Question

What goes in the standard unmodified opinion audit report for nonpublic companies? Specifically, what is in the content of the introductory paragraph? management’s responsibility paragraph, and the auditor’s responsibility paragraph.

Answer 1

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The standard unmodified opinion audit report for a nonpublic entity consists of 8 parts, they are:

1st part-Report title:As per Auditing standards, the report should be titled and that the word independent is included in the title .

2nd part-Audit report address:Usually the report is addressed to the company, stockholders or the board of directors.

3rd part- Introductory paragraph: The introductory paragraph states that the CPA firm has done an audit and Secondly it lists the financial statements that were audited, including the balance sheet dates and the accounting periods for the income statement and the statement of cash flows.

4th part - Management's responsibilities: This paragraph mentions that the financial statements are the responsibility of management including selecting appropriate accounting principles and maintaining internal control over financial reporting. The paragraph must hold the heading, management's responsibility for the financial statements.

5th part- Auditor's responsibility: As compared to above parts, this is more in depth.This part includes 3 paragraphs, and it must have the heading auditor's responsibility. The 1st paragraph states that the auditor's responsibility is to express an opinion on the financial statements based on an audit conducted in accordance with auditing standards and that the audit provides reasonable assurance, that the financial statements are free of material misstatement.The 2nd paragraph is what we call the scope paragraph and is a factual statement about what the auditor did in the audit. The paragraph briefly describes important aspects of an audit, including that the procedures depend on the auditors judgement and the assessment of the risk of the material misstatements.It also indicates that the auditor considers the entities' internal control, but not for the purposes of giving an opinion on the effectiveness of internal control over financial reporting. The last sentence of the paragraph indicates that the audit includes evaluating the appropriateness of accounting policies selected, the reasonableness of accounting estimates, and the overall financial statement presentation.The 3rd paragraph, under the auditor's responsibility, indicates that the auditor believes the audit evidence is sufficient and appropriate to provide a basis for the audit opinion.

6th part - Opinion paragraph:The final paragraph in the report states the conclusions made by the auditor are based on the results of the audit.The paragraph must include the title opinion.

7th part - Signature and address of CPA firm: The name helps in identifying the CPA firm or practitioner who performed the audit and the city and state where the auditor is located.

Finally 8th part - Audit report date:The appropriate date is the one on which the auditor completed the auditing procedures needed to obtain sufficient appropriate evidence to support the opinion.