ACCA Advanced Audit and Assurance (AAA) Practice Exam

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ISA 705 outlines different types of modifications to the auditor's opinion. Which of the following is NOT one of those types?

Qualified opinion
Adverse opinion
Disclaimer of opinion
Unqualified opinion

The correct answer is: Unqualified opinion

The correct choice is unqualified opinion, as it is not classified as a modification of the auditor's opinion under ISA 705. Instead, an unqualified opinion signifies that the auditor has found the financial statements to be free from material misstatements and in accordance with the applicable financial reporting framework. In contrast, modifications refer to situations where the auditor concludes that the financial statements contain material misstatements or that they are unable to obtain sufficient appropriate audit evidence. ISA 705 specifically outlines three types of modified opinions: qualified opinion, adverse opinion, and disclaimer of opinion, each representing different levels of concern regarding the financial statements. Thus, unqualified opinion stands apart as a clean opinion without any modifications, indicating compliance with the relevant standards.