Key CPA Exam Takeaways

High-Yield Review

• The audit report communicates the auditor's opinion on the financial statements.
• The opinion paragraph appears first in the standard report.
• An unmodified opinion indicates the financial statements are fairly presented.
• Qualified opinions are issued for material but not pervasive issues.
• Adverse opinions result from material and pervasive misstatements.
• Disclaimers result from material and pervasive scope limitations.
• Materiality and pervasiveness determine the type of modified opinion.
• Emphasis-of-matter paragraphs highlight important disclosed matters without modifying the opinion when appropriate.
• Under U.S. GAAS, adequate going concern disclosures generally result in an unmodified opinion with a separate going concern section rather than an emphasis-of-matter paragraph.

Misstatement vs. lack of evidence—and material vs. pervasive—determine the auditor's opinion.