Bangladesh University of Professionals

Excellence Through Knowledge

Term Paper
Topic: Analysis on Audit Quality and Audit Opinion of Audit Report

Course name: Auditing and Assurance

Course code: ACT 3103

Submitted to:
Md. Sahid
Hossain Lecturer
Department of Accounting & Information
Systems Faculty of Business Studies
Bangladesh University of Professionals

Submitted by:
Name ID
Rashik Uz Zaman Mohammad Tasin 19211012
Nishad Nabi Nishi 19211054
S. M. Al Yeasa Saleheen 19211066
Mojammel Hossain Siam 19211092
Asif Jardari Anik 19211098

Submission Date: 24 May 2021

 Analysis on Audit Quality and Audit Opinion of Audit Report

Letter of Transmittal

24 May 2021
Md. Sahid
Hossain Lecturer
Department of Accounting and Information Systems
Bachelor of Business Administration
Bangladesh University of Professionals
Mirpur Cantonment, Dhaka – 1216

Subject: Submission of term paper

Dear Course Instructor,

Good day!
As requirements on the subject ―Auditing and Assurance‖, the researchers would like
to present the report entitled ―Analysis on Audit Quality and Audit Opinion of Audit
Report‖, in accordance with your instruction.
The purpose of the term-paper is to study the necessity of auditing and maintain the quality of
audit report. This will help the reader to know about the types of audit report, the quality of
audit report and can easily determine how to distinguish between different types of audit
opinion.

I hope that this report will meet your approval.

Obediently yours,
Rashik Uz Zaman Mohammad Tasin, ID: 19211012
Nishad Nabi Nishi, ID: 19211054
S. M. Al Yeasa Saleheen, ID: 19211066
Mojammel Hossain Siam, ID:
19211092 Md. Asif Jardari Anik, ID:
19211098 Batch: 2018-19
Department of Accounting and Information Systems
Bangladesh University of Professionals
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 Analysis on Audit Quality and Audit Opinion of Audit Report

Acknowledgement

Foremost, I, on behalf of my team members would like to express our sincere gratitude to our
course advisor Lecturer Md. Sahid Hossain for the continuous support of our Auditing and
Assurance course and research, for his patience, motivation, enthusiasm, and immense
knowledge. His guidance helped us in all the time of research and writing of this term paper.
We could not have imagined having a better advisor and mentor for our Auditing and
Assurance course.

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 Analysis on Audit Quality and Audit Opinion of Audit Report

Table of Contents

Content no Content Name Page no

1 Letter of Transmittal i

2 Acknowledgement ii

3 Table of Contents iii

4 Executive Summary iv

5 Introduction 1

6 Methodology of the Study 1

7 Objective of the Study 2

8 Scope and Limitations of the Study 2

9 Analysis on Audit Quality and Audit Opinion of Audit report 3 - 22

10 Conclusion 22

11 References v

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 Analysis on Audit Quality and Audit Opinion of Audit Report

Executive Summary

The report contains the effort of the researchers to describe the importance of maintaining
audit quality and audit opinion in an audit report. The researchers mainly concentrated on the
lessons they have learnt throughout the course and tried to find out actual examples specially
for audit opinion of audit report. The data regarding this research were available in the
internet. As the researchers had to work on audit report, the researchers were able to find
example and relate with the basics of their learning and come out to a conclusion. The
researchers had to look some other research reports which were made on the same topic. The
data from those research reports helped a lot to valuate this research report. The researchers
have the basic knowledge of auditing and assurance. Therefore they tried their best to relate
their analysis with the basics and were able to find out the key terms of audit report. Those
who will read the research report will easily understand how the analysis has been made. This
research report will allow the reader to know about the basics of quality control of audit
report as well as different types of opinions of audit report provided by the external auditors.

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Introduction:

Quality a specialized instead of a administrative work. The prerequisites appropriate to the day-to-
day administration of audit assignments. This is also product-centric. CPA firms are required to
execute arrangements and methods to screen the firms‘ hones and guarantee that proficient
benchmarks are being taken after. In 1977 the AICPA begun a intentional peer survey program,
and by January 1988 had endorsed required quality peer surveys. The program is organized in two
tiers: one for firms that have open company review clients and one for (usually smaller) firms that
review as it were private companies. The reason of the quality review program is to guarantee that
firms comply with important quality control standards.

In 2004, the PCAOB expected the AICPA‘s obligations relating to firms that review open clients
and organizations a required quality assessment program for those firms. In any case, the AICPA
proceeds to manage a two-tiered quality audit framework in arrange to empower firms to meet
their state authorizing, federal regulatory, and AICPA enrollment necessities and to serve firms
that audit only secretly held clients. The two levels of quality audits are advertised through (1) the
AICPA Center for Public Company Review Firms Peer Survey Program and (2) the AICPA Peer
Audit Program (for firms that review as it were private companies). All AICPA part firms subject
to PCAOB reviews are required to join the Center, whose peer audit program is planned to audit
and assess those portions of a firm‘s bookkeeping and inspecting hone that are not subject to in-
spection by the PCAOB. The Center‘s program is broadly managed by a peer survey committee
made up of firms that are moreover subject to PCAOB inspection. Firms that are not subject to
PCAOB assessment may select to connect the Center or may choose the AICPA Peer Audit
Program.

Methodology of the Study:

The study is basically based on secondary data which have been gathered from different reports,
distributed articles, national and international sites such as PCAOB website, ICAEW website and
also some relevant site such as newspapers site

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Objectives of the Study:

1. Build up essential standards and basic strategies and to provide direction with respect to a
firm's duties for its framework of quality control for reviews and to know audits of
authentic budget data, and other affirmation and related administrations engagements; and

2. To know quality control for review work in depth, relating to the duties of firm staff with
respect to the quality control arrangements and strategies appropriate to review
engagements.
3. To know the obligations of the firm for its framework of quality control, and
4. To know the particular obligations of firm work force with respect to quality control
strategies for reviews of verifiable monetary data, counting reviews of budgetary
explanations.
5. To know the significance of administration obligations for quality on reviews; moral
prerequisites (counting autonomy); acknowledgment and continuation of client connections
and particular review engagements; task of engagement groups; engagement execution
(counting meeting, determination of contrasts of supposition and engagement quality
control audit); and also the part of monitoring in a firm

Scope and Limitation of the Study:

This study includes assortment data for the auditing area particularly. There were a few boundaries
in conducting the research:

1. Limited data and information in the web on auditing and assurance (Quality Control)
2. No or not many earlier exploration led on this quality control in audit topic
3. Less measure of journal in the newspaper on this topic
4. Limited time-frame for leading the research
5. Restriction in visiting the spot physically especially in this pandemic situation
6. Bacause of this pandemic situation (COVID-19), communication among group members is
not much very productive as physical communication.
7. All the courses has given term paper and other works and also the final exams are very
near, so this is very much difficult to investing much time to prepare this term paper.

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In spite of certain issues there were a few advantages too:

1. The research area was chosen before so it spares some time

2. Earlier research on the same area which is basically very useful to prepare this paper
3. Data and information is collected and already having some relevant data because of
questionnaire on the same topic before
4. Information from blog relating auditing area

Analysis on Audit Quality Control and Audit Opinion of Audit Report

Framework of Quality Control:

A firm‘s framework of quality control includes its organizational structure and the arrangements
and methods built up to supply the firm with sensible as- surance of adjusting with proficient
measures. A firm‘s system of quality control, be that as it may, has got to be custom-made to its
measure, the nature of its practice, its organization, and cost-benefit contemplations. For a sole
professional or small firm, a framework of quality control is likely to be much less formal than for
a national or worldwide firm. For case, a sole specialist with three profes- sional staff individuals
may utilize a straightforward checklist and conduct occasional informal discussions to screen his
or her firm‘s compliance with proficient standards. On the other hand, a expansive universal CPA
firm may create included in-house procedures and relegate full- or part-time staff to supervise and
guarantee compliance with the firm‘s quality control framework.

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Components of Quality Control:

1. Freedom, Integrity, and Objectivity : Arrangements and strategies ought to be built up to

supply the firm with sensible affirmation that personnel maintain independence (in reality and in
appearance) in all required circumstances, perform all proficient obligations with keenness, and
maintain objectivity in releasing proficient obligations.

2. Personnel Administration: Arrangements and methods ought to be built up for contracting,

doling out faculty to engagements, proficient improvement, and advancement exercises that give
sensible confirmation that

a. Those enlisted have the suitable characteristics to empower them to perform

competently.

b. Work is alloted to work force having the degree of specialized preparing and capability
required within the circumstances.

c. Faculty take an interest in common and engagement-specific proceeding proficient

instruction and take an interest in proficient improvement activities that empower them to
fulfill obligations relegated, and fulfill appropriate proceeding proficient instruction
necessities of the AICPA and regulatory agencies.

3. Acknowledgment and Continuation of Clients and Engagements: Approaches and methods

ought to be set up for choosing whether to acknowledge or proceed a client relationship and
whether to perform a particular engagement for that client. Such methods ought to give the firm
with sensible assurance that the probability of affiliation with a client whose administration needs
astuteness is minimized.

Engagement Execution: Arrangements and strategies ought to be set up to supply the firm with
sensible confirmation that the work performed by engagement faculty meets appropriate proficient
measures, administrative prerequisites, and the firm‘s measures of quality.

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4. Observing: Arrangements and procedures should be set up to supply the firm with sensible
affirmation that the arrangements and strategies established by the firm for each of the other
components of quality control are appropriately outlined and are being connected viably.

It ought to be clear from the definitions that these components are interrelated. For case, faculty
manage- ment envelops criteria for proficient advancement, enlisting, advancement, and task of the
firm‘s work force to engagements, which influence policies and strategies created to meet quality
control destinations. It is vital for a firm to create a framework of quality control that takes each of
these elements into account and to guarantee that individuals of the firm get it the firm‘s quality
control arrangements and strategies. Whereas not required, communication of the firm‘s quality
control framework ordinarily ought to be in composing ,with the degree of documentation
changing with the estimate of the firm. A firm‘s quality control policies and the Code of Proficient
Morals ought to be secured within the firm‘s training programs.

Selected Quality Control Arrangements and Methods:

1. Freedom, Integrity, and Objectivity

• Educate faculty of the firm‘s freedom arrangements and strategies and exhort them that they
are anticipated to be commonplace with these arrangements and procedures.
• Get composed representations from staff on an yearly premise, expressing that they are
commonplace with the approaches and strategies which prohibited investments are not held
and were not held amid the period.

2. Personnel Management

• Arrange for the firm‘s staff needs at all levels and build up measured enlisting goals based
on current clientele, expected development, personnel turnover, person progression, and
retirement.

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 • Distinguish the properties to be looked for in hirees, such as insights, astuteness,
trustworthiness, inspiration, and fitness for the calling.

3. Acknowledgment and Continuation of Clients

• Set up methods for assessing planned clients such as

(1) getting and investigating accessible monetary data with respect to the prospective
clients and

(2) request of third parties approximately any data with respect to the planned client and
its management.

• Assign an person or bunch, at fitting administration levels, to assess the information gotten
and to create the acknowledgment decision.

4. Engagement Performance

• Give satisfactory supervision at all organizational levels, considering the preparing,

capacity, and encounter of the faculty assigned.

• Create rules for survey of working papers and for documentation of the audit prepare.

5. Monitoring

• Decide the assessment methods vital to supply sensible confirmation that the firm‘s other
quality control arrangements and methods are operating effectively.

• Review hone units, capacities, or offices.

It gives a few chosen illustrations of the sorts of arrangements or proce- dures a firm can actualize
to comply with a sound framework of quality control. Quality control guidelines require steady
checking of (1) the relevance of and compliance with the firm‘s approaches and methods, (2) the
ampleness of the firm‘s direction materials and hone helps, and (3) the adequacy of professional
improvement programs. Firms ought to actualize observing pro- cedures to recognize and

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communicate circumstances which will necessitate changes and enhancements to the firm‘s
framework of quality control. Methods for monitoring include :

• Assessment procedures.

• Pre- and post-completion audit of chosen engagements.

• Investigation and evaluation of

— Unused proficient pronouncements.

— Comes about of freedom confirmations.

— Proceeding proficient instruction and other professional development exercises

attempted by firm personnel.

— Choices related to acknowledgment and continuation of client relationships and

engagements.

• Interviews of firm personnel.

• Assurance of any remedial activities to be taken and advancements to be made within the
quality control system.

• Communication to fitting firm personnel of any weaknesses identified within the quality
control framework or within the level of understanding or compliance therewith.

• Follow-up by fitting firm staff to guarantee that any necessary modifications are instantly
made to the quality control approaches and procedures.

Characteristics of Quality Control:

1. Quality to be built into the audit prepare instead of depending on post audits or checklists
2. Responsibilities for each player within the control prepare be clearly defined
3. Controls ought to be result centered
4. Excessive numerous controls result in no control

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Quality Control in the Audit Process:

1. Quality control is operational methods and exercises amid audit forms of arranging,
execution and announcing
2. Quality control could be a handle within the course of which an SAI (Supreme Audit
Institution) extreme to satisfy quality requirements
3. Quality control comprises of all measures and strategies carried out inside the review
handle to ensure the quality of audit work and of the coming about report.
4. Quality control within the audit process gives reasonable assurance that:
1. the audit has examined inspected noteworthy things;
2.that the comes about of the audit, contained within the audit report, are an precise
reflection of the genuine conditions of the things beneath consideration.
1. Detailed rules and checklists may be arranged by SAIs to guarantee quality control in
arranging, execution and announcing of review

The full form of SAI is Supreme Audit Institution. SAI is an independent and professional audit
institution. All the guidelines for auditors are set by SAI. FRC or Financial Reporting Council
provides guidelines. Auditor has to maintain those guidelines.

If auditors do not maintain the guidelines, the audit report won't be accepted. If they do not
follow, the quality of their audit report will be questioned. SAI will provide the guidelines in the
executing and reporting stage of auditing. Auditors will have to control the quality of auditing by
maintaining these guidelines.

According to Bangladesh Security and Exchange Commission (Public Issue), rules 2015 any
company can issue their securities to the general public. We know issuer means who issues the
securities like share, bonds, or stock. Before coming to the IPO market a new company publishes
its prospectus.

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By publishing the prospectus a company can inform their prospect to the general people. In the
prospectus, a company includes the ongoing concern, about the future growth of that company.
According to BSEC rules 2015, an issuer can issue securities to the general people through the
publication of a prospectus. The main difference between a prospectus and a financial report is
prospectus is published before coming to the IPO market and a financial report is publishing at the
end of the financial year of a company.

Under section 3, there is some rule of the establishment of the commission and they are given
below;

Government recruit BSEC (Bangladesh Security and Exchange Commission) act. It's a
constitutional institution.

Government publishes the BSEC act by notifying in a gadget. Gadgets are published in written
form. This gadget cannot be changed.

For changing the rule government has to publish another gadget. The commission is formed to
perform the work of the act. The commission is a statutory organization and it is formed by the
law.

It will have perpetual succession. We know, perpetual succession means the commission will run
for the foreseeable future. The commission must have a common seal. The common seal is the
official seal of the commission.

Commission has some power and they are, the commission can acquire, hold and transfer
properties of for the movable and immovable properties. The commission may sue anyone. Again,
one can sue against the Commission.

According to Sec 4 of Bangladesh Securities and Exchange Commission, there are some rules of
office of the commission.

The head-quarter of the commission must be situated in Dhaka.

They can open their branch office in different places. The government recruited the team member
of the commission by publishing a new gadget. The commission is consists of five members and
they are a chairman and four commissioners.

Those four commissioners help the chairman to do his work. The job type of this team is full-time.
They must have some qualifications for being a part of the commission. They must know
accounting, law, economics, private sector, security exchange.

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If the government thinks it needs a different discipline, it can appoint people accordingly. They
also need work experience.

Formation of the commission

The Bangladesh Securities and Exchange Commission (BSEC) is the controller of the capital
market of Bangladesh, Both Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).
The commission may be a constitutional body and linked to the Ministry of Finance.

► The Chairman shall be the Chief Executive of the Commission.

► Chairman and commissioners shall hold their individual offices for a period of 4 years from the
date of nomination and shall be qualified for re-appointment for an additional term only.

► as long as an individual who has reached the age of sixty five years, shall not be qualified for
appointment, or grasp the position of Chairman or commissioner, because the case may be.

► Chairman and any of the commissioners may, whenever before end of their service term, resign
from his office by giving a minimum of three months prior notice to the Government

► as long as the Chairman or the commissioner, because the ease could also be , shall still
perform his functions until acceptance of his resignation by the govt

Disqualification of Chairman

No person shall be qualified for selection or grasp office of the Chairman or commissioner, if :-

► He has been adjudicated bankrupt by a competent court

Bankruptcy means who cannot repay the debt to creditor. A chairman will disqualified when he is
related with any bankrupt issue and that‘s provided by court.

► He has been acknowledged to be of unsound concentration by a court.

Whether a chairman is mentally ill,he will never do his work properly. So that‘s why an unsound
mind person never be a chairman.

► He has been sentenced for a criminal misconduct of moral turpitude.

If a person is imprisoned for a any type of criminal offense then he never hold his position as a
chairman or eligible for appointment.

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► He has, according to the the government, ill-treated his position in such a manner that extension
of his service will go counter to the public interest.

A person who‘s manner is goes against the public interest,he will not eligible or can‘t qualify for
hold chairman position.

► He has been selected as a leader or official of a corporation or organization.

► No steps shall be taken in contradiction of the Chairman or any commissioner if he has been
provided with reasonable opportunity with roadmap.

Meetings of the Commission

► Meetings of the Commission shall be held at such times and places as could also be determined
by the principles and before that, such meetings shall be held at such times and places as could also
be determined by the Chairman.

► Three Commissioners existing shall constitute quorum of the meeting.

► The Chairman shall control over all meetings of the Commission and in his nonappearance, a
commissioner designated by the commissioners present shall control over the meeting.

As per the rules, Chairman always preside over the meetings. But in his absence, a commissioner
designated by the present commissioner shall preside the meetings.

► Decisions at a gathering of the Commission shall be taken by popular votes of the

commissioners present and just in case of equality of votes, the person presiding shall have the
power to exercise a second or vote .

Decisions would be taken by popular votes of the present commissioners but only presiding person
have the rights to exercise a second vote.

► No steps or proceeding of the Commission shall be treated unlawful and no questions are often
raised merely for a post within the post of a commissioner or any flaw in the formation of the
Commission.

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Functions of the Commission

► Subject to the provisions of this Act and rules made thereunder, responsibilities and functions
of the Commission shall be to ensure proper issuance of securities, protect the interest of investors
in securities and grow and control the capital market.

According to this act,commissioner shall be take responsibility of protect investors right and
regulate capital market.

Without prejudgment to the preceding provisions, the functions, in particular, may include the
following:-

• Managing the business of stock market or any stock exchange .

• Stipulating and changeable the functions of stock brokers, sub-brokers, share transfer agents,
bankers to the topic, merchant bankers, registrars to the issue, managers to the issue, underwriters,
portfolio managers, investment advisers, trustee of trust deeds, asset management companies,
custodians, credit rating companies and such other intermediating organizations as could also be
linked to the stock exchange .

► registering, controlling and directing the functions of any type of collective investment schemes
including mutual funds.

► evolving, monitoring and regulating all authorized self-regulatory organizations.

► elimination fraudulent and biased business associated with securities or securities markets.

► promoting investment related education and training (BICM- Bangladesh Institute of Capital
Market)of all segments of the securities market.

► elimination insider trading in securities.

► regulating substantial procurement of shares or stocks and take-over or control of companies.

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Functions of The Commission:

The primary function of Bangladesh Security and Exchange commission is to regulate the buying
and selling of securities such as stocks and bonds and make sure the investors don‘t suffer from
frauds. The commission works to achieve this through the functions below.

1. The commission can call for information through the issuers and inspect, enquire and
conduct auditing operations.

2. During the time when the commission is conducting inquiry, no other law will be
withstanding. The commission will keep Bangladesh Bank constantly informed of the
whole process. During this time no other law shall prohibit the commission from getting
required information from any bank, insurance company, financial institutions or other
authorities as long the information is related to the transaction of security.

3. The commission can sign agreements with local and foreign authorities. Prior approval
from the Government is necessary.

4. The commission can compile, analyse and publish information of the issuer if need be. The
said information cannot be unrelated to the issuer‘s financial performance.

5. In order to accomplish the other purposes, the researcher described in this section, the
commission can levy fees and other charges.

6. The commission conducts research and publishes information in order to fulfil the purposes
of this section.

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Fund of the commission

The commission needs sufficient resources to be able to operate its duties effectively. Investor trust
is gained through suitable funding. Bangladesh Securities and Exchange Commission Fund is the
official fund for the commission where all sums received are deposited.

Sources

The sources of these funds are usually -

1. Grants of the Government

2. Local authorities

3. Other financial institutions.

Safekeeping the money:

The money received from all funds are kept in scheduled bank. The bank is approved by the
commission. Even though the funds are kept in the bank, it is kept in the name of the commission.

Expenses:

All expenses related to the commission is paid from the commission funds.

Example: Salary, Allowance of the officers and employees.

Spending permissions:

- Own purposes:

. The commission shall spend any money earned by itself.

The commission is not allowed to spend the money which they got from grants of the government,
local authorities or other financial institutions for its own purposes.

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Power of the commission:

Similar powers vested in a civil court, the commission can exercise power according to the Code
of Civil Procedure, 1908 (Act V of 1908).

Purpose: The commission can exercise said powers in order to hear on the inquiry report for these
purposes:

1. Summoning a person for attendance and him inquiring under oath.

2. Producing necessary documents.

3. Submitting compelling information.

Audit Opinion:

The most important outcome of the audit process is the audit report. Because the further process of
carrying on any sort of operation of the organization, the investment decisions of the shareholders
etc. are depended on the audit report. An audit report may cause significant amount of loss of a
company if the report contains any major mistakes. So, it is very necessary to make an audit report
proper and authentic.

There are four types of audit opinions.

1. Unqualified Opinion
2. Qualified Opinion
3. Adverse Opinion
4. Disclaimer of Opinion

Unqualified Opinion

Qualified Opinion

Types of Audit Opinion

Adverse Opinion

Disclaimer of Opinion

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When it is referred to Audit opinion, it is referred to one element of the audit report but not the
whole audit report. Among these four types of opinions, unqualified opinion is the best and easy to
indicate. The rest three types of opinion are modified opinion and is challenging while application.

Unqualified Opinion: The first type of opinion is called the Standard Unmodified Opinion or
Unqualified Opinion. This is the best opinion that can be provided. Unmodified opinions of
financial statements declare that the financial statements are free from any material misstatements.
Unqualified opinions are regarded as satisfactory opinion and auditors can conclude that opinion.

Qualified Opinion: When any sort of transaction makes the auditor to provide unqualified
opinion, then the auditor may issue a qualified opinion. A qualified opinion makes a negative
impact on the image of a company and the investors take this type of opinion negatively. It is
because for some unwanted transactions doesn‘t satisfy the criteria of the auditors. The auditors
provide their qualified opinion as they provide opinion for unqualified opinion explain the reason
for not providing unqualified opinion.

Adverse Opinion: When the financial statements carry any sort of misstatement then auditors
provide adverse opinion for that type of audit report. For carrying significant amount of
misstatement, auditors are bound to provide adverse opinion for the material misstatement and this
indicates potential fraud in the audit report. This means the audit reports does not follow the
Generally Accepted Accounting Principles and providing any sort of adverse opinion for audit
report is even worse than the section of qualified opinion.

Disclaimer Opinion: Auditors provide disclaimer opinion if they don‘t get any proper evidence
regarding any situation in the audit report or this may provide because the auditors are not
authorized to have a look to the particular sector of the organization. It may also occur because of
any sort of limited ability of the company as well. Moreover we can conclude that, auditors try to
keep themselves away by providing disclaimer opinion.

In public, unmodified opinion is highly valued but modified opinion is a negative impression for a
company. Auditors provide modified opinion to inform public about the probability of presence of
fraud which may cause damage to the investment of the investor of the company as well as it
warns the organization to change the audit report into an authentic one by providing necessary
evidence so that the report can be reliable.

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Parts of an Audit Report:

As mentioned earlier that audit report is a very important part of the annual report and it is
provided before disclosing the consolidated financial statements of the company. For this research,
the researcher used a general format of an audit report as concept and also managed the audit
report of Square Textile Limited from their annual report of 2019-2020.

The following is the representation of general format of audit report.

Fig: General Format of Audit Report

Analyzing the audit report we can declare that, there are 7 parts of an audit report. These are:
1) Report Title
2) Audit Report Address
3) Introductory Paragraph
4) Scope Paragraph
5) Opinion Paragraph
6) Name of CPA Firm
7) Date of Audit Report
These are the individual 7 parts of an audit report. After a depth analysis of the 7 parts, our
description is as follows.

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Report Title: A report must contain a title and without title it is not possible to determine what the
report is about. In the report title, there is an important word ‗Individual‘ which must be included
in the title and the title must be like ‗Individual Audit Report‘ which will clearly define that the
auditors who audited the financial statements of the company or organization was independent and
free from any manipulation during the audit process. By analyzing the audit report of Square
Textiles Limited, we were able to find out the application of the title in a Bangladeshi listed
company.

Fig: Audit Report Title and Address

Audit Report Address: In this part the addressing must be clear that the report is addressed to the
shareholders of the company. Because the audited report is not just necessary for the internal
organization but the shareholders also have the right to know about the financial statements and
auditors are to make sure if the company is working fine or not. From the example provided
previously, the researchers were able to identify that the audit report is addressed to the
shareholders of the company which is written right below the title of the audit report.

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Introductory Paragraph: In this part of the audit report the auditors provide a simple statement
of the report indicating that the report is audited. In this part, the auditors distinguish between the
responsibilities between the auditor and the company.

Fig: Audit Report Title and Address

As the researchers analyzed the similar part of the audit report of Square textiles limited, there the
researchers found two simple paragraphs as an introductory paragraph. Though in the general
structure of the audit report, the statement was a little but in the researched company the
introductory paragraph was descriptive.

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Scope Paragraph: Scope paragraph is a part that contains proper evidence according to the report
of different audited parts. In this paragraph, the auditors illustrate the audit process indicating the
assurance and compliance with the accounting principles. Scope paragraph is very descriptive as it
contains a lot of information. In the researched organization Square textiles limited, the researchers
found two pages long description that provided the key audit matter and description of the audit
process.

Opinion Paragraph: This is the part where the auditors provide their opinion about the audit. As
stated before that there are four types of audit opinion, these four types of audit opinion is provided
in this section of an audit report. It is a conclusion part of the audit report where the auditors
conclude their describing about audit and provide a reasonable opinion about the audit. In the
researched organization, the researchers found a part named ―Other Matter‖ where the
auditors provided that who are responsible for which information and thereafter that, the auditors
provided the responsibility of the management and the responsibility of the auditors as well as a
report on other legal and regulatory requirements. Moreover, the researchers were able to find that
the opinion paragraph is very descriptive defining all the responsibilities of both audit and
management body and to assure that the audit report is clean.

Name of CPA Firm: This part clearly identifies the name of CPA firm must be included in the
audit report to disclose that which firm audited the report. In the general structure of the audit
report, the researchers found that the name of the CPA firm is provided after providing the audit
opinion and before providing the date of the audit report. But in the researched organization, there
was a difference. As the audit report was very descriptive and was described using several pages,
the name of the audit firm was stated on the top of the report page in every page that contained the
audit report.

Date of Audit Report: This is a simple part to identify in both the general format of an audit
report and in the researched organization for the researchers. As in general format the date is
provided after the name of the CPA firm but in the researched organization, the date is provided at
the end of the audit report along with the signature of the auditor.

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Determination of Standard Unqualified Audit Opinion: A standard unqualified audit opinion
must meet some criteria to be unqualified. As audit opinion is as important as the numerical data of
the financial statements, the researchers put importance on the features of the audit opinion and
tried to find out if the audit report of the researched organization comply with the features of the
unqualified audit report or not.

The first rule to maintain is to include all the consolidated financial statements. In the researched
organization, the previous audit firm declared unmodified opinion on October 27, 2019 on the data
of June 30, 2019. But for the year 2019-2020, the audit firm was unable to provide unmodified
opinion declaring that there were material misstatement in the financial statement. This is a
drawback according to the researchers.

Fig: Indication of Material Misstatement

Secondly, the audit firm also declared that they approached in every engagement in audit process
following the rules and regulations. This could be a plus point for the auditors to provide the
unmodified opinion.

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Thereafter the auditors while auditing the data on 2019-2020, tried to provide evidence that were
available to them and that was reflected in the key terms of the audit report. The financial
statements must comply with the other information so that the auditors could provide unmodified
opinion but in the researched organization the audit firm clearly stated that the financial statements
does not cover the other information properly and declared that there may remain material
misstatement.

In conclusion, the audit firm was not fully able to provide unmodified opinion for the company as
they found not sufficient evidence to support the financial statement data.

Conclusion

In the whole research the researchers tried to elaborate about the quality control in audit process
and the characteristics of the audit process as well as described different sections as per
Bangladesh Securities and Exchange Commission rules. The researchers also elaborated about
different types of audit opinion and the parts of audit report and related with a public limited
company‘s audit report to find out the similarities and dissimilarities. Quality control in audit is
important as well as audit opinion. These key points are ideal scales to know well about a
company‘s performance otherthan just reviewing the financial statements. Therefor the researchers
conclude that maintaining proper quality is a must for audit report and providing audit opinion
according to the rules is also important as general public are allowed to view those documents in
the financial statements and maintaining honesty in these works can lead a company to the way of
success in the long run.

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 Analysis on Audit Quality, Audit Report of Audit Report

References:
1) Annual Report 2019-2020, Square Textiles Limited, 30 November 2020
― ar_19_20.pdf (squaregroup.com)”
2) Audit Report Format, Abhilash Ramachandran, “Audit Report Format | Sample Format of an Audit
Report with Examples (wallstreetmojo.com)”
3) Sample of Audit Report “15_Sample_Audit.pdf (armymwr.com)”
4) 50 Free Audit Report Templates (Internal Audit Reports) ᐅ TemplateLab