Question

Provide your opinion on the impact of giving an unmodified (“clean”) audit opinion when in fact a modified audit opinion should have been given.

Provide your opinion on the impact of giving a modified audit opinion when in fact an unmodified opinion should have been given. There is no reach too small when discussing who or what is impacted.

Answer 1

Impact of giving an unmodified (“clean”) audit opinion when in fact a modified audit opinion should have been given

For any enterprise, the audit report is a key deliverable which shows the end results of the entire audit process. The users of financial statements like Investors, Lenders, Customers, and others base their decisions and plans on audit reports of any enterprise. An audit report is always critical to influencing the perceived value of any financial statement’s audit.

The auditor should be careful in issuing the audit report as there is are a large number of people placing reliance on such report and taking decisions accordingly. The report should be issued by being unbiased and objective in discharging the functions.

So auditor should take care while issuing audit opinion.

If unmodified (“clean”) audit opinion when in fact a modified audit opinion should have been given then investors may think that business is doing well and their investment is secure but infact it is false which is leading to wrong decision making.

impact of giving a modified audit opinion when in fact an unmodified opinion should have been given

If Modified audit opinion is given when in fact an unmodified opinion should have been given then investor may feel that their investment will goo and share prices will and management will lose confidence over them in the market and it will impact adversely the share prices and reputation.