CSSC wants to be ensured that the audit report for year-end 2005 is a standard unqualified audit report. Management has requested that you create a presentation about how to obtain an unqualified audit report. Include the following details:
- What are the circumstances that could prevent the external auditors from providing an unqualified report?
- What steps can be taken by CSSC to address any concerns?
The following are the conditions that must be met in order for an audit firm to issue an unqualified report. Alternately, one could say that an unqualified report will be issued provided there are no issues with respect to the following:
1. No material violations of GAAP
2. Disclosures are adequate
3. The auditor was able to perform all the necessary procedures
4. There was no change in accounting principles that had a material affect on the financial statements
5. The auditor is independent
6. The auditor does not have any significant doubt about the client remaining being an ongoing concern
(Auditing Concepts for a Changing Environment, Fifth Ed, page 616 - Rittenberg, Schwieger)