Internal Controls, Accounting for Cash, an blem 4-26 Types of audit reports pro

Question

Internal Controls, Accounting for Cash, an blem 4-26 Types of audit reports pro Stevens is a partner of a regional accounting firm. Stevens was hired by a client to audit the Connie ompany's books. After extensive work, Stevens determined that she was unable to perform the ap- propriate audit procedures. Required a. Na me the type of audit report that Stevens should issue with respect to the work that she did accomplish h. If Stevens had been able to perform the necessary audit procedures, there are three types of audit reports that she could have issued depending on the outcome of the audit. Name and describe these three types of audit reports.

Explanation / Answer

a. Disclaimer Opinion.

b. Three type of Audit Report which she can issue is:

1) Unqualified Opinion: It shows that audited financial statement can be presumed to be free from Misstatement. It is treated as Clean Report.

2) Qualified Opinion: It shows that there is some minor misstatement or some violation of rules and regulation in the preparation of financial reports which make the auditor to express it as a qualified report. Else it could be an unqualified report. There could be several reasons for which an auditor may express this opinion.

3) Adverse Opinion: It shows that there is Gross misstatement, fraud, or some material discrepancies present in the financial statement. This report clearly indicates that there is some major issue which needs to be short out urgently.

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