accounting policies.
The appropriateness of the financial statement presentation or the appropriateness or adequacy of disclosures in the financial statements.
Nonissuer reports
Nonissuer reports
When the auditor expresses a qualified or adverse opinion due to material misstatement of the financial statements, the auditor's report will include a modified "Basis for Opinion" section and a "Qualified Opinion" or "Adverse Opinion" section, as appropriate.
Qualified opinion
Qualified opinion
Adverse opinion
Adverse opinion
Issuer reports
Issuer reports
When the auditor expresses a qualified or adverse opinion due to material misstatement of the financial statements, the auditor's report will include an additional paragraph immediately following the opinion paragraph and the opinion paragraph will be modified. The auditor is not required to report critical audit matters in the auditor's report when the auditor expresses an adverse opinion.
Qualified opinion
Qualified opinion
Adverse opinion
Adverse opinion
š§® Practice Problem: LO1-05, MCQ-14943
š§® Practice Problem: LO1-05, MCQ-14943
Which of the following phrases would an auditor of a non issuer most likely include in the auditor's report when expressing a qualified opinion due to inadequate disclosure?
Page updated
Google Sites
Report abuse