The ICAI has rolled out a new compilation of FAQs aimed at providing greater clarity on the Auditor’s Opinion on Financial Statements option while generating a UDIN (Unique Document Identification Number).

This latest guidance comes at a crucial time, as it directly affects the submission of Tax Audit and Audit & Assurance reports during one of the busiest periods for professionals.

Here’s a detailed breakdown of the clarifications issued and their practical significance for members handling audit assignments.

🟩 Q1. Do auditors need to compulsorily mention their opinion on financial statements while generating UDIN?

✅ Answer:
Yes, entering the Auditor’s Opinion on Financial Statements is mandatory only in the following two categories:

• GST and Tax Audit engagements, and

• Audit & Assurance assignments

For other professional services — such as Internal Audits, Concurrent Audits, or Valuation Work — mentioning the auditor’s opinion is not required and the field can be left blank.

🟩 Q2. What information needs to be filled under the “Auditor’s Opinion on Financial Statements” section?

✅ Answer:
While generating a UDIN, members will see the prompt:

“Is Auditor’s Opinion on Financial Statements applicable to this audit?”

Your next steps will depend on how you respond:

If you select “Yes”:

You’ll be required to provide the following details:

1. Type of Opinion – choose the appropriate option from the dropdown:

   • Unmodified Opinion

   • Qualified Opinion

   • Adverse Opinion

   • Disclaimer of Opinion

2. Additional Reporting Elements – specify “Yes” or “No” for:

   • Key Audit Matters (KAM)

   • Emphasis of Matter (EOM)

   • Other Matter

   • Material Uncertainty related to Going Concern

3. Entity Type – select whether the entity is:

   • Listed, or

   • Unlisted (and if unlisted, choose the relevant sub-category such as Sole Proprietorship, Partnership, Private Limited Company, etc., or select “Others”).

If you select “No”:

No further inputs are necessary, and you can proceed to the next step in the UDIN generation process.

🟩 Q3. What does the term “Modified Opinion” mean?

✅ Answer:
According to SA 705 (Revised) – Modifications to the Opinion in the Independent Auditor’s Report, a modified opinion is issued when the auditor concludes that the financial statements do not present a true and fair view, either due to identified misstatements or insufficient audit evidence.

Modified opinions are categorized into three types:

• Qualified Opinion

• Adverse Opinion

• Disclaimer of Opinion

These variations depend on the nature and extent (pervasiveness) of the issue identified during the audit.

📘 Reference Summary – SA 705 (Revised):

🟩 Q4. When should an auditor select “No” for the field — “Is Auditor’s Opinion applicable to this audit?”

✅ Answer:
The “No” option should be chosen only when the engagement does not require the auditor to express a true and fair view on the financial statements. In such cases, the assignment does not involve forming or reporting an auditor’s opinion.

As per SA 700 (Revised) – Forming an Opinion and Reporting on Financial Statements, an auditor’s opinion is required only when the financial statements are prepared to present a true and fair view. Therefore, for other types of engagements — such as certifications, reviews, or procedures not involving opinion reporting — selecting “No” is appropriate.

🟩 Q5. Does an auditor need to provide an opinion for engagements such as concurrent audit, stock audit, revenue audit, internal audit, valuation, system audit, or compilation under SRS 4410?

✅ Answer:
No.
These types of assignments do not require the expression of an auditor’s opinion on financial statements. They are not considered assurance engagements under SA 700 (Revised) and therefore fall outside the scope of this UDIN functionality.

🟩 Q6. Is it necessary to report the Auditor’s Opinion on Financial Statements for a Tax Audit conducted under Section 44AB of the Income Tax Act, 1961?

✅ Answer:
Yes. For audits carried out under Section 44AB, the auditor is required to express an opinion on the financial statements in certain cases.

• Under Clause 3(b) of Form 3CB, the auditor must state their opinion on the financial statements. Accordingly, this information needs to be entered while generating a UDIN.

On the other hand,

• Under Clause 3 of Form 3CA and Clause 5 of Form 3CB, the auditor provides an opinion only on the particulars reported in Form 3CD, not on the financial statements themselves.
  Therefore, these clauses do not call for separate reporting under the new UDIN “Auditor’s Opinion” field

🟩 Q7. Is an Auditor’s Opinion mandatory for audits conducted under the Maharashtra Charitable Trust Act?

✅ Answer:
Yes.
Audits performed under the Maharashtra Charitable Trust Act require the auditor to express an opinion on the trust’s financial statements. Consequently, the auditor must enter this information while generating the UDIN for such assignments.

🟩 Q8. What is the reporting approach when significant doubt exists about an entity’s ability to continue as a going concern?

✅ Answer:
When there are indicators of material uncertainty concerning the entity’s going concern status, the auditor must follow the guidance outlined in SA 570 (Revised) – Going Concern, along with the technical advisories issued by ICAI.

The auditor should carefully review management’s assessment of the entity’s financial viability and, if such uncertainty persists, make an appropriate reference in the Auditor’s Report under the section “Material Uncertainty Related to Going Concern.”

🟩 Q9. Does any change or qualification in audit trail reporting need to be reflected under the Auditor’s Opinion section in UDIN?

✅ Answer:
No.
According to Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, remarks or qualifications relating to the audit trail are disclosed under the section “Report on Other Legal and Regulatory Requirements.”

Such observations relate specifically to system compliance and do not alter the core opinion expressed on the financial statements. Therefore, they are not required to be reported or modified under the Auditor’s Opinion on Financial Statements functionality in UDIN.

🟩 Q10. Should modifications in Internal Financial Controls (IFC) reporting be included under the Auditor’s Opinion section in UDIN?

✅ Answer:
No.
Under Section 143(3)(i) of the Companies Act, 2013, auditors are required to express a separate opinion on the adequacy and operating effectiveness of Internal Financial Controls over Financial Reporting (IFCFR).

If control weaknesses or deficiencies are identified, the auditor may modify their IFC report; however, this modification does not affect the overall opinion on the financial statements unless those deficiencies have a material impact on true and fair presentation.

Hence, such IFC-related remarks do not need to be reflected in the Auditor’s Opinion on Financial Statements section while generating UDIN.

🧩 Key Practical Insights for Members

• Applicable Scope: The Auditor’s Opinion field is mandatory only for GST & Tax Audits and Assurance assignments.

• When to Choose “No”: Opt for “No” only in cases where no true and fair view opinion is required.

• Tax Audit Clarification: For Form 3CB, the opinion on financial statements is mandatory; Form 3CA cases are exempt.

• Non-Assurance Engagements: Internal, stock, concurrent, or revenue audits don’t require opinion disclosure under this field.

• Going Concern Matters: Any uncertainty must be handled strictly as per SA 570 (Revised).

• Other Reporting Areas: Changes in audit trail or Internal Financial Controls (IFC) reporting are not part of this UDIN functionality.

📘 Key Insights

The enhanced UDIN functionality is designed to align auditor reporting more closely with the Standards on Auditing (SAs) and strengthen the traceability of opinions through the UDIN system.

As these changes coincide with the Tax Audit filing season, members should quickly acquaint themselves with the updated requirements to ensure accurate and compliant UDIN generation.