Matters that Do Affect the Auditor’s OpiMatters that Do Affect the Auditor’s Opinion

Matters that Do Affect the Auditor’s Opinion

21 An auditor may not be able to express an unqualified opinion when any of the following circumstances exist and, in the auditor’s judgement, the effect of the matter is or may be material to the financial report:

(a) there is a limitation on the scope of the auditor’s work;

(b) there is a disagreement with those charged with governance regarding the acceptability of the accounting policies selected, the method of their application or the adequacy of financial report disclosures; or

(c) there is a conflict between applicable financial reporting frameworks.

The circumstances described in (a) could lead to a qualified opinion or a disclaimer of opinion. The circumstances described in (b) could lead to a qualified opinion or an adverse opinion. The circumstances described in (c) could lead to a qualified opinion or an adverse opinion. These circumstances are discussed more fully in paragraphs 29-36.

22 A qualified opinion shall be expressed when the auditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with those charged with governance, a conflict between applicable financial reporting frameworks or limitation on scope is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion. A qualified opinion shall be expressed as being “except for” the effects of the matter to which the qualification relates. The opinion paragraph shall be headed “Qualified Auditor’s Opinion”.

23 A disclaimer of opinion shall be expressed when the possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and accordingly is unable to express an opinion on the financial report. The opinion paragraph shall be headed “Disclaimer of Auditor’s Opinion”.

24 An adverse opinion shall be expressed when the effect of a disagreement or a conflict between applicable financial reporting frameworks is so material and pervasive to the financial report that the auditor concludes that a qualification of the auditor’s report is not adequate to disclose the misleading or incomplete nature of the financial report. The opinion paragraph shall be headed “Adverse Auditor’s Opinion”.

25 Whenever the auditor expresses an opinion that is other than unqualified, a clear description of all the substantive reasons shall be included in the auditor’s report and, unless impracticable, a quantification of the possible effect(s) on the financial report. If the effects or possible effects are incapable of being measured reliably, a statement to that effect and the reasons therefore shall be included in the basis for modification paragraph of the auditor’s report.

26 Ordinarily, this information would be set out in a separate paragraph preceding the opinion or disclaimer of opinion on the financial report and may include a reference to a more extensive discussion, if any, in a note to the financial statements.