1.The financial statements are free from material misstatement, and no disclosur

Question

1.The financial statements are free from material misstatement, and no disclosure is required in the notes to the financial statements.
2.The financial statements do not conform with generally accepted accounting principles (GAAP).
3.The financial statements contain unadjusted misstatements that should result in a qualified opinion.
4.The financial statements are free from material misstatement, but disclosure of the proposed adjustments is required in the notes to the financial statements.

A client decides not to make an auditor's proposed adjustments that collectively are not material, and wants the auditor to issue the report based on the unadjusted numbers. Which of the following statements is correct regarding the financial statement presentation? (Points : 5)

Explanation / Answer

Correct answer is 1

The financial statements are free from material misstatement, and no disclosure is required in the notes to the financial statements

Explanation:

An unqualified opinion states that the financial statements are presented fairly, in all material respects.

Since proposed adjustments are not material collectively, an unqualified opinion should be expressed. In addition, footnote disclosure of proposed immaterial adjustments is not required.

Since tcollectively the proposed financial statements are immaterial, the financial statements would be
considered to conform to generally accepted accounting principles, and footnote disclosure of the
proposed adjustments would not be required. Hence other statements are incorrect.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.