Statements on Auditing No. 23
Clarification of Accountant's Report When Opinion Is Omitted
1, The presentation of financial statements on the stationery or in a report of an independent public accountant without a definitive expression clearly indicating the representations he is making as to their fairness tends to create uncertainties in the minds of those who do not have special information regarding the preparation of the financial statements. In such cases, these third parties have no basis for determining what inferences are warranted by the association of the accountant's name with the financial statements and may place undue reliance upon them.
2, Illustrative of the practices which frequently give rise to such uncertainties are the following:
(a) The presentation of financial statements on the stationery of the accountant without comment, opinion, or signature; or with the assertion that the statements are "for management purposes only."
(b) The omission of an expression of opinion or of a specific dis-claimer of an opinion in a report of an accountant in which financial statements and comments on the scope of the audit are included.
3. In the first case it is not clear whether, by his silence, the ac-countant intends to express unequivocal satisfaction with the finan-cial statements or whether he intends to disclaim any opinion at all. The assertion that the statements are "for management purposes only" leaves the reader in doubt as to whether it indicates a limita-tion on the scope of the audit examination, whether it merely desig-nates the form in which fully-approved statements are presented, or whether it has some other significance. In the second case, there is a review of the accountant's procedures, but it is not clear whether those procedures were sufficient to permit the expression of an opinion.
Issued by the Committee on Auditing Procedure, American Institute of Accountants, 13 East 41st Street, New York 17, N. Y.
Copyright 1947 by American Institute of Accountants