Question

What does it mean standard unqualified opinion? How many parts of standard unqualified audit report and explain each part?

Answer 1

An unqualified opinion is an independent auditor's judgment that a company's financial statements are fairly and appropriately presented, without any identified exceptions, and in compliance with generally accepted accounting principles (GAAP). An unqualified opinion is the most common type of auditor's report. Like any auditor’s opinion, it does not judge the financial position of the company or interpret financial data. It indicates that as a result of the testing done during the audit, the independent auditor has enough information to conclude that the company's financial statements conform to GAAP and fairly present the company's financial position for the statement time frame. It is issued when the auditor believes that all changes, accounting policies and their application and effects, have accurately been disclosed.

8 parts of standard unqualified report

1. report title include word independent
- "report of independent auditor"
-means unbiased
2. audit report address addressed to the company, its stockholders, or board of directors
3. introductory paragraph indicates CPA firm has performed audit
-lists FS audited
-dates and periods
4. management responsibility states statements are responsibility of management
-they select principles and maintain internal control
5. auditor responsibility audit conducted in accordance with GAAP, used to obtain reasonable assurance (free of material misstatement"

indicates auditor believe sufficient appropriate evidence has been obtained
6. opinion paragraph financial paragraph states conclusions based on results of audit
-"in our opinion"
7. name and address identifies CPA firm who performed audit and their address
8. audit report date