Types of Modified Opinions.docx - Pervasive A term used in...

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Pervasive. A term used in the context of misstatements to describe the effects on the financial statements of misstatements or the possible effects on the financial statements of misstatements, if any, that are undetected due to an inability to obtain sufficient appropriate audit evidence [my italics]. Pervasive effects on the financial statements are those that, in the auditor’s professional judgment: are not confined to specific elements, accounts, or items of the financial statements; if so confined, represent or could represent a substantial proportion of the financial statements; or with regard to disclosures, are fundamental to users’ understanding of the financial statements. Modification of the Auditor’s report An auditor gives an unmodified opinion if the financial statements present true and fair view. In all other circumstances, the auditor gives a modified opinion . The auditor uses different techniques and methods and also applies different procedures to see if the financial statements are free of material misstatements. If all the information in the financial statement is materially correct, the opinion of the auditors will be un-modified opinion. In its contrary, if there are the chances that the information in the financial statement are having some material errors, the auditors gives a modified opinion. The modified opinion means the future amendments which have to be followed in order to make the financial statement transparent and clear. Modified opinion is somehow similar to the qualified opinion where the auditors suggest the future procedures to avoid the misstatement in the financial statements. While giving the modified opinion, the auditors must have some set of strong evidences which will support their opinion. Although they are not fully liberal to suggest and implement any procedure, here also there is the intervention of the managers and other management staff. Types of Modified Opinions The three types of modified opinions, namely, a qualified opinion, an adverse opinion, and a disclaimer of opinion. The decision regarding which type of modified opinion is
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