MINGGU 12

PEMERIKSAAN AKUNTANSI 1
Pokok Bahasan:
Audit Report

Tujuan Instruksional Khusus:

Memahami sifat dan kebutuhan laporan audit dengan berbagai
kondisi opini

Referensi:
1. Alvin A. Arens, Randal J. Elder & Mark S. Beasley (2012), Auditing
and Assurance Services – Integrated Approach, 14th edition,
Prentice Hall Inc.
2. Michael C. Knapp (2013), Contemporary Auditing – Real Issues &
Cases. 9th edition, South Western Learning.

Minggu 12 Page 1
Auditing and Assurance Services
Seventeenth Edition, Global Edition

Chapter 24
Audit Reports

Copyright © 2020 Pearson Education Ltd. All Rights Reserved.

Learning Objectives (1 of 2)
24.1 Describe the parts of the standard unmodified opinion audit
report for nonpublic entities under AI C PA auditing
standards
24.2 Specify the conditions required to issue the standard
unmodified opinion audit report
24.3 Understand reporting on financial statements and internal
control under P CAO B auditing standards
24.4 Describe the five circumstances when an emphasis-of-
matter explanatory paragraph or nonstandard wording is
appropriate to include in an unmodified opinion audit
report
Learning Objectives (2 of 2)
24.5 Identify the types of audit reports that can be issued when an
unmodified opinion is not justified
24.6 Explain how materiality affects audit reporting decisions
24.7 Draft appropriately modified opinion audit reports under a
variety of circumstances
24.8 Determine the appropriate audit report for a given audit
situation
24.9 Understand the use of international accounting and auditing
standards by U.S. companies
Learning Objective 24.1
Describe the parts of the standard unmodified opinion audit
report for nonpublic entities under AI C PA auditing standards
Parts of Standard Unmodified Opinion
Audit Report
• The auditor’s standard unmodified opinion audit report
contains eight distinct parts:
• Report title
• Auditor report address
• Introductory paragraph
• Management’s & Auditor’s responsibility
• Scope paragraph
• Opinion section & Basis for opinion
• Signature and address of CPA firm
• Audit report date
 Parts of the Standard
Unqualified Audit Report

3-7
Disclosure of Key Audit Matters
• International auditing standards and PCAOB auditing
standards require communication of “key audit matters” or
“critical audit matters” in the standard unmodified audit report
• The AICPA reporting standards do not require the
communication of key audit matters
• Key audit matters, if disclosed, are included in a section
following the Basis for Opinion section
Learning Objective 24.2
Specify the conditions required to issue the standard
unmodified opinion audit report
Conditions for Standard Unmodified
Opinion Audit Report
• Standard unmodified opinion audit report is issued when:
• All statements and required disclosures are included in the
financial statements
• Sufficient appropriate evidence has been accumulated
• Financial statements are presented fairly in accordance
with GAAP or other appropriate accounting framework
• No circumstances requiring the addition of an emphasis-
of-matter paragraph or modification of the wording or
auditor’s opinion in the report
Figure 24.2 Categories of Audit Reports
Let’s Discuss (1 of 6)
• Explain why auditors’ reports are important to users of
financial statements and why it is desirable to have standard
wording.
• What four circumstances are required for a standard
unmodified opinion audit report to be issued?
Learning Objective 24.3
Understand reporting on financial statements and internal
control under PCAOB auditing standards
Standard Unmodified Opinion Audit
Report for Public Companies
• PCAOB refer to the standard unmodified opinion audit
report as an “unqualified opinion” audit report, which
requires:
• The audit firm is registered with the PCAOB standards
and is independent of the company
• A statement indicating that an audit is designed to provide
reasonable assurance
• The disclosure of critical audit matters
• The signature, tenure, and city and state of the audit firm
and the audit report date
Critical Audit Matters
• PCAOB auditing standards define a critical audit matter
as:
• Any matter arising from the audit of the financial statements
that was communicated or required to be communicated to
the audit committee and that
• (1) relates to accounts or disclosures that are material to
the financial statements and
• (2) involved especially challenging, subjective, or
complex auditor judgment
Reports on Internal Control over
Financial Reporting
• PCAOB auditing standards require the audit of internal
control to be integrated with the audit of the financial
statements
• Auditor may choose to issue separate reports or a combined
report
• The combined report addresses both the financial
statements and management’s report on internal control
over financial reporting
Learning Objective 24.4
Describe the five circumstances when an emphasis-of-matter
explanatory paragraph or nonstandard wording is appropriate to
include in an unmodified opinion audit report
Emphasis-of-Matter Explanatory
Paragraph/Nonstandard Report Wording (1
of 2)

• The unmodified opinion audit report with emphasis-of-

matter paragraph or nonstandard report wording:
• Meets the criteria of a complete audit with satisfactory
results and financial statements that are fairly presented
• But the auditor believes it is important to draw the
reader’s attention to certain matters or the auditor is
required to provide additional information
Emphasis-of-Matter Explanatory
Paragraph/Nonstandard Report Wording (2
of 2)

• The most important causes of the addition of an

emphasis-of-matter paragraph/nonstandard report
wording:
• Lack of consistent application of GAAP
• Auditor agrees with a departure from promulgated
accounting principles
• Substantial doubt about going concern
• Emphasis of other matters
• Reports involving other auditors
Lack of Consistent Application of GAAP

Auditors must note circumstances in which

accounting principles are not consistently applied

Auditor should modify the report when a material

change occurs by adding an explanatory paragraph
in the report

3-20
Figure 24.5 Explanatory Paragraph Because of Change
in Accounting Principle
 Auditor Agrees with a Departure
from a Promulgated Principle

Departure may not require a qualified or

adverse opinion

The auditor must separately explain in the

audit report that adhering to the principle
would have produced a misleading result.

Circumstances are unusual

3-22
 Substantial Doubt About
Going Concern

 Significant recurring operating

losses or working capital deficiencies.
 Inability of the company to pay its
obligations as they come due.
 Loss of major customers, the
occurrence of uninsured catastrophes.
 Legal proceedings, legislation that
might jeopardize the entity’s ability to operate.

3-23
Figure 24.6 Explanatory Paragraph Because of
Substantial Doubt About Going Concern
Emphasis of Other Matters
• Auditor may want to emphasize specific matters
regarding the financial statements under certain
circumstances:
• Material related party transactions
• Subsequent events
• Comparability of the financial statements
• Material uncertainties disclosed in the footnotes
• A major catastrophe that has had or continues to have a
significant effect on the entity’s financial position
Reports Involving Other Auditors

1. Make no reference in the audit report

2. Make reference in the report

(modified wording report)

3. Qualify the opinion

26
Figure 24.7 Unmodified Opinion Shared Report
—AICPA Auditing Standards
Let’s Discuss (2 of 6)
• What are the eight parts of a standard unmodified opinion
audit report for a nonpublic entity and what is the main
content provided in each part?
• What are the most significant differences between the AICPA
and the PCAOB standard unmodified opinion audit reports?
• When should the auditor include an explanatory paragraph in
an unmodified opinion audit report?
Let’s Discuss (3 of 6)
• Describe the information included in the opinion and basis for
opinion sections in a separate audit report on the effectiveness
of internal control over financial reporting.
• What is the nature of the additional paragraphs in the
audit report?
• Describe what is meant by reports involving the use of other
auditors.
• What are the three options available to the primary
auditor responsible for the opinion, and when should each
be used?
Learning Objective 24.5
• Identify the types of audit reports that can be issued when an
unmodified opinion is not justified
Modifications to the Opinion in the Audit
Report (1 of 2)
• Three conditions requiring a modification to the opinion:
• The scope of the audit has been restricted (scope
limitation)
• The financial statements have not been prepared in
accordance with GAAP (GAAP Departure)
• The auditor is not independent
Modifications to the Opinion in the Audit
Report (2 of 2)
• When any of the three conditions requiring a departure from
an unmodified opinion exists and is material, the opinion in
the audit report must be modified
• Three main types of audit reports are issued under these
conditions:
• Qualified opinion
• Adverse opinion
• Disclaimer of opinion
Learning Objective 24.6
Explain how materiality affects audit reporting decisions
Materiality (1 of 3)
• Materiality is an essential consideration in determining the
appropriate type of report for a given set of circumstances
• The common definition of materiality is as follows:
• A misstatement in the financial statements can be
considered material if knowledge of the misstatement will
affect a decision of a reasonable user of the statements
Materiality (2 of 3)
• Three levels of materiality are used for determining the
type of opinion to issue:
• Amounts are immaterial
• Amounts are material but do not overshadow the financial
statements as a whole
• Amounts are so material or so pervasive that overall
fairness of the statements is in question
Materiality (3 of 3)
• In application, deciding on actual materiality in a given
situation is a difficult judgment
• The evaluation of materiality also depends on the
following:
• Materiality decisions—non-GAAP condition
• Dollar amounts compared with a benchmark
• Measurability
• Nature of the item
• Materiality decisions—scope limitations condition
Table 24.1 Relationship of Materiality to
Type of Opinion (1 of 2)
Materiality Significance in Terms of Reasonable Type of Opinion
Users’ Decisions
Immaterial Users’ decisions are unlikely to be Unmodified
affected.
Material Users’ decisions are likely to be affected Qualified
only if the information in question is
important to the specific decisions being
made. The effect of the misstatement(s)
is not pervasive to the financial
statements and the overall financial
statements are presented fairly.
Table 24.1 Relationship of Materiality to
Type of Opinion (2 of 2)
Materiality Significance in Terms of Reasonable Type of Opinion
Users’ Decisions
Highly Most or all Users’ decisions based on the Disclaimer or Adverse
material financial statements are likely to be
significantly affected. The effect of the
misstatement(s) is pervasive to the
financial statements.

Note: Lack of independence requires a disclaimer regardless of materiality.

Let’s Discuss (4 of 6)
• Distinguish between a qualified opinion, an adverse opinion,
and a disclaimer of opinion, and explain the circumstances
under which each is appropriate.
• Define materiality as it is used in audit reporting.
• What conditions will affect the auditor’s determination of
materiality?
Learning Objective 24.7
Draft appropriately modified opinion audit reports under a
variety of circumstances
Conditions Requiring a Modification of
Opinion (1 of 2)
• Auditor’s scope has been restricted
• Qualified or disclaimer of opinion, depending on
materiality
• Statements are not in conformity with GAAP
• Qualified or an adverse opinion, depending on the
materiality of the item in question
Conditions Requiring a Modification of
Opinion (2 of 2)
• Justified departure from GAAP
• Unmodified opinion except for the reference to the added
explanatory paragraph
• Auditor is not independent
• Disclaimer of opinion
• Overrides any other scope limitations
Figure 24.8 Qualified Report Due to Scope
Restriction—AICPA Auditing Standards
Figure 24.9 Disclaimer of Opinion Due to
Scope Restriction—AICPA Auditing Standards
Figure 24.10 Qualified Opinion Report Due to Non-
GAAP—AICPA Auditing Standards
Figure 24.11 Adverse Opinion Report Due to Non-
GAAP—AICPA Auditing Standards
Learning Objective 24.8
Determine the appropriate audit report for a given audit situation
Auditor’s Decision Process for Audit
Reports
• Auditors use a well-defined process for deciding the
appropriate audit report in a given set of circumstances:
• Determine whether any condition exists requiring a
departure from a standard unmodified opinion report
• Decide the materiality for each condition
• Decide the appropriate type of report for the condition,
given the materiality level
• Inclusion of key audit matters or critical audit matters
Table 24.2 Audit Report for Each Condition Requiring a
Departure from a Standard Unmodified Opinion Report at
Different Level of Materiality

* If the auditor does not concur with the appropriateness of the change, the condition is considered a violation of GAAP.
† The auditor has the option of issuing a disclaimer of opinion.
‡ If the auditor can demonstrate that GAAP would be misleading, an unmodified opinion audit report with an explanatory
paragraph is appropriate.

Copyright © 2020 Pearson Education Ltd. All Rights Reserved.

More than One Condition Requiring a
Departure or Modification
• Auditors may encounter situations involving more than
one of the conditions requiring a departure from an
unmodified opinion audit report or revisions to the
standard report wording:
• In these circumstances, the auditor should modify his or
her opinion for each condition unless one has the effect of
neutralizing the others
Let’s Discuss (5 of 6)
• What are the three conditions that require a departure from an
unmodified opinion audit report?
• Give an example of each.
• What are the three alternative opinions that may be
appropriate when the client’s financial statements are not in
accordance with GAAP?
• Under what circumstance is each appropriate?
Let’s Discuss (6 of 6)
• How does the auditor’s opinion differ between scope
limitations caused by client restrictions and limitations
resulting from conditions beyond the client’s control? Under
which of these two will the auditor be most likely to issue a
disclaimer of opinion? Explain.
• When an auditor discovers more than one condition that
requires departure from or modification of the standard
unmodified opinion audit report, what should the auditor’s
report include?
Learning Objective 24.9
Understand the use of international accounting and auditing
standards by U.S. companies
International Accounting and Auditing
Standards (1 of 2)
• U.S. public companies are required to prepare financial
statements that are filed with the SEC in accordance with
GAAP in the United States
• Foreign companies listed on U.S. exchanges are allowed to
report under IFRS
International Accounting and Auditing
Standards (2 of 2)
• An auditor may be engaged to report on financial statements
prepared in accordance with IFRS
• When the auditor reports on financial statements prepared in
conformity with IFRS, the auditor refers to those standards
rather than U.S. GAAP