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Accounting IC

AUDIT REPORTS

Reporting describes what the auditors have done and the conclusions obtained. Audit
reports are generated only if audit work is actually carried out. The preparation of the audit
report must be based on the four existing reporting standards in generally accepted auditing
standards / GAAS. And there must be uniformity of reports to avoid confusion.

Standard Audit Report with Unqualified Opinions

An audit report with an unqualified opinion / WTP / unqualified opinion is made when
the following conditions are met:

1. All balance statements, profit and loss statements, retained earnings and cash flow
statements are included in the financial statements.
2. The three general standards have been followed in the assignment.
3. Sufficient evidence of competence has been gathered to allow it to be concluded that the
three standards for field work have been followed.
4. The financial statements are presented in accordance with generally accepted accounting
standards.
5. There are no conditions that require adding explanatory paragraphs or modifying words
in the report.

The sections of a standard audit report consist of 7 main parts, namely:

1. Title of report
2. Address to address in the audit report
3. Introduction paragraph, intended to show three things include:
a. That the relevant KAP has conducted an audit.
b. Includes the audited financial statements including the date and period.
 c. State that the financial statements are the responsibility of management while the
responsibility of the auditor is to express an opinion on the report based on the
audit.
4. The scope paragraph is a factual statement about what was done in the audit and states
that the audit is designed to be able to obtain assurance that the financial statements are
free from material misstatement. The report must contain the words "on the basis of
testing", which means that what is done is a sampling and not an audit of every
transaction and every amount in the financial statements, depending on the
implementation of the audit in the field.
5. Paragraph of an opinion, this opinion is not an absolute statement or a guarantee, but only
an auidtor's opinion on the presentation of the financial statements. Here there is the term
"present fairly" which is associated with adherence to generally accepted accounting
standards.
6. Signature of the name and register number of the public accountant, indicating the name
of the partner who will be legally responsible and the position for the quality of the audit
according to professional standards.
7. The date of the audit report, is the date when the auditor has completed the most
important part of the audit process in the field (field audit).

Conditions that cause deviation from unqualified opinion

There are two categories that cause financial statements to not get unqualified opinion /
WTP, namely:

1. Report deviating from the unqualified report due to three conditions:

a) Limitation on the scope of the auditor's examination caused by the client and by
other constraints beyond the control of both the auditor and the client.
b) The financial statements are not presented in accordance with GAAP
c) The auditor is not independent
2. WTP report with explanatory paragraph or word / sentence modification.

Audit Reports Other Than Unqualified Unqualified Reports

 If one of the conditions of the three conditions above occurs, the auditor must provide an
opinion other than fair without exception, which can be in the form of:

1) An adverse opinion is given if the auditor believes in the financial statements are not
presented fairly or are not in accordance with GAAP and contain material misstatements.
2) Statement not giving an opinion / disclaimer of opinion is given if the auditor fails to
convince himself, due to the auditor's lack of knowledge, that the entire financial report is
presented fairly. This refusal arose because of scope limitations (condition 1) and because
the auditors were not independent (condition 3).
3) Qualified opinion is given if the auditor believes that the financial statements are
presented fairly, but because there are scope limitations (condition 1) or the generally
accepted accounting standards are not adhered to, there are exceptions to the scope and
opinion (condition 1). ) or only on opinion (condition 2)

The forms of reports on opinions on financial statements see SPAP

1) Materiality
Misstatements in the financial statements can be considered material if the
knowledge of the misstatements can affect the decisions of users of the financial
statements rationally. The relationship between materiality and different types of opinion:

Materiality Level Influence on User Type of Opinion

Decisions
Immaterial Decisions usually have no Fair without exception
effect
Material Decisions are usually Fair with exceptions
affected if the information
is important to the
decisions taken.
Highly Material A large proportion of all Refuse to give an
decisions based on unreasonable opinion or
financial statements are opinion.
severely affected
The deviation from regulations regarding independence is considered very
material. The obstacle for the auditor is deciding whether something is immaterial,
 material or very material because there are no instructions, but in practice several aspects
of materiality must be considered, namely:

a) The amount of rupiah compared to a certain benchmark, namely in the form of a

percentage
b) Measurement power, if it cannot be measured in money, then the level of
materiality depending on whether or not it affects the decision.
c) The nature of errors, errors can affect the financial statements and will also affect
the auditor's opinion.

Discussion of conditions that cause deviations

Audit reports for each of the conditions that require differentiation from standard reports
without exception at different levels of materiality:

Materiality Level

Materiality Level Significance in Terms of Reasonable Users’ Type of Opinion

Decision
Immaterial Users’ decisions are unlikely to be affected Unmodified
Material Users’ decisions are likely to be affected only if Qualified
the information question is important to the
specific decisions being made. The effect of the
misstatement(s) is not pervasive to financial
statements and the overall financial statements
are presented fairly.
Highly Material Most or all users’ decision based on the financial Disclaimer of
statements are likely to be significantly affected. Adverse
The effect of the misstatement(s) is pervasive to
the financial statements.