AUD: Audit Reports: Unmodified Opinion - Nonissuer - YouTube

Hey scholars now we want to make sure we’ve got the wording down for both the

unmodified and the unqualified opinion. Remember the unmodified opinion is for

nonpublic companies and that’s going to be the MR DIM REPPORTS CRAME. All right

the wording is a little bit different. If we ultimately go on to the unqualified

opinion for an issuer then we’re going to do the RAPMEAM, RAPMEAM. So we’re going

to see the wording is a little bit different even though you’re essentially

giving a thumbs up the highest level opinion you can. So we want to make sure

that you remember how this actually flows through before we try some exercises. So

let’s study this one together. All right we’re going to start with the independent

auditor’s report and this is for an unmodified opinion with a nonissuer. We

have our intro paragraph and we say we have ordered the accompanying financials

of the ABC, which comprise the balance sheet at December 31st, and the related

statements of income, changes in stockholders’ equity and cash flows and

the related footnotes. Nothing surprising there. Then we have the

management representation paragraph and this is where we’re going to see MR DIM.

All right in this case management is responsible, there’s the M and the R for

the preparation and fair presentation of these financials in accordance with

accounting principles generally accepted in the United States. This includes the,

and here’s the important MR DIM, design implementation and maintenance of the

internal control relevant to the preparation and fair presentation of the

financials that are free from material misstatements whether due to fraud or

errors. So there’s MR DIM. Then we have our next item which is the auditor’s

responsibility and here we’re going to have reports and then we’ll have crime.

REPPORTS, we have our responsibility is to express an opinion on the financial

statements based on our audit. We conducted our audit in accordance with

auditing standards generally accepted in this United States of America. Those

standards require that we plan; okay so there’s the R, the E and the P, all right

we plan and perform the audit to obtain reasonable assurance about whether the

financials are free of material misstatement. An audit involves

performing, there’s the 2nd P, procedures and obtaining evidence, audit evidence

about the amounts and disclosures in the financials. The procedures selected

depend on the auditor’s judgment including an assessing, the assessment of

the risk, there’s the R of reports, risks of material misstatement on the financial

statements and the preparation and the fair presentation of the financial

statements, there’s the S. So we have that and then of course just before that

I forgot to read this, the auditor considers internal control, that means we

test internal control, there’s the T. So you’re really if you want we have that

the test of internal control. So we start with that and then of course it’s

the financial statements and their presentation. Continuing on it then says

in order to design audit procedures that are appropriate in the circumstances.

Now in addition it will say the following, but not for the purpose of

expressing an opinion on the effectiveness of the entity’s internal

controls, there’s the C. Accordingly we express no such opinion, all right. And

audit also includes evaluating the appropriateness of the accounting

policies used and the reasonableness, that’s the R of crime and the significant

accounting, there’s the A, accounting estimates made by management, there’s the

M as well as evaluating, there’s the E, the overall presentation. And then we

say the following, one last major statement that we have in the auditor’s

responsibility. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion. We then issue the

audit opinion, in our opinion the financial statements referred to above

present fairly in all material respects the financial position of ABC Company as

of December 31st and the results of operation and cash flows for the year

then ended in accordance with accounting principles generally accepted in the

United States. So there’s our opinion paragraph and then of course we sign it,

we state the city and state we’re located in and of course we give the auditor’s

report mint date. So what do we have? We have a certain point here, we have a

little passkey, each exam question they focused in on the content, it’s important

to be familiar with the report so just remember MR DIM REPPORTS CRAME.