Audit and Assurance 2025 – 400 Free Practice Questions to Pass the Exam

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What does a 'clean opinion' indicate in an audit report?

An unqualified opinion indicating significant misstatements

An unqualified opinion indicating financial statements are fair and accurate

A 'clean opinion' in an audit report refers specifically to an unqualified opinion. This indicates that the auditor has reviewed the financial statements and found them to be presented fairly in all material respects, in accordance with the applicable financial reporting framework. Essentially, it suggests that the financial statements are free from material misstatements, and the auditor believes they accurately represent the company's financial condition.

This type of opinion means that the auditor did not encounter any disagreements with management regarding accounting policies, estimates, or financial reporting decisions. A clean opinion provides assurance to investors, stakeholders, and other interested parties that the financial statements can be trusted for decision-making purposes. Therefore, the characterization of a clean opinion as an indication of fair and accurate financial statements aligns perfectly with the definition of an unqualified opinion.

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A qualified opinion with reservations noted

An opinion indicating a lack of evidence

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