Site MapHelpFeedbackKey Terms
Key Terms
(See related pages)


Adverse opinion  An opinion that the financial statements do not fairly present financial position, results of operations, and cash flows, in conformity with generally accepted accounting principles.
Change in accounting principle  Changes in accounting principles and reporting entities result in an explanatory paragraph being added to the auditors' report.
Disclaimer of opinion  A form of report in which the auditors state that they do not express an opinion on the financial statements.
Explanatory language  A paragraph inserted in an auditors' report to explain a matter or to describe the reasons for giving an opinion that is other than unqualified.
Introductory paragraph  The paragraph of the auditors' report in which the auditors indicate that they have audited the financial statements and that the financial statements are the responsibility of management.
Last day of fieldwork  The day upon which the auditors conclude their investigative procedures at the client's offices on a particular audit.
Material  Being of substantial importance. Significant enough to affect evaluations or decisions by users of financial statements. Information that should be disclosed in order for the financial statements to constitute a fair presentation. Determining what is material involves both quantitative and qualitative criteria.
Opinion paragraph  The paragraph of an auditors' report that communicates the degree of responsibility that the auditors are taking for the financial statements.
Principal auditors  Auditors who use the work and reports of other independent CPAs who have audited the financial statements of one or more subsidiaries, branches, or other segments of the principal auditors' client.
Qualified opinion  A modification of the auditors' standard report, employing a clause such as except for to limit the auditors' opinion on the financial statements. A qualified opinion indicates that except for the effects of some limitation on the scope of the audit or some departure from generally accepted accounting principles, the financial statements are fairly presented.
Qualifying language  Language inserted in the opinion paragraph, and sometimes in the scope paragraph, to express the auditors' reservations about some aspect of the client's financial statements.
Scope limitation  A restriction that prevents the auditors from being able to apply all of the audit procedures that they consider necessary under the circumstances. Scope limitations may be client imposed or may be imposed by other circumstances.
Scope paragraph  The paragraph of an auditors' report in which the auditors describe the character of their audit.
Shared responsibility opinion  An auditors' report in which the principal auditors decide to share responsibility with other auditors who have audited some segment of the client's business. The sharing of responsibility is done by making reference to the other auditors. Making reference is not, in itself, a qualification of the auditors' report.
Standard report  The "standard wording" of an unqualified auditors' report, not including such modifications as emphasis of a matter, substantial doubt about going-concern status, a change in accounting principle, departures from official GAAP, or a shared responsibility opinion.
Unqualified opinion  An opinion that the financial statements fairly present financial position, results of operations, and cash flows, in conformity with generally accepted accounting principles.







Principles of AuditingOnline Learning Center

Home > Chapter 17 > Key Terms