| What are the three types of Qualified Opinions? | 1. Qualified
2. Disclaimer of Opinion
3. Adverse |
| Define, Pervasive. | (a) Effects that are not confined to specific elements, accounts or items of the financial statements;
(b) effects that, if so confined, represent or could represent a substantial proportion of the financial statements; or
(c) regarding disclosures, are fundamental to users’ understanding of the financial statements. |
| When should an auditor express a Qualified Opinion? | The auditor should express a qualified opinion when the auditor is unable to obtain sufficient appropriate audit evidence, and the auditor concludes that the possible effect on the financial statements, if any, could be Material, BUT NOT Pervasive. |
| When should an auditor Disclaim an Opinion? | The auditor should express a disclaimer of opinion when the auditor is unable to obtain sufficient appropriate audit evidence, and the auditor concludes that the possible effect on the financial statements, if any, could be Material AND Pervasive. |
| FYI:
What are some circumstances that create a Scope Limitation? | 1. Circumstances beyond the Control of the Entity—For example, the entity's accounting records have been destroyed.
2. Circumstances Related to the Nature or Timing of the Auditor's Work—For example, the auditor determines that substantive procedures alone are not sufficient and the entity's controls are ineffective; the auditor is unable to obtain audited financial statements of an investee (accounted for using the equity method); or the timing of the auditor's appointment does not permit the auditor to observe the physical counting of inventories.
3. Limitations Imposed by Management—For example, management prevents the auditor from requesting external confirmation of certain account balances. The auditor should request that management remove any such limitation. |
| FYI:
The choice between a qualified opinion and a disclaimer of opinion arises when a scope limitation has occurred. Inability to obtain sufficient appropriate evidential matter represents a scope limitation.
Depending on the severity of the limitation, either a qualified opinion or a disclaimer would be issued. | The choice between a qualified opinion and a disclaimer of opinion arises when a scope limitation has occurred. Inability to obtain sufficient appropriate evidential matter represents a scope limitation.
Depending on the severity of the limitation, either a qualified opinion or a disclaimer would be issued. |
