What conditions should be met to issue a standard unqualified audit opinion?
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In an audit engagement, the auditor must express his opinion on the financial statements based on the audit process carried out. The Auditor’s report forms part of the annual report which is circulated to the shareholders and stakeholders. Auditor’s Opinion plays a key role as readers and users of the financial statements place their reliance on the facts presented based on the opinion expressed by the Auditor. Any comment mentioned in the audit report has a significant impact on the business. All in One Financial Analyst Bundle(250+ Courses, 40+ Projects) Price 250+ Online Courses | 40+ Projects | 1000+ Hours | Verifiable Certificates | Lifetime Access An unqualified opinion is an opinion of the independent auditor on the financial statements of a company audited by him. An Unqualified opinion is the most common form of Audit report unless and until there are material issues to be reported like material misstatements, non-disclosure of significant information, enough evidence substantiating the transactions are not obtained at the time of the audit, etc. It is also known as a clean report. Start Your Free Investment Banking Course Download Corporate Valuation, Investment Banking, Accounting, CFA Calculator & others This opinion gives an understanding that the financial statements are prepared as per appropriate GAAP (Generally Accepted Accounting Principles), Adequate disclosure of all significant and material transactions are appropriately presented and that the financial statements present fairly the affairs of the business in all the material aspects and are free of misrepresentation. The opinion on the financial statements is given by the Auditor based on the audit carried out and based on the collection of sufficient and appropriate audit evidence. This opinion does not indicate anything about the financial performance and economic health of the company, it just indicates the financial reporting is clear and the facts are presented appropriately in the financial statements. Examples of Unqualified Opinion of AuditorZ Corp is a publicly traded company. For the year-end Dec’2019, it has hired Xen & Co to conduct an audit of Financial Statements. After carrying out substantive audit procedures, testing, and with proper documentary evidence, Xen & Co using its best judgment as per the auditing statements concludes that the financial statements present a true and fair view of the financial position of Z Corp and are free of material misstatement. In the Audit report of Z Corp, Xen & Co expressed an unqualified opinion. Importance of Unqualified Opinion in Auditor’s Report
Advantages of Unqualified Audit OpinionSome of the advantages are given below:
Disadvantages of Unqualified Audit OpinionSome of the disadvantages are given below:
ConclusionAn unqualified opinion is expressed by the auditor after performing all the adequate audit proceduresand risk assessments where the auditor strongly believes that the financial statement has no material misstatements. They also check for the internal control system in the company to obtain reasonable assurance.Audit report and Auditor’s opinion plays a key role in the annual report and it influences the business in a bigger way. There are lots of advantages that come from an unqualified audit opinion and every company expects its financials to be cleared by the auditors and to get an unqualified opinion. Management is responsible for the preparation of the financial statements as per applicable accounting standards and relevant laws. They are responsible for presenting the financials without any material misstatement and errors. The auditor must carry out the audit following the auditing standards and provide an independent audit opinion based on the findings. Recommended ArticlesThis is a guide to Unqualified Opinion of Auditor. Here we also discuss the introduction and example of unqualified opinion of auditor along with advantages and disadvantages. You may also have a look at the following articles to learn more – What are the conditions to fulfill unqualified opinion?It is issued when the auditor believes that all changes, accounting policies, and their application and effects, have accurately been disclosed.
Under what circumstances would an auditor issue a qualified opinion?. 29 If the auditor concludes that a matter involving a risk or an uncertainty is not adequately disclosed in the financial statements in conformity with generally accepted accounting principles, the auditor should express a qualified or an adverse opinion.
What is a condition required for an auditor to issue an unqualified opinion on the internal controls of a client?A scope limitation is the condition that would cause the auditor to express a qualified opinion or a disclaimer of opinion on internal control over financial reporting.
What are the components of an unqualified audit 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.
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