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Chapter 6

5.2 Modified reports

Modified reports are issued when either the opinion of the auditors is that the
financial statements do not or may not show a true or fair view or have not or may not
have been prepared in accordance with specific legislation.

5.3 Key term: Pervasive

Pervasive effects on the financial statements are those that, in the auditor’s
judgment:

 are not confined to specific elements, accounts or items of the financial
statements

 if so confined, represent or could represent a substantial proportion of the
financial statements, or

 in relation to disclosures, are fundamental to users’ understanding of the
financial statements.

5.4 Types of modification

 Qualified Opinion – i.e. material misstatements or material insufficient
evidence.

 Adverse Opinion – i.e. material and pervasive misstatement.

 Disclaimer of Opinion – i.e. material and pervasive insufficient evidence.

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