(10 pte Select the approprlate opinion from the tollowing 3lConsider each situat
ID: 2400400 • Letter: #
Question
(10 pte Select the approprlate opinion from the tollowing 3lConsider each situation independently a Unmodi fied opinion b Unmodified opinion with emphaste parageaphNegative Assurance c. Qualified Opinion d. Diselainer f Adverse GAAS has not been followed because of ellent-imposed soope 1imitations. You consider this to be material and pervasive 2) The client has a material pending iawsuit. They have a reset-chance of anna the suiE Footnotes to finaneial statements do not disclose the suie 3) The elient has failed to capitalize certain leases that should be capitalized under FASB 13 provisions. The effect is material but not pervasive. 4) You notice that the company's beginning accumulated depreciation balance is materially misstated because of a calculation error in a prior period. The error s corrected this year and last year's statements are fixed for comparative presentation. 5) The client merged with another company this year and comparative statements ace presented in the financial statements 6) The client's changed its presumed estimated useful lives of its fixed assets and calculated depreciation prospectively using the new useful 1ives. Prior statements were not retroactively adjusted. 7) You are unable to satisfy yourself about the client's potential warranty liability because the client keeps no records on subsequent repairs of its products. The client's current year sales are subject to warranties for a full year beyond the date of sale. You believe this to be material but not pervasive 8) The client changed accounting methods from FIFO to LIFO. You concur with the change to an acceptable method, LIFO. The effects of the change is not material to the current year statements but is expected to be material in future years 9) You have doubts about your client's ability to continue as a going concern. The Footnotes adequately disclose this possibility. 10) Your client elects to omit the statement of Cash FlowsExplanation / Answer
An auditor gives a Qualified opinion when he has obtained sufficient evidence to prove that misstatement is material but not pervasive and when he is unable to obtain evidence due to limitation by management but he concludes that misstatement would be material, not pervasive.
The Auditor gives a Disclaimer of opinion when he is unable to obtain sufficient evidence but he is sure that misstatement could be both material and pervasive.
An Adverse opinion is given when auditor has obtained sufficient evidence which states that financial statements are materially misstated and pervasive.
On the basis of above details, Answers of given questions are as follows.
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