i. What is the correct phrase that is included in the opinion paragraph of the standard (unqualified) auditor’s report? ii. Briefly explain why the given phrase is a poor replacement for the correct phrase
Consider the following given phrase that is not included in the opinion paragraph of the
standard (unqualified) auditor’s report:
“The financial
December 31, 2019, and its financial performance and its
accordance with Canadian generally accepted auditing standards.”
i. What is the correct phrase that is included in the opinion paragraph of the standard
(unqualified) auditor’s report?
ii. Briefly explain why the given phrase is a poor replacement for the correct phrase
The type of Audit report that is given in the question is an "Disclaimer opinion".
If the auditor is unable to express an opinion (eg., in the case of a scope limitation), a disclaimer of opinion is issued.
i. A correct phrase that should be included in standard audit report are
1. Tittle
The unqualified report consists of a title that included the word "independent". This is done to determine that it was prepared by an unbiased third party.
2. Addressee
3. Introductory paragraph
The auditor's report should identify that financial statements of the entity have been audited and the report includes a statement that the preparation of financial statements are the responsibility of the management and a statement that responsibility of the auditor is to express an opinion on the financial statements based on the audit.
4. Scope paragraph
The auditor's report should describe the scope of the audit by stating that the audit was conducted by GAAP or relevant national standards as appropriate. The audit report should include a statement that the auditing work was planned and performed to check whether the financial statements are free of material misstatement.
5. Opinion paragraph
The opinion paragraph of the auditor's report should clearly state the auditor's opinion as to whether the financial statements are presented fairly, in all material respects, by GAAP and where appropriate whether the financial statements comply with statutory requirements.
6. Date of report
The auditor should date the report as of the completion date of the report.
Unqualified report or opinion is also known as an unmodified or clean opinion indicates that the auditor believes the statements are free from material omissions and errors
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