 In this presentation, we will take a look at situations where there is a departure from a standard unqualified report, a standard unqualified opinion, recalling that the standard unqualified opinion is going to be the most common opinion. That's kind of like the highest level opinion. That's what we would typically expect because we'll recall within the audit again, engagement. Management is basically saying the financial statements are put together in accordance with some type of standards such as generally accepted accounting principles. Our goal is to gather evidence and give an opinion on whether that is indeed the case. We would expect that hopefully management is correct that that is indeed the case. Usually it should be and therefore we would give the standard or unqualified opinion, meaning there's no qualifications to the fact that the standards, the reports do appear to us to be reported in all material respects in accordance with generally accepted accounting standards. Now, if there's a departure, that basically means that there's going to be a problem. There's some type of problem. We're departing from the unqualified report and we're going to issue something other than an unqualified report. Now, remember, if this happens, then that's kind of not good. There's something that's going to be fairly significant, a fairly significant issue here requiring us to depart from what we would expect to be the normal standard unqualified report. As we consider the types of qualifications then, we're still going to think about that standard report. So you still basically just want to have that standard report kind of memorized or at least have the outline of it in your mind and then think about, okay, what would happen to it if we had an unqualified report or some of these departures to it? How do we modify that report? That's kind of how you'd want to think about these types of reports. And also remember, if you're going to memorize any report, you almost want to memorize at least some of the wording for the standard unqualified report. And then, of course, you want to memorize or think about those areas where there could be departures from it. You don't need to memorize every kind of report that has a departure from it. But if you know the structure of the standard report, you can kind of then think about those types of areas that would be modified to it and what type of modifications would need to be in place given these circumstances. So when might these departures happen? We could have a departure from the standard unqualified report if, and we're going to list these out here and then we'll go into more detail on them later. But the departures, if there's a scope limitation, if there's a departure from gap generally accepted accounting principles, and if there's a lack of auditor independence, these could be issues that would require us to deviate from the unqualified opinion. And of course, remember that means that we're assuming, of course, that the financial statements have been put together in accordance in this case with generally accepted accounting principles. If there's a significant deviation or some type of departure from it, that would be an issue because that's what our opinion is based on. So what do we do if that happens? What are the type of reports that we can issue? Well, we have the standard unqualified report, that's going to be the standard type of report. If there aren't any problems, we have the unqualified, that's the highest standard report, then we can go to a qualified report and the qualified report is going to be a step down from the standard report. So when you're thinking of the hierarchy of reports, I get note that the unqualified to me sounds like a funny kind of word for the highest type of report, because it sounds like to me something like someone was unqualified or something like you didn't qualify for the race or something like that. But it means you want to think of unqualified as meaning that it doesn't have any qualifications to the opinion that the financial statements are indeed in accordance with whatever standard generally accepted accounting principles as they should be. So there's no qualifications, this would be the highest report. Then we're going to say, well, there's a qualification, that's going to be the next step down. So we're going to say, and we still issue a report, it's still not a terrible report here, although we would totally, we would normally expect an unqualified report, that's going to be the standard report. So, so a qualified report is a significant step down from an unqualified report. However, it's not, it's not completely terrible report, we're going to basically list out what that means in a bit more detail, but we'll basically say, hey, this is, this is the qualification or the deviation for whatever reason. And that's our qualification from the standard. Then we have a disclaimer type of report, which we're going to disclaim from the opinion. And then we have the adverse report. Now these two down here are going to be things that are not good because if we, if we disclaim from the opinion, or we have an adverse opinion, these two types of opinions are typically not good. They're not typically going to be helpful to the company. Now we have to go where the audit evident lies, of course, and if we need to issue a disclaimer or adverse opinion, that's what needs to happen. But hopefully we avoid this kind of situation at the front end, at the planning stage, by taking on clients with integrity and taking on engagements that we know that we can complete. And that will hopefully limit the amount of times that we might have a situation of disclaimer or adverse opinion, which of course is not good for anybody because typically that audit report is going to be something that's not useful for the company. And it took, it's going to take a lot of time to basically put that together on our basis in terms of the audit on the audit information. So again, normally we want to avoid that. How we make on the front end, we make sure that we're picking up clients that are good, that have integrity within the clients and that we have the ability to complete the full service of the of the engagement process. So a disclaimer would basically mean that we're not going to give an opinion. So we're going to disclaim from giving the opinion, we basically are saying, Hey, we were engaged to give an opinion, but there's some problem, possibly a scope type of limitation, which means that we can't complete. And then we have a disclaimer of the audit, that means a lot of work went into it for a disclaimer type of opinion, where no opinion basically is going to be given. And then an adverse opinion is basically saying the financial statements are not in accordance with generally accepted accounting principles. So that would be saying that that would be a bad opinion, of course, because the idea here, the audit is we're giving an opinion as to whether the financial statements are in accordance with generally accepted accounting principles, is there not, we have an adverse opinion basically saying that we don't believe with all material conditions and all material respects that the financial statements are in accordance with generally accepted accounting principles. Again, if we have an adverse opinion, that's not going to be something that's going to be useful to the company. So oftentimes, if something's going down the road of being an adverse opinion, the engagement may end before that time at, you know, it might be might be terminated at some point in time. And if that's the case, then again, there's a lot of work on both sides of things, a lot of time being spent that is basically could be wasted in that kind of situation. So the bottom line is these two types of opinions are something that we would have to issue if the conditions arise, but in practice, they're not going to be the most common types of opinion, we would expect unqualified to be the most common type of opinion, followed by some type of qualification, where we would say, Hey, there's this one thing that's not in conformity for whatever reason, but possibly the company want things that should be reported in this way, even though it's not generally accepted accounting principles or something like that or some other type of qualification, which we can state and say, Hey, this piece we're not, we don't think is in a conformity or something like that, but the rest of it is good as a whole that can happen to some degree. This disclaimer might end in a disclaimer type of opinion or basically terminating the engagement and adverse opinion, typically again, doesn't always get all the way to the end of the engagement and in a situation where you're going to end up with an adverse type of opinion. But if it does, you have that, but that's probably the most rare type of actual report that would be completed conditions required report other than unqualified. So a scope limitation, you'll recall it's one of those types of conditions that may cause us to issue a report other than an unqualified standard report results from not being able to obtain sufficient appropriate evidence about some component of the financial statements. So there's a scope limitation. We can get the information on some significant component. For example, let's say they have some part of their organization that's in another country and we can't, we don't have the resources in order to audit that. Possibly we can't get to it. Possibly we can't have another firm do it. Maybe there's regulatory limitations. That's a scope limitation. We weren't able to complete the job in that specific area and that's going to cause us if it's significant area, if it's material to the financial statements to have some kind of qualification possibly within the reporting of the financial statements. Not in conformity with generally accepted accounting principles. Happens when financial statements are materially affected by a departure from gap generally accepted accounting principles. Now, of course, the main what we're doing here is giving an opinion as to whether the financial statements are in conformity with generally accepted accounting principles. If there's a significant departure from them in what from what other area, then that could result in us issuing some type of