A Flow Chart Conceptualization of Auditors' Reports on Financial Statements.

Abstract This article focuses on the usefulness of a flow chart conceptualization method for better interpretation of auditors' reports on financial statements. Here, the authors have developed a flow chart that covers most reporting situations confronted by certified public accountants. The purpose of the flow chart is to provide students of auditing with an easy to understand logical model of the major reporting possibilities. A definitive understanding of related sections of the "Codification of Statements on Auditing Standards, Numbers 1 to 7," however, requires careful reading and study; the flow chart presented here is not intended to relieve students of that task. It is suggested that, if sufficient evidence is obtained through alternative auditing procedures, there is no significant scope limitation, and the report need not be modified from the wording of an unqualified opinion. If part of the examination is made by other auditors, the principal auditor may issue an unqualified, an "except for" qualified, or a disclaimer of opinion. After making any necessary inquiries, if he or she is satisfied with the professional reputation and independence of the other auditor, the principal auditor normally should render an unqualified opinion.