Lilts, Berger and Associates, CPAs, has completed its audit of Oceanview Marine

Question

Lilts, Berger and Associates, CPAs, has completed its audit of Oceanview Marine Company’s 2018 financial statements. Oceanview is a private company. Oceanview is issuing comparative financial statements for 2018 and 2017. However, the 2017 financial statements were audited by a different CPA firm – Talbert & Johnson, CPAs. If Talbert & Johnson refuses to reissue its audit report for 2017, then Lilts, Berger and Associates should:

A. express a standard unmodified opinion on the 2018 financial statements and disclaim an opinion on the 2017 financial statements.

B. disclaim an opinion on the 2018 and 2017 financial statements.

C. express an unmodified opinion on the 2018 financial statements and include an other-matter paragraph in the report, stating that the 2017 financial statements were audited by other auditors and the date and type of opinion expressed by the other auditors.

D. express a standard unmodified opinion on the 2018 financial statements and a qualified opinion on the 2017 financial statements.

E. express a standard unmodified opinion on the 2018 financial statements and issue a copy of the predecessor’s audit report on the 2017 financial statements.

Explanation / Answer

In the above situation option 'C' is a best answer.

Lits berger and associate should express an unmodified opinion on the 2018 financial statements and include a other matter paragraph in the report, stating that 2017 financial statements were audited by other auditors and date and typ of opinion expressed by the other auditors in case where other auditor i.e.Talbert and Johnson CPA refuses to reissue the audit report for the year 2017.

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