Explanations and Qualifications in Accountants' Certificates
BY MALCOLM M. DEVORE PARTNER, LOS ANGELES OFFICE
Presented before the Annual Meeting of the American Institute of Accountants., .Washington, D. C. — October, 1955
The most difficult problem in drafting accountants' certificates* concerns explanations and qualifications. A clearer understanding of our objectives in this respect will be helpful to us.
Possibly the best springboard for our consideration lies in those sections of our generally accepted auditing standards dealing with Standards of Field Work and Standards of Reporting; therefore I suggest
we start with a review of these sections: "Standards of Field Work:
1. The work is to be adequately planned and assistants, if any, are to properly supervised.
2. There is to be a proper study and evaluation of the existing internal control as a basis for reliance thereon and for the determination
of the resultant extent of the tests to which auditing procedures are to be restricted.
3. Sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and confirmations to afford a reasonable
basis for an opinion regarding the financial statements under examination.
Standards of Reporting:
1. The report shall state whether the financial statements are presented in accordance with generally accepted principles of accounting.
2. The report shall state whether such principles have been consistently
observed in the current period in relation to the preceding period.
3. Informative disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report.
*For convenience I have selected the expression "accountants' certificates" from the group
including that expression as well as "accountants' reports", "accountants' opinions", etc.