The auditor of three independent companies have just concluded their audit. For

Question

The auditor of three independent companies have just concluded their audit. For each company audit described below, identify and briefly explain the type of audit report that can be issued by an auditor to that company:

a. COMPANY A: The auditor of Company A concludes that the overall financial statements are fairly presented, but the scope of the audit has been materially restricted, or GAAP were not followed in preparing the financial statements. • Based on audit tests and evidence gathered the auditors did not detect any material misstatements

b. COMPANY B: The financial report for Company B misstates or misclassifies some important accounting entries. For example, an expense that should appear above the gross profit line appears wrongly below it. This leads to a misleading gross profit figure. The Auditor is limits on audit scope. This can mean, for instance, that auditors are denied access to certain financial data. The auditor has some doubts as to the truthfulness of certain financial data. The auditor is not fully confident that the financial reports: Comply with GAAP Represent the entity's accounts fairly

Explanation / Answer

Analysis and conclusion

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