The feature “Auditor’s Opinion on Financial Statements” within the UDIN portal has recently gained attention among members engaged in audit and assurance functions.
While it may appear to be a simple selection, its correct usage is crucial for compliance with Standards on Auditing (SAs) and the integrity of UDIN-based authentication.
This article interprets the latest FAQs, provides practical illustrations, and clarifies how to report auditor’s opinion, KAM, EOM, and Other Matter in the UDIN portal correctly.
Applicability — Not for Every Assignment
The “Auditor’s Opinion on Financial Statements” field is mandatory only for two categories of engagements:
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(a) Statutory audits, including Tax Audits and GST Audits, and
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(b) Other Audit & Assurance functions that conclude with an opinion on the true and fair view of financial statements.
For other professional assignments—such as concurrent audit, internal audit, stock audit, revenue audit, valuation, or compilation—this field should be marked “No”, as these do not result in an audit opinion.
When “Yes” is selected, the portal prompts further disclosures such as:
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Type of audit opinion (Unmodified / Qualified / Adverse / Disclaimer)
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Presence of Key Audit Matters (KAM), Emphasis of Matter (EOM), or Other Matter
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Classification of the entity (Listed / Non-listed)
This ensures the UDIN record reflects the audit conclusion consistent with Standards on Auditing and safeguards the credibility of digital attestation.
Framework of Auditor’s Opinion under SAs
Under SA 700 (Revised), an auditor must form an opinion on whether the financial statements give a true and fair view based on sufficient appropriate audit evidence.
Where modification is necessary, SA 705 (Revised) defines the framework as follows:
| Nature of Matter | Material but Not Pervasive | Material and Pervasive |
|---|---|---|
| Financial statements are misstated | Qualified Opinion | Adverse Opinion |
| Insufficient appropriate audit evidence | Qualified Opinion | Disclaimer of Opinion |
This classification ensures uniform professional judgment when determining the nature and impact of misstatements.
Illustrative Scenarios for All Four Audit Opinions
The following table illustrates practical cases for each opinion type and the corresponding UDIN selection:
| Type of Opinion | Illustrative Scenario | Reasoning / Basis under SAs | UDIN Selection |
|---|---|---|---|
| 1. Unmodified (Clean) Opinion | ABC Pvt. Ltd.’s financial statements comply with Ind AS, and sufficient appropriate audit evidence is obtained. | Auditor concludes that the financial statements present a true and fair view as per SA 700 (Revised). | Select “Unmodified / Clean Opinion” |
| 2. Qualified Opinion | XYZ Ltd. lost inventory records for two small warehouses due to a data crash, but the remaining 95% of inventory was verified. | The misstatement is material but not pervasive. Financial statements are fairly stated except for the specific matter. | Select “Qualified — Material but Not Pervasive” |
| 3. Adverse Opinion | LMN Ltd. valued obsolete stock at full cost and failed to recognize deferred tax liabilities. | Misstatement is material and pervasive, distorting overall presentation of financial statements. | Select “Adverse — Material and Pervasive” |
| 4. Disclaimer of Opinion | PQR Ltd.’s accounting records were destroyed in a server failure; no sufficient audit evidence was available for key balances. | Auditor unable to obtain evidence — misstatement could be material and pervasive. | Select “Disclaimer — Material and Pervasive” |
These examples demonstrate how audit judgment under SA 705 directly translates into the correct UDIN classification.
Reporting of KAM, EOM, and Other Matter in UDIN
When selecting “Yes” for the auditor’s opinion, the UDIN portal also requires reporting on whether KAM, EOM, or Other Matter paragraphs were included in the audit report.
Here’s how to interpret and disclose them correctly:
| Type | When Applicable | Example / Practical Case | UDIN Reporting Guidance |
|---|---|---|---|
| Key Audit Matters (KAM) (SA 701) | For listed entities and, optionally, for large unlisted entities where significant matters were communicated to TCWG. | Revenue recognition involving multiple performance obligations or valuation of financial instruments requiring complex estimation. | Select “Yes” if one or more KAMs were included. The KAM description is not entered — only presence is indicated. |
| Emphasis of Matter (EOM) (SA 706) | To draw attention to a properly disclosed matter fundamental to user understanding, without modifying the opinion. | Example: Major litigation disclosed in notes; material uncertainty on going concern disclosed by management. | Select “Yes – EOM Present” when such paragraph exists, even though opinion remains unmodified. |
| Other Matter (SA 706) | To refer to a matter not presented or disclosed in financial statements, but relevant to users’ understanding of the audit. | Example: Comparative figures audited by another auditor; reliance on another firm’s component audit report. | Select “Yes – Other Matter Present” when included in the report. |
Key principle: Presence of KAM, EOM, or Other Matter does not by itself constitute a modified opinion. The auditor must report both — the type of opinion and the presence of such paragraphs separately in UDIN.
Decision Framework — When to Select “Yes” in UDIN
Material Uncertainty on Going Concern
Under SA 570 (Revised), if significant doubt exists about an entity’s ability to continue as a going concern, the auditor must evaluate management’s disclosure:
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If adequately disclosed → include an Emphasis of Matter (EOM), with an Unmodified Opinion.
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If not adequately disclosed → issue a Qualified or Adverse Opinion, depending on pervasiveness.
Correct reflection of this scenario in UDIN ensures audit trail transparency and protects the auditor’s professional judgment in future reviews.
Professional Implications and Best Practice
The “Auditor’s Opinion” field in UDIN is not a procedural checkbox—it’s a compliance and integrity checkpoint connecting the audit conclusion to a digitally traceable record.
Correct classification under SA 700, SA 701, SA 705, SA 706, and SA 570 helps auditors:
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Maintain consistency and credibility in digital reporting,
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Strengthen assurance quality and peer review readiness, and
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Reinforce public trust in the audit profession.
Ultimately, this feature embodies the principle that:
Every digitally authenticated audit must faithfully mirror the auditor’s professional opinion — clear, consistent, and compliant with the Standards on Auditing.
In essence:
The UDIN feature on Auditor’s Opinion on Financial Statements is not a mere declaration.
It is the bridge between audit integrity, digital accountability, and public confidence — ensuring every signature carries both professional judgment and ethical clarity.
