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Executive Summary:

ISSAI 1705 – Modifications to the Opinion in the Independent Auditor's Report


This Practice Note provides supplementary guidance on ISA 705 – Modifications to the Opinion in the Independent Auditor's Report

ISSAI Category:

Level 4: General Auditing Guidelines - General Auditing Guidelines on Financial Audit

Target Group:

Public sector external auditors


ISA 705 deals with the auditor's responsibility to issue an appropriate report in circumstances when, in forming an opinion in accordance with ISA 700, the auditor concludes that a modification to the auditor's opinion on the financial statements is necessary.

ISA 705 establishes three types of modified opinions, namely

  • A qualified opinion,
  • An adversed (i.e. a negative) opinion and
  • A disclaimer of opinion.

The decision regarding which type of modified opinion is appropriate depends upon

  • The nature of the matter giving rise to the modification, that is whether the financial statements are or may be materially misstated, and
  • The auditor's judgement about the pervasiveness of the effects or possible effects of the matter on the financial statements.
Scope - Content:

The Practice Note provides additional guidance for public sector auditors related to

  • Circumstances when a modification to the auditor's opinion is required
  • Determining the type of modification to the auditor's opinion
  • Nature of material misstatements or of an inability to obtain sufficient appropriate audit evidence
  • Form and content of the auditor's report when the opinion is modified
  • Communication with those charged with governance.

The appendix of ISA 705 illustrates auditor's reports with modifications to the opinion.

Author - Committee:

INTOSAI Professional Standards Committee – Financial Audit Subcommittee


Approved at XXth Congress of INTOSAI, Johannesburg 2010


Related Documents - Executive Summaries:
Related Documents - ISSAI Full Versions:
Related Documents - Others:

ISA 705 is applicable to auditors of public sector entities in their role as auditors of financial statements. Other related ISA are

ISA 700 – Forming an Opinion and Reporting on Financial Statements

ISA 706 – Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report

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