Published: 22 June 2022
Given the misconception that the use of the phrase “highest COA audit rating” may cause and its potential impact to decision makers and the public, the Commission on Audit (COA) would like to clarify again that an audit opinion should not be viewed as a rating, score or grade, with ranking of lowest to highest.
An audit opinion pertains only to the financial audit conducted regularly by COA auditors on the agencies within its jurisdiction. It may be unmodified or modified, depending on whether an agency’s financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework.
An unmodified opinion (also referred to as unqualified opinion) is issued when the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. Meanwhile, a modified opinion – includes qualified, adverse and disclaimer of opinion – is issued when the auditor concludes that, based on the audit evidence obtained, the financial statements as a whole are not free from material misstatement; or is unable to obtain sufficient appropriate audit evidence to conclude that the financial statements as a whole are free from material misstatement.
It is important to note that the financial statements represent only a facet of an agency and that an audit opinion does not provide any conclusions on the agency’s level of compliance with laws, rules and regulations, nor the application of the principles of economy, efficiency, and effectiveness in the agency’s operations. Such matters are covered by the compliance and performance audits, respectively, which are conducted by the COA in addition to financial audit. Results of these audits are found in the Annual Audit Reports and are uploaded in the COA website.
For more information, attached is a briefer on understanding an audit opinion. #