What is Departure from the reporting framework?
In short
When financial statements depart from the applicable financial reporting framework, for example by not following generally accepted accounting principles, and the effect is material, the auditor gives a qualified ('except for') or adverse opinion.
Key takeaways
- The opinion is qualified if the effect is material but not pervasive, and adverse if pervasive.
- The basis for opinion section describes and, if practicable, quantifies the effects.
- Omitted required disclosures are also departures.
Where it's tested
AUD: Audit Reports — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
The financial statements contain a material misstatement that is NOT pervasive. The auditor should issue: