Under PCAOB standards, what is the “ standard modified opinion’” audit report referred to as?

Expert Solution

Modified opinion are the types of auditors’ opinion that issue to entity’s financial statements when those statements are not prepare and present fairly in all material respect in accordance with accounting framework that they are using. There are three sub audit opinions belong to Modified Opinion.

The level of modification classify into three different types based on level of misstatements, pervasiveness, and sufficiency of audit evidence according to ISA 705. As per ISA 705, auditors need to modified their opinion (qualified report) according to the detail guideline in ISA 705. if the misstatements are found in the financial statements.Based on ISA 705, Modification to the opinion in the independent auditors’ report, there are three modified audit opinions: Qualified audit opinion, adverse audit opinion, and disclaimer audit opinion.Audit opinion that express to the financial statements imply not only how entity’s financial statements are, but also inform the readers or users of audit report about the integrity of executive management in the organization. That why, the audit opinion is matter to not only executive management, but also investors and shareholders.

Qualifies opinion is the first type of modified audit opinion where auditors make conclusion after their testing that there are material misstatement found in the financial statements; however, those misstatements are not pervasive. Pervasive here is a bit subjective as it is based on auditors’ judgement.

Qualified audit opinion is the massage to the users of financial statements to have high skepticism when they are using those financial information. Especially, the information that cause auditor to qualified the opinion.

There are two factors that cause auditors qualified audit opinion. First, There are material misstatement found in the financial statements. Second, The material misstatements are not pervasive.

ekkarill92 answered 2 years ago

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