Qualified for misstatement

Question 1

What is the meaning of a qualified opinion for a misstatement relative to GAAP or other applicable financial reporting framework?

Answer 1

The auditor is expressing one or more reservations (specifically about the financial statement presentation; for example, a “GAAP departure”) while still concluding that, except for the specific matter referenced, the financial statements, taken as a whole, are fairly stated and the auditor has obtained sufficient, appropriate audit evidence as a reasonable basis for the auditor’s conclusions.

Question 2

What type of report should the auditor express when a misstatement is viewed as material and pervasive?

Answer 2

Adverse opinion

Question 3

What type of report should the auditor express when a misstatement is viewed as material but not pervasive?

Answer 3

Qualified opinion

Question 4

Give an example of the language used in an auditor’s report for a “qualified opinion” for inadequate disclosure.

Answer 4

1. )”In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements referred to above present fairly???”
2. )The qualification (i.e., reservation) is the phrase “except for???.”