What does disclaimer of opinion mean on the CPA exam?
Disclaimer of opinion. The auditor states that no opinion is expressed, because they could not get evidence and the possible effect is pervasive. It is a refusal to conclude, not a negative conclusion.
Defined against AU-C 705.09.
Which CPA exam sections use disclaimer of opinion?
Disclaimer of opinion appears in 6 CPA exam sections: AUD, BAR, FAR, ISC, REG, TCP.
What is the difference between disclaimer of opinion and qualified opinion?
A qualified opinion is an opinion: the auditor obtained enough evidence and found one material problem. A disclaimer is the absence of an opinion, issued when a scope limitation is so pervasive the auditor could not obtain sufficient appropriate evidence to form one at all. Qualified answers the question with a carve-out; a disclaimer declines to answer. (AU-C 705)
Other terms defined against AU-C 705
- adverse opinion: The opinion given when misstatements are both material and pervasive, so the statements are not fair at all.
- qualified opinion: The opinion given when a misstatement is material but not pervasive, or when evidence the auditor could not obtain would have been.
- qualified or adverse: The two modified opinions used when the auditor has the evidence but disagrees with the statements: qualified when the effect is material, adverse when it is also pervasive.
- scope limitation: Anything that stops the auditor obtaining evidence they judged necessary, whether imposed by the client or by circumstance.
Related terms
- applicable financial reporting framework: The framework management adopts for the statements, such as GAAP or a special purpose framework.
- valuation allowance: The contra account reducing a deferred tax asset to the portion more likely than not to be realized, meaning a likelihood above 50%.
- auditor's opinion: The conclusion the audit exists to produce.
- auditor's report: The document carrying the opinion, with its sections in a fixed order.
- audit evidence: Everything the auditor uses to reach a conclusion, including the accounting records and anything corroborating them.
- unqualified opinion: The clean opinion: the statements are presented fairly in all material respects.