Can the Auditor Be Qualified and Unqualified at the Same Time?(TRICK QUESTION)

[KayPee]

Hi Guys,

I just got off the phone and I was talking to a friend who studies with FBT.He wanted help with this trick question:''Why does an Auditor want to be both Qualified and Unqualified at the same time?".

I gave him some answer but i was not quite convinced with the answer I gave so I thought it wise to bring it to this august forum so we could do justice to it.:chatterbox:

[Suze]

hummmm, I am not sure. I never thought a question like this could pop up.

I guess he would want to be qualified so as to earn more $$$$

I guess he would want to be unqualified so that his responsibilities are limited and he basically has no risks.

Are these the answers you are thinking ?

[Suze]

hummmm, I am not sure. I never thought a question like this could pop up.

I guess he would want to be qualified so as to earn more $$$$

I guess he would want to be unqualified so that his responsibilities are limited and he basically has no risks.

Are these the answers you are thinking ?

[KayPee]

I was thinking the qualification bit relates to the auditor qualifying to act as such whereas the Unqualified bit has to do with the opinion they normally give.
Remember the accounts of listed companies are almost always given an unqualified opinion on the audit report.They are however qualified where potential problems are identified and dealt with ahead of the release of the financial statements.

[Suze]

ahhhhhhhh was not thinking in that line.

I wonder what is the answer they are looking for

[Kelly]

Yep,
An auditor needs to be qualified to carry out external audit work in order to give an unqualified opinion on a set of financial statements.

That's neat KayPee

[KayPee]

A Qualified Auditor
It is only a qualified person/firm that can act as an auditor. Hence restrictions are put in place to ensure audits are done by persons with suitable qualification and experience. A member (an individual or a firm) of a Recognized Supervisory Body e.g. ACCA and allowed by the rules of that body to be an auditor or someone directly authorized by the state is qualified to act as an auditor.

The Auditor’s Main Objective
The auditor’s main objective in carrying out an external audit is to express an opinion whether the Financial Statements are prepared, in all material respects, in accordance with an identified Financial Reporting Framework.

Unqualified Audit opinion
If the statement that "in our opinion the financial statements give a true and fair view" is given as an audit opinion then the audit is unqualified. This opinion is what most external auditors seek to give (as per their main objective) unless potential problems are identified and dealt with ahead of the release of the financial statements.

Conclusion
"An auditor needs to be qualified to carry out external audit work in order to give an unqualified opinion on a set of financial statements"
(Credit:Kelly)

[ptty_noel]

Cooool thanks. By the way have you ever seen this question in an exam paper? I would like to see how it is stated and how much marks will be awarded for a question like this. This is really a tricky question and you stated the answer really well.

[dragoon_alex]

In my opinion, I think there is only qualified requirement for audit manager and audit partner, so there is no any requirement for audit senior and audit junior.

Usually an audit team will include all of them, so some of them are probably not qualified.

Audit report will include unqualified and qualified report. however, it's also possible to mix them together, when the financial statement just have contingency libility. So at that time auditor will offer an unqualified but modified report.

[ManOo]

mmm... elaborating what I Learned...

Auditor can be qualified and unqualified in light of audit report...He can express Qualified (except for) and Unqualified (Emphasis of matter paragraph) together in an audit report ..as "Without Further Qualifying Our Opinion F.S gives True n Fair view...."

[accalad]

while we are on the topic.

Why it is called Unqualified Opinion even though the Auditors did not find anything wrong in the financial statement and it gives true and fair view....???

the answer I came up with...

The auditors are there to find ANYTHING (fraud, theft, incorrect methods used and so on) wrong in the finanacial stements but they did not find it hence the financial statement were unqualified (for such exercise).

If they find anything that they were looking for then it is Qualified task for them and they express their opinion as qualified...

thats how I remember it.. :)

What you think am I correct???

[dragoon_alex]

while we are on the topic.

Why it is called Unqualified Opinion even though the Auditors did not find anything wrong in the financial statement and it gives true and fair view....???

the answer I came up with...

The auditors are there to find ANYTHING (fraud, theft, incorrect methods used and so on) wrong in the finanacial stements but they did not find it hence the financial statement were unqualified (for such exercise).

If they find anything that they were looking for then it is Qualified task for them and they express their opinion as qualified...

thats how I remember it.. :)

What you think am I correct???


The main duty to auditor is offer an reasonable assurance, because auditor can't guarantee 100% correct in the financial statement. Therefore, if the error or fraud in the account is not material, them audit will still offer an unqualified report.

However, if the error or fraud is material, and director refuse to make any adjustment, them audit will offer qualified report.

[frankmudiaga]

I think it is the report which must be unqualified or qualified depending on the circumstances given the underlying factors of the events. The person performing the duties must be qualified in the field i.e. ACCA, CA , IA etc to perform the duties which he has been employed for. Whether at Junior level or senior level the must some paper qualification. Refer to ACCA code of conduct under professionalism.

I hope this reasoning is clear.