4 (a) ISA 701 Modifications to The Independent Auditor’s Report includes ‘suggested wordin

Question

4 (a) ISA 701 Modifications to The Independent Auditor’s Report includes ‘suggested wording of modifying phrases

for use when issuing modified reports’.

Required:

Explain and distinguish between each of the following terms:

(i) ‘qualified opinion’;

(ii) ‘disclaimer of opinion’;

(iii) ‘emphasis of matter paragraph’. (6 marks)

Answer 1

正确答案：
4 PETRIE CO
(a) Independent auditor’s report terms
(i) Qualified opinion – A qualified opinion is expressed when the auditor concludes that an unqualified opinion cannot be
expressed but that the effect of any disagreement with management, or limitation on scope is not so material and
pervasive as to require an adverse opinion or a disclaimer of opinion.
(ii) Disclaimer of opinion – A disclaimer of opinion is expressed when the possible effect of a limitation on scope is so
material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and accordingly
is unable to express an opinion on the financial statements.
(iii) Emphasis of matter paragraph – An auditor’s report may be modified by adding an emphasis of matter paragraph to
highlight a matter affecting the financial statements that is included in a note to the financial statements that more
extensively discusses the matter. Such an emphasis of matter paragraph does not affect the auditor’s opinion. An
emphasis of matter paragraph may also be used to report matters other than those affecting the financial statements
(e.g. if there is a misstatement of fact in other information included in documents containing audited financial
statements).
(iii) is clearly distinguishable from (i) and (ii) because (i) and (ii) affect the opinion paragraph, whereas (iii) does not.
(i) and (ii) are distinguishable by the degree of their impact on the financial statements. In (i) the effects of any disagreement
or limitation on scope can be identified with an ‘except for …’ opinion. In (ii) the matter is pervasive, that is, affecting the
financial statements as a whole.
(ii) can only arise in respect of a limitation in scope (i.e. insufficient evidence) that has a pervasive effect. (i) is not pervasive
and may also arise from disagreement (i.e. where there is sufficient evidence).