Chapter 3 - Audit Reports

What are the types of audit reports, and what do they mean?

• Standard unqualified (Clean)

  • All 4 criteria are met

• Unqualified with emphasis of matter, Explanatory paragraph, or modified wording

  • A note or extra was needed by the auditor

• Qualified

  • The scope of the audit was limited, or accounting standards were not followed in preparing the statements

• Adverse

  • F/S are not presented fairly, or the auditor cannot form an opinion (not independent)

What are the conditions for a standard unqualified audit report?

1. All statements and required disclosures are included in the financial statements

2. Sufficient appropriate evidence collected and audit performed in accordance with auditing standards

3. Financial statements are presented fairly in all material respects in accordance with GAAP or other appropriate accounting frameworks.

4. No circumstances requiring emphasis, explanatory paragraph, or modified wording

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