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Audit opinions are divided into two main groups:
(A) Unqualified (Unmodified) Opinion
Issued when
- Financial statements give a true and fair view
- Prepared according to accounting standards
- No material misstatement
- Simple meaning: Everything is okay.
(B) Modified Opinions (ISA 705)
There are three types
1. Qualified Opinion
Issued when
- There is a scope limitation OR
- Disagreement with management
- Problem is material but not pervasive
- Uses the phrase “except for”
- Meaning: Mostly okay, except one issue.
2. Disclaimer of Opinion
Issued when
- Auditor cannot obtain sufficient evidence
- Effects may be material and pervasive
- Auditor does not express any opinion
- Meaning: Auditor cannot say anything.
3. Adverse Opinion
Issued when
- Financial statements are materially and pervasively misstated
- Do not present a true and fair view
- Meaning: Accounts are seriously wrong.
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