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An unmodified opinion provides a high level of assurance the a professional, independent examination of financial statements has not revealed any actual or possible material misstatements in those financial statements.
An audit report is said to be modified where a matter arises which does not affect the opinion given by the auditor ,but gives rise to an emphasis of matter paragraph or a matter arises which does affect the opinion issued on the financial statements and give rise to a qualified opinion, a disclaimer of opinion or an adverse opinion.
Unmodified opinion is the opinion where auditor expresses an opinion that financial statements are presented, in all material respects, in accordance with applicable financial reporting framework.
Unqualified opinion is the opinion where auditor expresses an unmodified opinion (as above) AND attaches an Emphasis of Matter Paragraph.
Simply, unmodified opinion is a clean opinion where as unqualified opinion is a “modified” clean opinion with emphasis of matter paragraph.
To me there is no difference between the two terms as they concludes one and the same thing. Auditing Standards use both terms to mean one and the same thing. But it has been observed that the term Unmodified opinion is used more often in standards instead of Unqualified opinion.
Some authors try to differentiate between these two terms as follows:
Unmodified opinion is the opinion where auditor expresses an opinion that financial statements are presented, in all material respects, in accordance with applicable financial reporting framework.
Unqualified opinion is the opinion where auditor expresses an unmodified opinion (as above) AND attaches an Emphasis of Matter Paragraph.
Simply, unmodified opinion is a clean opinion where as unqualified opinion is a “modified” clean opinion with emphasis of matter paragraph.
But to my mind we should not try to differentiate the terms in such way. The reason is that if we refer to Para 7(d) of ISA – 706 it is clearly stated that if auditor has included an Emphasis of Matter paragraph in the audit report than he must also indicate that opinion has not been modified in respect of the matter emphasized. So, this alone is enough to clear at any confusion regarding unqualified opinion and unmodified opinion. Therefore, both terms mean one and the same thing.
Remember! (According to 2010 handbook) The term Unqualified Opinion has not been defined under any pronouncement issued by IAASB where as Unmodified Opinion does have a definition. Also, most widely used term is Unmodified opinion in the pronouncements, however, the term Unqualified opinion has been used in pronouncements related to Other Assurance Engagements and Related Services
Unmodified Report
Audit report is said to be unmodified if auditor releases such report which has the exactly the same format or contents as are mentioned for the report which should be given if financial statements are giving true and fair view.
Under IAASB auditing standard ISA 700 (read para 20 through 40), the format of the report has been suggested which auditor shall follow if financial statements are giving true and fair view provided the same auditing standards are applicable in the given situation. However, if any addition or deletion is made in this format, the audit report is stand modified.
Unqualified Report
In an unqualified report, the auditors conclude that the financial statements of your business present fairly its affairs in all material aspects. The opinion embodies the assumptions that your business observed compliance with generally accepted accounting principles and statutory requirements. Also known as a clean report, such a report implies that any changes in the accounting policies, their application and effects, are adequately determined and divulged. This opinion does not tell that your business is in good economic health. It merely states that your financial report is transparent and thorough and has not hidden important facts.
No difference exist between the mentioned reports as these are one and the same. They are synonymous to each other in reference to audit reports.
Clean opinion without reservations
Have a clean conscience if he fulfills all of these cases and not part of it must be clean opinion contains the following points:
- That the auditor has completed the audit process in accordance with generally accepted auditing standards, without any pressure or restrictions of administration.
- That the financial statements are prepared in accordance with accepted accounting principles or accepted.
- That these principles applied uniformly from one period to another.
- That the financial statements meet the requirements of sufficient disclosure.
- There is no violation of the Statute of the company or the provisions of the law.
Opinion Conservatives
Be conservative opinion in the following cases:
- If there is a departure from generally accepted accounting principles generally accepted that this is not out significantly from the core so as not to show the dissenting opinion and this little paragraph in the examination scope of the reservation.
- Whether the financial statements are prepared in a way that does not meet the criterion of sufficient disclosure so as not to meet the needs of users of financial statements and the reservation mentioned in paragraph opinion.
- If there are restrictions on the auditor during the audit process, whether from management or caused by circumstances and nature of the activity in the company and the reservation mentioned in paragraph scan scope.
