Essential terms-CH3

Adverse opinion—a report issued when the auditor believes the financial statements
are so materially misstated or misleading as a whole that they do not present fairly the
entity’s financial position or the results of its operations and cash flows in conformity
with GAAP
Combined report on financial statements and internal control over financial
reporting—audit report on the financial statements and the effectiveness of internal
control over financial reporting required for larger public companies under Section
404 of the Sarbanes–Oxley Act
Disclaimer of opinion—a report issued when the auditor is not able to become
satisfied that the overall financial statements are fairly presented or the auditor is not
independent
Material misstatement—a misstatement in the financial statements, knowledge of
which would affect a decision of a reasonable user of the statements
Qualified opinion—a report issued when the auditor believes that the overall
financial statements are fairly stated but that either the scope of the audit was limited
or the financial data indicated a failure to follow GAAP
Separate report on internal control over financial reporting—audit report on the
effectiveness of internal control over financial reporting required for larger public
companies under Section 404 of the Sarbanes–Oxley Act that cross-references the
separate audit report on the financial statements
Standard unmodified opinion audit report— the report a CPA issues when all
auditing conditions have been met, no significant misstatements have been discovered
and left uncorrected, and it is the auditor’s opinion that the financial statements are
fairly stated in accordance with the applicable financial reporting framework
Unmodified opinion audit report with emphasis-of-matter paragraph or
nonstandard report wording—an unmodified opinion audit report in which the
financial statements are fairly presented, but the auditor believes it is important, or is
required, to provide additional information
or the wording of other paragraphs of the report require revision