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What is a "qualified opinion"? <br />A qualified opinion is one in which the auditor <br />expresses reservations about the fair presenta- <br />tion of the financial statements in conformity <br />with GAAP. One common reason that auditors <br />qualify their opinion on the financial statements <br />is that the government's underlying records may <br />not be sufficient to support some of the data con- <br />tained in the financial statements. In that case <br />the auditor would qualify the opinion by stating <br />that the financial statements are fairly pre- <br />sented except for the insufficiently supported <br />data in question. <br />e)G AN ELECTED OFFICIAL'S GUIDE <br />What is the relationship of a <br />government's framework of <br />anternal controls to the f nancial <br />statement audit? <br />An important advantage of a comprehensive <br />framework of internal controls is that it can re- <br />duce the amount of testing that would otherwise <br />be needed to support the independent auditor's <br />opinion on the fair presentation of financial <br />statements. Assume, for example, that a govern- <br />ment has poor internal controls over its receiv- <br />ables. In that case, the auditor would normally <br />need to perform extensive substantive (i.e., di- <br />rect) tests of receivables balances to support an <br />opinion on the fair presentation of the financial <br />statements. ~On the other hand, if the auditor can <br />obtain sufficient assurance that internal controls <br />over receivables are strong, the auditor may be <br />able to rely upon tests of controls to reduce signif- <br />icantly the amount of substantive testing that <br />might otherwise have been required. <br />TO AUDITING 17 <br />