Presentation on

Audit opinion
Classification of Audit opinion in light of International Standards on Auditing (ISA)

Classification of Audit opinion

Unmodified audit report

Modified audit report

Classification of Audit opinion

Unmodified audit report

(ISA 700, paragraphs 3536, deal with the phrases used to express this opinion in the case of a fair presentation framework and a compliance framework respectively.)

ISA 700 describes the contents and format of the unmodified report in detail.

Classification of Audit opinion

Modified audit report
GLOSSARY OF TERMS of ISA

or other matters modified opinion

Modified opinionA qualified opinion, an emphasis of matter adverse opinion or a disclaimer of opinion.

Classification of Audit opinion

It is important to understand that audit report is not always modified because of the modified opinion. In simple words audit reports with modified opinion are always modified audit reports BUT modified audit reports are not always with modified opinion.

Classification of Audit opinion

Modified report with unmodified opinion

GLOSSARY OF TERMS of ISA

Emphasis of Matter Paragraph

financial statements understanding of the financial statements already disclosed or reported in the

Emphasis of Matter paragraphA paragraph included in the auditors report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditors judgment, is of such importance that it is fundamental to users understanding of the financial statements.

Classification of Audit opinion

Other Matter Paragraph
other than those that are presented or disclosed in the financial statements understanding of the audit, the auditors responsibilities or the auditors report

Classification of Audit opinion

Modified report with modified opinion

based on the audit evidence obtained financial statements as a whole are not free from material misstatement conclude unable to obtain sufficient appropriate audit evidence to

Classification of Audit opinion

Qualified opinion

What is Pervasive?

having obtained sufficient appropriate audit evidence

material, but not pervasive unable to obtain sufficient appropriate audit evidence
material but not pervasive

Classification of Audit opinion

Adverse opinion

What is Pervasive?

adverse report obtained sufficient appropriate audit evidence both material and pervasive

Classification of Audit opinion

Disclaimer

What is Pervasive?

disclaimer report unable to obtain sufficient appropriate audit evidence both

material and pervasive

Classification of Audit opinion

Para 5 Definition of ISA 705 MODIFICATIONS TO THE OPINION IN THE INDEPENDENT AUDITORS REPORT defines Pervasive A term used, in the context of misstatements, to describe the effects on the financial statements of misstatements or the possible effects on the financial statements of misstatements, if any, that are undetected due to an inability to obtain sufficient appropriate audit evidence. Pervasive effects on the financial statements are those that, in the auditors judgment:
(i) Are not confined to specific elements, accounts or items of the financial statements; (ii) If so confined, represent or could represent a substantial proportion of the financial statements; or (iii) In relation to disclosures, are fundamental to users understanding of the financial statements.

Classification of Audit opinion

What is Pervasive?

Nature of Matter Giving Rise to the Modification Financial statements are materially misstated Inability to obtain sufficient appropriate audit evidence

Auditors Judgment about the Pervasiveness of the Effects or Possible Effects on the Financial Statements Material but Not Pervasive Qualified opinion Qualified opinion Material and Pervasive Adverse opinion Disclaimer of opinion

Thanks for you patience hearing!

Questions? / Open Discussion

By: S. A. Pasha