New audit opinion for 2012 – example for NPO client of one-partner or multi-partner firm

One of the biggest changes in the clarified audit standards is a new audit report.  It will apply for audit reports issued in 2013 for our 12-31-12 clients. 

This will be a biggie for 2013 work.

I previously provided a sample audit report for a commercial client of a one partner firm.  Here is a sample report for nonprofit organizations I plan to use in my practice.

The new opinion is discussed in AU-C Section 700, Forming an Opinion and Reporting on Financial Statements.

You can find all the new clarified standards on this page at the AICPA website.  You can click directly to section 700 here.

Here is the new report for an NPO, set up with options for a one partner or multi-partner firm.  Don’t forget the title, Independent Auditor’s Report. That is part of the report.

Independent Auditor’s Report

[Appropriate Addressee]

Report on the Financial Statements

I/We have audited the accompanying financial statements of Nonprofitname, which comprise the balance sheet statement of financial position as of Balancesheetdate, and the related statements of activity and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My/Our responsibility is to express an opinion on these financial statements based on my/our audit.  I/We conducted my/our audit in accordance with U.S. generally accepted auditing standards.  Those standards require that I/we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.  An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.  The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  Accordingly, I/we express no such opinion.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.  I/We believe that the audit evidence I/we have obtained is sufficient and appropriate to provide a basis for my/our audit opinion.

Opinion

In my/our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nonprofitname as of Balancesheetdate, and the results of its operations and its cash flows for the year then ended in accordance with U.S. generally accepted accounting principles.

[Report on Other Legal and Regulatory Requirements – This section usually won’t apply unless the auditor has other reporting responsibilities.]

[Auditor’s signature]

[Auditor’s city and state]

[Date of the auditor’s report]

 

You can copy and paste the AICPA’s example, or get one from your third-party provider, or copy and paste my example above.

If you copy my example, you will need to make a few changes:

  • Choose between I/my and We/our.
  • Replace the Nonprofitname, which is intentionally misspelled so it will jump out at you if you forget to change it.
  • Enter the Balancesheetdate.
  • The above sample uses the U.S. GAAP formulation.  If your firm policy calls for the accounting principles generally accepted in the United States of America phrasing, you will need to change the sample.

Use of U.S. GAAP phrasing

Having a reference to U.S. GAAP or U.S. GAAS is allowed by the literature.  I think that makes more sense for the readers of my client’s financial statements.  Check out the following comments from AU-C 700:

.A27 The reference to the standards used conveys to the users of the auditor’s report that the audit has been conducted in accordance with established standards.  For example, the auditor’s report may refer to auditing standards generally accepted in the United States of America or U.S. generally accepted auditing standards.  (emphasis added)

.A31 Description of the applicable financial reporting framework and how it may affect the auditor’s opinion (Ref: par.  .36).  The identification of the applicable financial reporting framework in the auditor’s opinion is intended to advise users of the auditor’s report of the context in which the auditor’s opinion is expressed; it is not intended to limit the evaluation required in paragraph .17.  For example, the applicable financial reporting framework may be identified as accounting principles generally accepted in the United States of America or U.S. generally accepted accounting principles or International Financial Reporting Standards promulgated by the International Accounting Standards Board (IASB) or International Financial Reporting Standard for Small and Medium-Sized Entities promulgated by the IASB.  (emphasis added)

2 thoughts on “New audit opinion for 2012 – example for NPO client of one-partner or multi-partner firm”

  1. Pingback: New audit opinion for 2012 – example for commercial client of one-partner firm « Attestation Update – A&A for CPAs

  2. Pingback: Double check your revised audit opinions with the AICPA Peer Review checklist | Attestation Update - A&A for CPAs

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