Understanding a qualified opinion in a Hong Kong audit
A qualified opinion is a type of modified audit opinion in Hong Kong, indicating agreement with financial statements except for a specific reservation.
What Is a Qualified Opinion in a Hong Kong Auditor's Report?
A qualified opinion is a modified audit opinion issued by a certified public accountant registered with the HKICPA. The auditor states the financial statements present a true and fair view, except for a specific issue. This matters because the Companies Ordinance (Cap. 622) requires every company to file audited accounts, and the opinion type affects how the report is received by members, the Companies Registry and the Inland Revenue Department.
Audit Qualified Opinion Hong Kong
In an audit qualified opinion, the auditor agrees with most of the financial statements but identifies a material misstatement or a limitation of scope that is not pervasive. The auditor's report includes a paragraph explaining the basis for the qualification. This differs from an adverse opinion, where the problem is pervasive, and from a disclaimer, where the auditor cannot obtain sufficient evidence.
Modified Audit Opinion Hong Kong
"Modified opinion" is the broader category under HKICPA standards. It covers three sub-types: qualified, adverse and disclaimer. A qualified opinion is the least severe. The modified audit opinion appears in the auditor's report alongside the directors' report. The auditor must state whether the modification affects the view given by the financial statements as a whole.
Auditor's Qualified Opinion
The auditor's qualified opinion is issued by a practice unit holding a practising certificate. It arises in two situations: a disagreement with management about an accounting treatment, or a restriction on the audit work. The opinion must cite the relevant HKICPA standard and explain the effect on the financial statements.
HKICPA Qualified Opinion
The HKICPA qualified opinion framework follows Hong Kong Standards on Auditing. The auditor determines whether the matter is material but not pervasive. If the company is a going concern but the auditor has concerns, a qualified opinion may be appropriate. The HKICPA publishes illustrative reports that auditors follow when drafting the opinion paragraph.
Sources
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