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Reporting

Modified report with modified opinion

5.1 Actions when the opinion is to be modified

 Discuss the matter with those charged with governance

 Consider management integrity

 Seek external advice

 Resign

5.2 Modifications to the audit opinion

There are two main reasons for the auditor to modify the opinion.

A modified opinion will be necessary when the auditor concludes that:

 Based upon the evidence obtained the financial statements as a whole are
not free from material misstatement. This is where the client has not
complied with the applicable financial reporting framework

Or

 They have been unable to gather sufficient appropriate evidence to be able
to conclude that the financial statements as a whole are free from material
misstatement. This is evidence the auditor would expect to exist to support the
figures in the financial statements.

The nature of the modification depends upon whether the auditor considers the
matter to be material but not pervasive, or material and pervasive, to the financial
statements.

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