Audit Opinion
The auditor's conclusion, expressed in the report, on whether the financial statements are fairly presented.
AUD rarely asks “what is an opinion”; it hands you a fact pattern and makes you pick the right type from a 2×2 grid. One axis is the problem: a GAAP departure (misstatement) versus a scope limitation (insufficient appropriate evidence). The other is severity: material but not pervasive versus material and pervasive. A known error points toward qualified/adverse; an evidence gap toward qualified/disclaimer. Under AU-C 700/705, a modified report leads with the renamed Opinion section, then a matching “Basis for Qualified/Adverse/Disclaimer Opinion” section (SAS 134 reordered these so Opinion comes first; some older banks still show the basis ahead of it).
The classic trap is mismatching the axes: students wrongly issue an adverse opinion (reserved for pervasive misstatements) when the auditor merely couldn’t gather evidence — pervasive that way is a disclaimer, while a contained problem on either axis is qualified (“except for”). Another miss: a going-concern doubt that is adequately disclosed keeps an unmodified opinion — it adds a separate going-concern section, not a modification. Hook: problem sets the row, pervasiveness sets the column.
PlayPrepHQ study notes are written and reviewed against primary exam sources. How we create & review content →