Standard Unqualified Audit Report 4 conditions

1. All financial statements are included

2. FS fairly presented in accordance to GAAP
3. Sufficient Audit Evidence
4. No circumstances requiring explanatory paragraph or modified wording

Unqualified Audit Report with explanatory paragraph/modified wording

ie. Complete Audit with satisfactory results + Fairly presented but auditor
believes it is important/required to provide additional info
1. Lack of consistent application of GAAP
2. Substantial doubt about going concern
3. Departure from promulgated accounting principles
4. Emphasis of other matters
5. Report involving other auditors
1-4 is Explanatory Paragraph (PCAOB) or Emphasis-of-matter (AICPA), 5 is
modified wording

Lack of consistent application of GAAP

- affects consistency and thus must include explanatory paragraph
1. Change in accounting principles
2. Change in reporting entities
3. Correction of error INVOLVING PRINCIPLES
- only affects comparability
1. change in accounting estimates
2. COE not involving principles
3. variations in presentation of financial info
4. changes due to substantially different transactions or events

Substantial doubt about going concern

1. significant recurring operating losses
2. inability to pay obligations
3. loss of major customers, occurrence of uninsured catastrophes etc.
4. legal issues that might affect entitys ability to operate

Audit agrees with departure from promulgated principle

Unusual situation sometimes departure from GAAP may not require
qualified/adverse opinion, but auditor must be satisfied and state/explain in
separate paragraph how adhering to principle would produce misleading result
Report involving other auditors
3 kinds
1. No reference (when other CPA audits immaterial portion of FS etc.)
2. Shared Unqualified Report/Unqualified report with modified wording (when it is
impractical to review work of other auditor, other auditor audits significant
portion of FS etc.)
Wording:
We did not audit the FS of XX, in which company has (equity interest, net assets
and net revenue). These FS are audited oy other auditors whose reports have
been furnished to us, and our opinion, insofar as it relates the amounts included
in XX, are based solely on the reports of the other auditors.
3. Qualified Report or disclaimer report

Code of Professional Conduct

PRINCIPLES ideal standards of ethical conduct (philosophical)
1. Responsibilities exercise sensitive professional and moral judgment
2. Public Interest Act in a way that will serve and honor public trust
3. Integrity To uphold public confidence
4. Objectivity and Independence Free from conflicts of interest
5. Due Care Observe technical and ethical standards, strive for continuous
competence
6. Scope and Nature of Services Must observe Code of Professional Conduct