Which statement about the opinion paragraph of a standard unqualified report is not true?

Which statement about the opinion paragraph of a standard unqualified report is not true?

• A. an opinion about the financial statements taken as whole
• B. a conclusion about whether the company follows Philippine financial reporting standards
• C. whether the management has or has not made adequate disclosure
• D. That the financial statements are presented fairly

Answer: (C)

The main idea here is what the opinion paragraph in an unmodified audit report actually communicates. It delivers an overall conclusion that the financial statements, taken as a whole, are presented fairly in all material respects in conformity with the applicable financial reporting framework (for a Philippine engagement, that framework would be the Philippine financial reporting standards). This paragraph also signals that the statements comply with that framework, which implies conformity with the standards themselves. The statement about whether management has or has not made adequate disclosure is not a separate point in the opinion paragraph. Adequacy of disclosures is part of the fair presentation, but the opinion paragraph does not explicitly judge management’s disclosures as a standalone item. That’s why the option stating that the opinion paragraph addresses whether management’s disclosures are adequate is not true. The other points—being about the financial statements as a whole, and about conformity with the applicable standards, and the claim that the statements are presented fairly—fit with what the opinion paragraph conveys.

The main idea here is what the opinion paragraph in an unmodified audit report actually communicates. It delivers an overall conclusion that the financial statements, taken as a whole, are presented fairly in all material respects in conformity with the applicable financial reporting framework (for a Philippine engagement, that framework would be the Philippine financial reporting standards). This paragraph also signals that the statements comply with that framework, which implies conformity with the standards themselves.

The statement about whether management has or has not made adequate disclosure is not a separate point in the opinion paragraph. Adequacy of disclosures is part of the fair presentation, but the opinion paragraph does not explicitly judge management’s disclosures as a standalone item. That’s why the option stating that the opinion paragraph addresses whether management’s disclosures are adequate is not true. The other points—being about the financial statements as a whole, and about conformity with the applicable standards, and the claim that the statements are presented fairly—fit with what the opinion paragraph conveys.