2-2 conditions

specify the conditions required to issue the standard unqualified audit report

The standard unqualified audit report is issued when the following conditions have been met:

All statements- balance sheet, income statement, statement of retained earnings, and statement of cash flows- are included in the financial statements.

The general standards have been followed in all respects on the engagement. 

Sufficient appropriate evidence has been accumulated, and the auditor has conducted the engagement in an manner that enables him or her to conclude that the standards of field work have been met. 

There are no circumstances requiring the addition of an explanatory paragraph or modification of the wording of the report.

The financial statements are presented in accordance with U.S. generally accepted accounting principles. This also means that adequate disclosures have been included in the footnotes and other parts of the financial statements.

When these conditions are met, the standard unqualified audit report, as shown in figure3-1, is issued. The standard unqualified audit report is sometimes called a clean opinion because there are no circumstances requiring a qualification or modification of the auditor’s opinion. The standard unqualified report is the most common audit opinion. Sometimes circumstances beyond the client’s or auditor’s control prevent the issuance of a clean opinion. However, in most cases, companies make the appropriate changes to their accounting records to avoid a qualification or modification by the auditor.

If any of the five requirements for the standard unqualified audit report are not met, the standard unqualified report cannot be issued.