SAS No. 33 The Auditor's Report on Financial Statements Show
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StatusRevised by Auditing Standards Committee in Taiwan on 21 December, 1999. SummaryThe auditor should review and assess the conclusions drawn from the audit evidence obtained as the basis for the expression of an opinion on the financial statements. The auditor’s report should contain a clear written expression of opinion on the financial statements taken as a whole. The auditor’s report includes the following basic elements, ordinarily in the following layout:
The auditor’s report should have an appropriate title to distinguish the auditor’s report from reports that might be issued by others. Introductory Paragraph The auditor’s report should identify the financial statements of the entity that have been audited, including the date of and period covered by the financial statements. The report should include a statement that the financial statements are the responsibility of the entity’s management and a statement that the responsibility of the auditor is to express an opinion on the financial statements based on the audit. Scope Paragraph The auditor’s report should describe the scope of the audit by stating that the audit was conducted in accordance with generally accepted auditing standards or in accordance with relevant national standards or practices as appropriate. The report should include a statement that the audit was planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement.The auditor’s report should describe the audit as including:
The report should include a statement by the auditor that the audit provides a reasonable basis for the opinion. 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, in accordance with generally accepted accounting principles and, where appropriate, whether the financial statements comply with statutory requirements. Date of Report The auditor should date the report as of the completion date of the audit. The Auditor’s Reports Unqualified Report Modified Reports Matters that Do Not Affect the Auditor’s Opinion Certain circumstances, while not affecting the auditor’s unqualified opinion, may require that the auditor add an explanatory paragraph (or other explanatory language) to the standard report. These circumstances include:The auditor’s opinion is based in part on the report of another auditor.
Matters that Do Affect the Auditor’s Opinion An auditor may not be able to express an unqualified opinion when either of the following circumstances exists and, in the auditor’s judgment, the effect of the matter is or may be material to the financial statements:
The circumstances described in (a) could lead to a qualified opinion or a disclaimer of opinion. The circumstances described in (b) could lead to a qualified opinion or an adverse opinion. Qualified Opinion Disclaimer of Opinion Adverse Opinion Whenever the auditor expresses an opinion that is other than unqualified, a clear description of all the substantive reasons should be included in the report and, unless impracticable, a quantification of the possible effect(s) on the financial statements. This information would be set out in a separate paragraph preceding the opinion or disclaimer of opinion on the financial statements and may include a reference to a more extensive discussion, if any, in a note to the financial statements. Effective dateThis Statement is effective from 31 December, 1999. When can an auditor issue a qualified except for opinion?An except-for opinion is rendered by an outside auditor when unable to audit parts of a client's operations. The issue arises when management imposes restrictions or when other conditions occur that make it impossible to engage in certain auditing procedures. What is non qualified opinion?Unqualified Opinion – Clean Report An unqualified opinion doesn't have any kind of adverse comments and it doesn't include any disclaimers about any clauses or the audit process. This type of report indicates that the auditors are satisfied with the company's financial reporting. In which of the following situations would an auditor usually choose between issuing a qualified opinion and issuing a disclaimer of opinion?In which of the following circumstances would an auditor usually choose between issuing a qualified opinion or a disclaimer of opinion on a client's financial statements? Inability of the auditor to obtain sufficient competent evidence. In which of the following situations would an auditor ordinarily issue an unqualified audit opinion without any modification?An auditor would generally issue an unqualified audit opinion without an explanatory paragraph when the auditor decides to make reference to the report of another auditor as a basis, in part, for the auditor's opinion. In what situations would an auditor issue an adverse opinion?09 The auditor should express an adverse opinion when the auditor, hav- ing obtained sufficient appropriate audit evidence, concludes that misstate- ments, individually or in the aggregate, are both material and pervasive to the financial statements.
Which of the following is the most likely reason for an auditor to issue an adverse opinion quizlet?The primary reason for issuing an adverse audit opinion is that the client's financial statements contain a pervasive and material unjustified departure from GAAP.
What is an example of an adverse opinion?Example: Adverse opinion due to a GAAP departure
The auditor believes ABC Company faces a going concern issue and is unable to survive another year. The company disagrees and prepares its financial statements on a historical cost basis instead of on a liquidation basis.
Which of the following circumstances would an adverse opinion be appropriate?In which of the following circumstances would auditors be most likely to express an adverse opinion? The financial statements are not in accordance with generally accepted accounting principles regarding the capitalization of leases. modify the Auditor's Responsibility section to identify the basis for the disclaimer.
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