BUS 426 Chapter Notes - Chapter 22: Financial Statement

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Published on 19 Sep 2012
School
Simon Fraser University
Department
Business Administration
Course
BUS 426
Page:
of 2
Chapter 22 - Auditor Reporting
The Standard Independent Auditor’s Report
Standard Unqualified Independent Auditor’s Report
o Used when all auditing conditions have been met, no
significant misstatements have been discovered and left
uncorrected, and the auditor believes that the financial
statements are fairly stated in accordance with GAAP
Specific Conditions to Issue an Unqualified Report
o An audit engagement has been undertaken
o GAAP has been followed by the auditor
o Sufficient evidence to support opinion
o Financial statements are fairly presented with GAAP
o Opinion of the auditor does not have to be modified or
explained with an additional paragraph
Parts of an Unqualified Report
o Report Title
o Addressee
o Introductory statement
o Management responsibility
o Auditor responsibility
o Opinion paragraph
o Signature, Name of public accounting firm
o Date of the auditor’s report
o Auditor’s Address
How Auditors Provide Additional Information
Four Categories of Auditor’s Report
o Standard Unqualified: Conditions have been met
o Unqualified with Explanatory Paragraph: Conditions have
been met, but auditor feels that it is important to provide
further additional information
o Qualified: Financial statements are fairly presented, except
for…, the scope has been restricted or there was failure to
comply with GAAP, is not pervasive or misstating in the
financial statements
o Adverse or Denial: The scope was significantly limited that
the auditor cannot provide an opinion; Financial statements
are materially misstated or misleading as a whole
Disclaimer of Opinion: A report issued when the
auditor has not been satisfied that the overall financial
statements are fairly presented
Materiality
Lvl
Users
Auditing
Accounting
Chapter 22 - Auditor Reporting
Immaterial
Unaffected
Unqualified
Unqualified
Material, but
not pervasive
Affected to a
certain degree
Qualified
Qualified
Material and
pervasive
Significantly
affected
Disclaimer of
Opinion
Adverse
Opinion
Negative Assurance, which is illegal, is: “However, nothing came
to our attention that would lead us to question the fairness of the
presentations”, because it confuses the readers
Subsequent Facts: Additional information that the auditor
becomes aware of after the audited financial statements have been
released that indicates that some information included in the
financial statements is materially misleading
Subsequent Developments: Information that becomes available for events that
occur after the date of the audit report

Document Summary

Standard unqualified independent auditor"s report: used when all auditing conditions have been met, no significant misstatements have been discovered and left uncorrected, and the auditor believes that the financial statements are fairly stated in accordance with gaap. Parts of an unqualified report: report title, addressee, introductory statement, management responsibility, auditor responsibility, opinion paragraph, signature, name of public accounting firm, date of the auditor"s report, auditor"s address. Disclaimer of opinion: a report issued when the auditor has not been satisfied that the overall financial statements are fairly presented. Negative assurance, which is illegal, is: however, nothing came to our attention that would lead us to question the fairness of the presentations , because it confuses the readers. Subsequent facts: additional information that the auditor becomes aware of after the audited financial statements have been released that indicates that some information included in the financial statements is materially misleading.