There are two broad categories of audit reports which are described as unmodified audit reports and modified audit reports. Unmodified reports refers to the judgement of the auditor expressing that the financial statements have been prepared in accordance with standards and that the statements give a true and fair representation of the the company’s fiannical records (Kimmel, Kieso, & Weygandt, 2011).
In contrast to the unmodified report, the modified reports are reports where the contents of the report have been altered. This is not always a negative action it may be committed under certain circumstances such as needing to emphasize material in the report or for the necessary inclusion of other material that amy be relevant to understanding the report (Kimmel, Kieso, & Weygandt, 2011).
Within this context, modified reports fall into three categories known as: Modified opinion, Qualified opinion, Adverse opinion, and Disclaimer of opinion reports. Modified opinion occurs when the auditor reports misstatements that are material but not pervasisve, or that there is a lack of information (Kimmel, Kieso, & Weygandt, 2011). Audit reports containing an adverse opinion occurs when the auditor expresses an adverse opinion due to evidence that reflects gross or pevasive misstatements that impact the overall validity of the statements (Kimmel, Kieso, & Weygandt, 2011). Disclaimer opinions are reports that there is not enough information to conclude that the statements are completely accurate (Kimmel, Kieso, & Weygandt, 2011).
Financial accounting: Tools for business decision making2011HobokenNJJohn Wiley & Sons