What happens if the audit team is not independent?
If the audit team determines that they are not independent, then the audit team should issue a disclaimer of opinion or withdraw from the audit. Under PCAOB and AICPA rules, the external auditor must be independent from the client.
If for whatever reason, the audit team is required to perform an audit where they know they are not independent, the audit team should still issue a disclaimer of opinion.
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What is qualified opinion?
A qualified opinion will be issued by an auditor if, after conducting audit tests, the auditor has determined that “except for the issue being described”, the financial statements have been presented in accordance with the applicable financial reporting framework, and no material modifications exist. Therefore, this is an issue that is not considered material or […]
What is an adverse opinion?
Whether the entity being audited is an issuer or a nonissuer, an adverse opinion would be distributed if there is a material departure from U.S. GAAP (financial reporting issues), and those departures are both deemed material and pervasive by the auditor. Some reasons for an auditor issuing an adverse opinion will be due to: 1) […]
What is a disclaimer of opinion?
A disclaimer of opinion is a type of modified opinion that the audit team would issue if there are audit issues that are both material and pervasive. Audit issues can be better described as scope limitations, meaning the company prevented the audit team from performing the work necessary to form an audit opinion.