Management and Organizational Studies 3363A/B Chapter 20: MOS 3363 - Chapter 20
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Department
Management and Organizational Studies
Course
Management and Organizational Studies 3363A/B
Professor
Michelle Loveland
Semester
Winter

Description
Types of Auditors Report: • Unqualified Report – Statements are free from material misstatement • Unqualified Report with Explanatory Paragraph • Qualified Opinion • Adverse Opinion – Also known as Denial of Opinion • Disclaimer Opinion – Also known as Denial of Opinion Independent Auditor’s Report • Standard Unqualified Report is the most common type • It is used when: o All auditing conditions have been met o No significant misstatements have been discovered and left uncorrected o Auditor believes the statements are fairly represented in accordance with GAAP Unqualified Report • An unqualified report has the following components: 1. Report Title 2. Addressee 3. Introductory Statement 4. Management Responsibility 5. Auditor Responsibility 6. Opinion Paragraph 7. Auditor’s Signature 8. Date of the auditor’s report 9. Auditor’s address. • Report Title o CAS 700 – Auditors title should explain its purpose o Emphasizes the auditor as independent ▪ ”Independent Auditor’s Report” • Addressee o Addressee is the parties that have hired the auditor o Normally, these are the company shareholders ▪ “To the shareholders of the company” • Introductory Statement o States that the public accounting firm has done the audit o Lists financial statements that were audited o Clarifies the roles of management and the auditor • Management’s Responsibility o Statement of management’s responsibility o Responsible for decisions underlying the financial statements o Development and monitoring of internal controls o Application of reasonable estimates • Auditor’s Responsibility o Statement of auditor’s responsibility o Explains the purpose of the audit ▪ To provide reasonable assurance that statements are free from MM o States that the audit was conducted in accordance with GAAS • Opinion Paragraph o States the auditor’s conclusions based on the audit ▪ “Auditor’s Opinion” • Auditor’s Signature o The name of the firm; or o The name of the practitioner who performed the audit o Reliance on Other Auditors or Specialists ▪ Primary auditor takes responsibility for the audit opinion • Date of Audit Report o Audit report can only be dated after those with sufficient responsibility within the entity have taken responsibility for the financial statements ▪ Large companies = board of directors ▪ Small companies = owner o Indicates the last day of the auditor’s responsibility to review significant events o Report may be dual dated ▪ Done when a material event occurs after the date of the auditors’ report, but before the statements were issued by the organization ▪ Auditor conducts work separately for the material event ▪ Preference is for auditors to do additional field work and avoid double dating • Auditor’s Address o Place of issuance (auditor’s address) Reporting on Comparative Financial Statements • Corresponding Figures Approach (ASPE): The auditor reports only on current year’s financial statements • Comparative Financial Statements Approach (IFRS): The auditor reports on both the current and prior year Variations of an Unqualified Opinion • Unqualified opinion is issued, but the format deviates from the standard report • Meets the qualifications of a complete audit with satisfactory results o Statements in Accordance with Regulatory Legislation o Changes in GAAS or Application of GAAS o Uncertainties about the Financial Statements • Financial Statements prepared in accordance with regulatory legislation
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