 Hello and welcome to the session. This is Professor Farhad. In this session, I will look at a summary, basically a conclusion of the various audit opinion that we cover in this playlist. This topic is covered in auditing and attestation course, the CPA exam auditing section. As always, I would like to remind you to connect with me on LinkedIn if you haven't done so. YouTube is where you would need to subscribe. I have 1600 plus accounting, auditing, tax and finance lectures. This is a list of all the courses that I cover, including CPA questions. If you like my lectures, please like them. Click on the like button. It doesn't cost you anything. Share them. Put them in playlist. If they benefit you, it means they might benefit other people. So share the wealth and please connect with me on Instagram. If you are looking to supplement your education, please check out my website, farhadlectures.com for additional resources, especially if you're studying for your CPA exam. It's a 30 year investment in your career. Take it serious. The first thing we're going to look at is the four types of audit opinion, which are unmodified, you know, or unqualified depending whether you're using the AICP or the PCAOB language or clean opinion. And with this opinion, we have a sub opinion of it. It's called still unmodified with explanatory paragraph. Simply put, it's unmodified opinion. That's the first opinion. Then we have a qualified opinion. Then we have adverse opinion. Then we have disclaimer. Notice the adverse and the disclaimer are in red to reflect that they are no good. Now, why do we use adverse versus disclaimer? We're going to see later that adverse is when you have a gap issue. And we're going to explain this much, much more in detail in the explanation session. And disclaimer is a gas issue. So now, so again, all these opinion I went over in detail in separate session. Check out the playlist for this, for this session. What are the conditions for a clean, unmodified or unqualified opinion? We need four conditions for this. One is include all the financial statements. Two, we have to have sufficient appropriate evidence. So the financial statements are all there. We have sufficient appropriate evidence. The financial statements present fairly with gap or the framework that we are using. And four, no circumstances requiring the additional emphasis of a matter or paragraph. So this is the cleanest kind of clean cut, nothing to worry about. Now, again, with unmodified or unqualified, we have unmodified opinion with explanatory paragraph. We are still unmodified. The only thing here we are pointing out to something else. We want to, we want the users to know about something else. What that could be something else? It could be lack of consistency in the application of gap, but we agree, but lack of consistency. We have to show it. Auditor agree with the departure from the accounting principle. There's a departure, but we still agree. Substantial doubt about going concern. We have a, there's a going concern issue, emphasis of other matters and reports involving other auditors. And here we use revised wording. Now these topics, I covered them much, much more in details, each one of them. I'm just giving you a summary of all the audit opinions. So if you want to know about this, about these explanatory paragraph, please see the recording. I'll put the playlist. I'll put the link for the playlist in the description. Now, now what happened if we don't give unmodified opinion? If we don't give unmodified opinion, now we have to look at what other opinion can we give because unmodified is not justified. Here we're going to have three circumstances. We could have a departure from gap. Financial statements are not prepared according to gap and the auditor disagree. Because remember here, in one of the paragraph, there's lack, there's auditor agree to a departure from the accounting principle. Here we don't agree. So we call this a gap issue. We could have scope restriction either by the client or other circumstances. And if it's by the client, it could be a major issue. This is a gas generally accepted. All the things standard issue and the auditor may not be independent. It's not independent. This is also a gas issue. So we could have three issues when we don't give unmodified or clean opinion. Now, when that's the case, what opinion do we give? Well, then we have to look at the materiality of the issue. If the issue could be material, so the gap issue could be material but not pervasive to the statement as a whole, or the issue could be material and pervasive to the whole financial statements. So the next thing we look at is the level of materiality and pervasiveness. Now, if it's not material, we don't have to worry about it, obviously. We only have to worry if it's material and if it's material, is it pervasive, pervasive or not? Pervasive or not? So if we have a gap issue, simply put, we're not following gap and it's not pervasive, easy. We give a qualified opinion. So basically we say the opinion except for this issue, it's good. And we looked at this opinion much, much more in detail in a separate recording. Also the scope, if there's a scope or restriction by decline, but the issue is material but not pervasive, it's a specific area and the financial statements, then we give a qualified opinion. So that's easy. So qualified when it's material but not pervasive. Now, if the issue is gap, it's material and pervasive, then we give an adverse opinion. If it's material and pervasive, if it's a gas issue, material and pervasive, we give a disclaimer. We give a disclaimer. Now we are left with auditor is not independent. It's a gas issue. Whether it's material or not material, here we disclaim, whether it's material or not. Whether it's material or not. Materiality is not an issue here. If you are not independent, if you are not independent, you disclaim. You disclaim. So those are the opinion and when we use them, this is a summary. Hopefully it will be very helpful if you're studying for the CPA exam. As always, if you like my recording, please like them, share them, put them in playlist, subscribe. And if you're studying for your CPA exam, I strongly suggest you check out my website for additional resources. Good luck and study hard and stay safe.