Part (c) for 3 marks required a description of three types of modified audit opinions. Performance was mixed on this question.

Better answers correctly identified qualified, adverse and disclaimer opinions and were able to concisely describe what these opinions meant. However, there were a considerable amount of candidates who gave emphasis of matter as a type of modified opinion, this is incorrect.

An emphasis of matter paragraph modifies the audit report but it does not affect the opinion. In addition, some candidates wasted time by referring to unqualified opinions; even though the question was on modified opinions only; this may be due to a failure to read the question properly.

Also candidates are reminded that since the clarified ISA 705 Modifications to the Opinion in the Independent Auditor’s Report has been issued the old terminology of “disagreement” and “limitation of scope” is no longer relevant and instead should refer to “material misstatement” or “inability to obtain sufficient evidence”.

Candidates’ inability to correctly identify modified audit opinions and to clearly explain them is unsatisfactory.

Audit reports are a key part of the F8 syllabus and candidates need to understand this area better. This point has been made many times in previous examiners reports.