Auditor's opinion on the basis of a restricted examination : (no. 2) ;

              Statements on Auditing Procedure
No. 11
September 1942
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Issued by the Committee on Auditing Procedure, American Institute of Accountants, 13 East 41st Street, New York 17, N. Y.
Copyright 1942 by American Institute of Accountants
The Auditor's Opinion on the Basis of a Restricted Examination (No. 2)
THE COMMITTEE previously expressed itself regarding the circumstances in which it would not be proper for the independent auditor to ex-press an opinion.1 In "Extensions of Auditing Procedure"2 it was stated:
"The independent certified public accountant should not express the opinion that financial statements present fairly the position of the com-pany and the results of its operations, in conformity with generally ac-cepted accounting principles, when his exceptions are such as to negative the opinion, or when the examination has been less in scope than he con-siders necessary. In such circumstances, the independent certified public accountant should limit his report to a statement of his findings and, if appropriate, his reasons for omitting an expression of opinion."
Questions arise however, in particular cases as to whether or not the exceptions are of such materiality as to negative the opinion. Bulletin No.
2 issued by this committee dealt with one case where the facts led to the conclusion that the items and transactions involved in the exceptions were so material that there seemed to be insufficient basis for even a restricted opinion and it was concluded that the auditor should refrain in the par-ticular situation from expressing any opinion at all.
Another case was recently presented to the committee, and since the committee took the position that a restricted opinion might be proper in this situation, it is the belief of the committee that the case might be of sufficient interest to the membership to merit presentation in a formal statement by the committee. In this particular case, several questions were involved, but the present statement deals only with the major question of the propriety of a qualified opinion.
The company involved is a federal savings and loan association oper-ating under the rules and regulations promulgated for such associations
1 Statements on Auditing Procedure No. 2, "The Auditor's Opinion on the Basis of a Restricted Examination."
2 Statements on Auditing Procedure No. 1.
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