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Sir i am confused about the difference between modified and qualified opinion.Also some times the audit report will be modified while the opinion will be unmodified.Please i would really like you to help me with examples
Thanks
Whenever an audit report is not a bog-standard report, then it’s a modified report
The opinion is an integral element of the report and the opinion may be unmodified, modified or qualified
An unmodified opinion is where the auditor gives a “clean” opinion and the report may (modified) or may not (unmodified) include an emphasis of matter paragraph
A modified opinion is where the auditor is not 100% happy about the financial statements showing a true and fair view. So the auditor may issue an opinion where (1) there is a material but not pervasive misstatement in some area within the financial statements or (2) where there is some non-pervasive area of the financial statements where the auditor feels that there was an insufficiency of appropriate audit evidence (used to be called a “limitation of scope”)
In addition, of course, the auditor may wish to qualify the audit opinion and has two alternatives for this. It could be that the area with the material misstatement mentioned above has a pervasive effect and the auditor will wish to say that, in her opinion, the financial statements DO NOT show a true and fair view
Equally, the areas where there was, in her opinion, an insufficiency of appropriate audit evidence may be SO pervasive that, in her opinion, the financial statements are lacking in supporting evidence and, in this case, she will disclaim her opinion “we are not able to express ….”
Does that make it any clearer?
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