GAAP Hierarchy / Nongovernmental Entities

Category [A]	FASB Statements[SFAS] and Interpretation APB Opinion AICPA Accounting Research Bulletins[ARB]
Category [B]	FASB Technical Bulletins AICPA Industry Audit and Accounting Guids AICPA Statements of Position
Category [C]	AICPA Practice Bulletins consensus positions of the FASB Emerging Issues Task[EITF]
Category [D]	AICPA accounting interpretations "Qs and As" published by FASB staff Prevalent practice

GAAP Hierarchy / State&Local Governments

Category [A]	GASB Statements GASB Interpretations AICPA and FASB Pronouncements if made applicable to state and local governments by GASB Statement of Interpretation
Category [B]	GASB Technical Bulletins AICPA Industry Audit and Accounting Guids AICPA Statements of Position
Category [C]	GASB EITF Consessuses(not yet organized by GASB) AICPA Practice Bulletins
Category [D]	"Qs and As" published by GASB staff Prevalent practice

Necessary Condition for an Unqualified Opinion
1. No departure from GAAP
2. Disclosure in financial statements (footnotes)are adequate and complete.
3. No unusual uncertainties(contingencies) surrounding the financial statements.
4. No scope limitations
5. GAAP must be consistently followed between periods.
6. Independent auditor

Contents of the standards report

Title including word "independent"

Address Not to management

Introductory Pragraph Identifying the financial statements that were audited.And states that the financial statements are the responsibility of the Company's management and that auditor's responsibility is to express an opinion on the financial statements based on the audit.

Scope Paragraph State that the audit was conducted in accordance with GAAP. And GAAP requires that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Examining on test basis,evidence supporting the amounts and disclosures in the financial statements Assessing the accounting principles used and significant estimates made by management Evaluating the overall financial statement presentation A statement that the auditor believes that the audit provides a reasonable basis for the auditor's opinion

[Explanatory Paragraph]

Opinion Paragraph

Signiture

Date

1. Scope Limitation
2. Material Departure from GAAP
3. Inadequate Disclosure
   • Qualified or Adverse
4. Inappropriate Accounting Changes
   • Qualified or Adverse

Reasons for Modification	Opinion Expressed	Explanatory Paragraph	Opinion Paragraph
GAAP Departure	Qualified or Adverse	Before opinion paragraph to explain the departure and amounts	Modified to provide qualifying language and refer to explanatory paragraph
Inadequate Disclosure	Qualified or Adverse	Before opinion paragraph to explain missing disclosure	Modified to provide qualifying language and refer to explanatory paragraph
Scope Limitation	Qualified or Disclaimer	Before opinion paragraph to explain scope limitation and potential monetary effects	Modified to provide qualifying language or to provide disclaimer
Uncertainty	Unqualified(disclaimer is allowed)	After opinion paragraph to describe uncertainty and refer reader to the financial statement footnote	Not modified
Going Concern Uncertainty	Unqualified(disclaimer is allowed)	After opinion paragraph to describe going concern using wording "substantial doubt" about entity's ability to continue as a going concern and refer reader to the financial statement footnote	Not Modified
Consistency Violation	Unqualified	After opinion paragraph to describe accounting GAAP departure change and refering reader to financial statement footnote	Not Modified
Emphasis of a Matter	Unqualified	After opinion paragraph to describe matter and refering reader to financial statement footnote	Not Modified
Reliance on Another Auditor	Unqualified	Division of responsibility indicated in introductory paragraph including significance of portion of entity done by other auditor	Modified to refer to other auditor
Changed Opinion on Prior Period Information	Unqualified	After opinion paragraph to describe reason for different opinion	Not Modified