Reporting on the Audits of Governmental Financial Statements

This chapter explains how to identify the components of the basic financial statements of a governmental entity, identify reasons for opinion modification in the auditor's report, and recognize his requirements for required supplementary information. A lack of sufficient appropriate audit evidence or restrictions on the scope of the audit of the financial statements for an opinion unit may lead the auditor to qualify the opinion or disclaim an opinion on that opinion unit. A disclaimer of opinion states that the auditor does not express an opinion on the financial statements for one or more opinion units or for the financial statements as a whole. A disclaimer is appropriate when the auditor has not performed an audit sufficient in scope to enable the auditor to form an opinion on the financial statements for the opinion unit or when the client imposes restrictions that significantly limit the scope of the audit. The auditor should consider quantitative and qualitative factors in determining whether the omission of general infrastructure assets requires an opinion modification and, if so, whether the modification should be a qualified or an adverse opinion.