Audit reports and misstatements
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1. What are the different types of audit reports and when should each be used?
2. In what types of situations would an auditor be allowed to issue an unqualified audit report?
3. To what extent is the auditor liable for misstatements in the financial statements of the audited company.
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Solution Summary
The solution discusses the different types of audit reports and when each should be used.
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1. Unqualified:
The standard unqualified report is regarded as a clean bill of health, the auditor made no exceptions and inserts no qualifications in the report. An unqualified opinion can only be expressed when the independent auditor has formed the opinion on the basis of an examination made in accordance with generally accepted accounting principles, applied in a consistent basis and includes all informative disclosures necessary to make the statements not misleading. The standard unqualified report consist of three paragraphs. The first paragraph clarifies the responsibilities of management and the auditors, and is referred to as the introductory paragraph. The second paragraph describes the nature of the audit and is called the scope paragraph. The final paragraph is the opinion paragraph, which is a concise statement of the auditor's opinion based on the audit. The auditors' report is addressed to the persons who retained the auditors.
2. Qualified:
A qualified report ...
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