What does qualified or adverse mean on the CPA exam?
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.
Defined against AU-C 705.07.
Which CPA exam sections use qualified or adverse?
Qualified or adverse appears in the AUD section of the CPA exam.
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.
- disclaimer of opinion: The auditor states that no opinion is expressed, because they could not get evidence and the possible effect is pervasive.
- qualified opinion: The opinion given when a misstatement is material but not pervasive, or when evidence the auditor could not obtain would have been.
- scope limitation: Anything that stops the auditor obtaining evidence they judged necessary, whether imposed by the client or by circumstance.
Related terms
- management's specialist: An expert management uses to help prepare the financial statements, such as an actuary or an appraiser.
- written representations: Statements the auditor requires from management to confirm matters or support other evidence.
- other information: Financial and non-financial information included in the annual report outside the audited statements.