1、3-1 Auditors reports are important to users of financial statements because they inform users of the auditors opinion as to whether or not the statements are fairly stated or whether no conclusion can be made with regard to the fairness of their presentation. Users especially look for any deviation
2、from the wording of the standard unqualified report and the reasons and implications of such deviations. Having standard wording improves communications for the benefit of users of the auditors report. When there are departures from the standard wording, users are more likely to recognize and consid
3、er situations requiring a modification or qualification to the auditors report or opinion.3-2 The unqualified audit report consists of:1. Report title Auditing standards require that the report be titled and that the title includes the word independent. 2. Audit report address The report is usually
4、addressed to the company, its stockholders, or the board of directors.3. Introductory paragraph The first paragraph of the report does three things: first, it makes the simple statement that the CPA firm has done an audit. Second, it lists the financial statements that were audited, including the ba
5、lance sheet dates and the accounting periods for the income statement and statement of cash flows. Third, it states that the statements are the responsibility of management and that the auditors responsibility is to express an opinion on the statements based on an audit.4. Scope paragraph. The scope
6、 paragraph is a factual statement about what the auditor did in the audit. The remainder briefly describes important aspects of an audit.5. Opinion paragraph. The final paragraph in the standard report states the auditors conclusions based on the results of the audit.6. Name of CPA firm. The name id
7、entifies the CPA firm or practitioner who performed the audit.7. Audit report date. The appropriate date for the report is the end of fieldwork, when the auditor has gathered sufficient appropriate evidence to support the opinion. The same seven parts are found in a qualified report as in an unquali
8、fied report. There are also often one or more additional paragraphs explaining reasons for the qualifications.3-3 The purposes of the scope paragraph in the auditors report are to inform the financial statement users that the audit was conducted in accordance with generally accepted auditing standar
9、ds, in general terms what those standards mean, and whether the audit provides a reasonable basis for an opinion.3-3 (continued) The information in the scope paragraph includes:1. The auditor followed generally accepted auditing standards.2. The audit is designed to obtain reasonable assurance about
10、 whether the statements are free of material misstatement.3. Discussion of the audit evidence accumulated.4. Statement that the auditor believes the evidence accumulated was appropriate for the circumstances to express the opinion presented.3-4 The purpose of the opinion paragraph is to state the au
11、ditors conclusions based upon the results of the audit evidence. The most important information in the opinion paragraph includes:1. The words in our opinion which indicate that the conclusions are based on professional judgment.2. A restatement of the financial statements that have been audited and
12、 the dates thereof or a reference to the introductory paragraph.3. A statement about whether the financial statements were presented fairly and in accordance with generally accepted accounting principles.3-5 The auditors report should be dated February 17, 2008, the date on which the auditor complet
13、ed the most important auditing procedures in the field.3-6 An unqualified report may be issued under the following five circumstances:1. All statementsbalance sheet, income statement, statement of retained earnings, and statement of cash flowsare included in the financial statements.2. The three gen
14、eral standards have been followed in all respects on the engagement.3. Sufficient evidence has been accumulated and the auditor has conducted the engagement in a manner that enables him or her to conclude that the three standards of field work have been met.4. The financial statements are presented
15、in accordance with generally accepted accounting principles. This also means that adequate disclosures have been included in the footnotes and other parts of the financial statements.5. There are no circumstances requiring the addition of an explanatory paragraph or modification of the wording of th
16、e report.3-7 The introductory, scope and opinion paragraphs are modified to include reference to managements report on internal control over financial reporting, and the scope of the auditors work and opinion on internal control over financial reporting. The introductory and opinion paragraphs also refer to the framework used to evaluate internal cont
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