The independent audit report includes the opinion of the independent auditor about the business financial statements as a result of the independent audit. This view is about whether all the important aspects of the financial statements are prepared in accordance with the financial reporting standards to which they are related. Because the purpose of the independent audit is to reveal whether the financial statements honestly reflect the truth in all important aspects in accordance with the financial reporting standards.
In the process of establishing the independent audit opinion, the independent auditor should have sufficient and appropriate independent audit evidence to obtain reasonable assurance that the financial statements do not contain material misstatements. In some cases, however, due to a number of limitations, the independent auditor may not be able to gather the necessary independent audit evidence. Such cases are referred to as “limitation of the field of study” in which the independent auditor cannot observe the physical inventory count due to the appointment time, the enterprise’s accounting records are insufficient or the failure to apply an independent audit technique believed to be necessary. Due to this limitation, despite the alternative independent audit techniques used, the inadequate and appropriate independent audit evidence regarding the audited item or items will affect the opinion of the auditor.
Another issue that affects the independent auditor’s view of the financial statements is to disagree with the business management on issues such as selected accounting policies, their application and the adequacy of footnotes. Because, during the independent audit, the deficiencies or inaccuracies found in the financial statements are first conveyed to the business management; If the management participates in the determination of the independent auditor, it may correct the mistake in the tables without disclosing it to the public. However, if the management does not participate in the determination of the independent auditor, the financial statements are presented to the users in an incomplete or inaccurate form according to the independent auditor. In this case, the independent auditor’s opinion on the final version of the financial statements presented to users will not be positive.
If the above mentioned and independent auditor has a limitation in his field of study and there is a disagreement with the management regarding the appropriateness of the selected accounting policies, their application methods, or the adequacy of the financial statement disclosures, the independent auditor may be positive, will not express opinion; it will go to one of the ways to give negative or conditional opinion or refrain from giving opinion. In this context, 4 types of independent audit reports emerge:
In this type of report, the independent auditor’s opinion on the entity’s financial statements is that they fairly reflect the truth, in all material respects, in accordance with financial reporting standards.
Having obtained sufficient appropriate audit evidence, the auditor shall express an adverse opinion if the auditor concludes that misstatements, individually or in the aggregate, are material and (the effect) pervasive to the financial statements.
The auditor disclaims an opinion if he or she cannot obtain sufficient appropriate audit evidence to form a basis for his opinion and if he or she concludes that the possible effects of undetected misstatements on the financial statements may be material and pervasive.
The auditor gives a qualified opinion (qualified opinion) when:
(A) The auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material but not pervasive in the financial statements; or
(B) If, although the auditor is unable to obtain sufficient appropriate audit evidence to base the opinion on, the auditor concludes that the possible effects of undetected misstatements, if any, on the financial statements may be material but not pervasive.
If the auditor considers it necessary to draw users’ attention to a matter presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance as to be fundamental to users’ understanding of the financial statements; Include an Emphasis of Matter paragraph in the auditor’s report, provided that sufficient appropriate audit evidence has been obtained that the financial statements are free from material misstatement. This paragraph refers only to the information presented or disclosed in the financial statements.