16. Identify the different types of audit reports that the auditor may issue and

Question

16. Identify the different types of audit reports that the auditor may issue and explain when each is appropriate.

18. What type of audit report should the auditor issue in the following situations?

(a) Client imposed restrictions significantly limit the scope of the auditor’s procedures.

(b) The auditors decide to make reference to the report of another CPA firm as a basis, in part for their auditor’s report.

(c) The auditors believe that the financial statements have been presented in conformity with GAAP in all respects, except that a loss contingency that should be disclosed in a footnote to the financial statements is not included.

Explanation / Answer

16 Answer :- The different types of audit reports that the auditor may issue are follows:-

1. Unqualified Opinion

2. Qualified Opinion

3. Adverse Opinion

4. Disclaimer of opinion

18 Answer :-

(a). Disclaimer of opinion :- Generally the independent auditors must issue a disclaimer of opinion. When client imposed restrictions limit significantly the scope of the audit, because such restrictions lead to questions concerning whether the client withholding important information.

(b). Unmodified Opinion on group :- Generally, the principal auditors issue an unqualified opinion when they decide to make reference to the report of another CPA firm as a basis in part for their opinion. such a reference indicates a sharing of responsibilities for the scope of the audit; it doesn't represent a qualification of the auditors report.

(c). Qualified Opinion: A lack of disclosures leads to either qualified opinion or an adverse opinion. A qualified opinion is issued when the auditor encountered one of twork types of situations which do not comply with generally accepted accounting principles, however rest of the financial statements are fairly presented. This type of opinion is very similar to an unqualified or clean opinion, but the report states that the financial statements are fairly presented with a certain exception which is otherwise Misstated.

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