Types of Opinion A. Standard Unmodified (Unqualified) B. Unmodified with an expl
ID: 2597845 • Letter: T
Question
Types of Opinion
A. Standard Unmodified (Unqualified)
B. Unmodified with an explanatory paragraph before the opinion
C. Unmodified with an explanatory paragraph after the opinion
D. Unmodified with modified wording, but no explanatory paragraph
E. Qualified
F. Disclaimer
G. Adverse
Circumstance
Opinion(s)
1
After the audit, you realize that Urban Manufacturing records revenue when goods are ordered and the owner, Keith, refuses to correct the situation.
2
Margaritaville has audited Deep Clean for several years. Deep Clean is struggling to stay afloat given the economic conditions. Based on the audit teams work, Buffet has substantial doubt that Deep Clean will be in business by the end of its next fiscal year.
3
Approximately, 20% of the audit of Pickler Farms, Inc. was performed by a different CPA firm, selected by Buffet. Based on a review of their audit files, Buffet believes they did an excellent job on their portion of the audit. Nevertheless, Margaritaville CPA's are unwilling to accept responsibility.
4
Underwood Company changes from FIFO to LIFO for inventory valuation and the auditor concurs with the change. The change has a material affect on the comparability of the entity's financial statements this year.
5
Margaritaville CPA's was just about to complete the audit of Meaty Dresses Department Store in which the financial statements appear to be fairly stated, when they discover that two individuals assigned to the audit-Senior Auditor, Lady Gaga and Tax Partner, Pink- have material investments in Meaty Dresses.
6
Paisley Inc. has changed its estimate of likely doubtful accounts from 2% of credit sales to 3%. The auditor believes the change to be reasonable.
7
Rascal Flatts Company has departed from GAAP in the way that they applied fair value, but Buffet and the other auditors on the engagement consider the method used to be justified in the situation.
8
Client Nelly Co. will not make essential corporate minutes available to the auditor.
9
Chesney Co.'s inventory records were deficient and the assigned auditor was required to satisfy herself that the inventory was properly stated using alternative procedures. Buffet reviewed the work and he is satisfied with the results of those procedures.
Circumstance
Opinion(s)
1
After the audit, you realize that Urban Manufacturing records revenue when goods are ordered and the owner, Keith, refuses to correct the situation.
2
Margaritaville has audited Deep Clean for several years. Deep Clean is struggling to stay afloat given the economic conditions. Based on the audit teams work, Buffet has substantial doubt that Deep Clean will be in business by the end of its next fiscal year.
3
Approximately, 20% of the audit of Pickler Farms, Inc. was performed by a different CPA firm, selected by Buffet. Based on a review of their audit files, Buffet believes they did an excellent job on their portion of the audit. Nevertheless, Margaritaville CPA's are unwilling to accept responsibility.
4
Underwood Company changes from FIFO to LIFO for inventory valuation and the auditor concurs with the change. The change has a material affect on the comparability of the entity's financial statements this year.
5
Margaritaville CPA's was just about to complete the audit of Meaty Dresses Department Store in which the financial statements appear to be fairly stated, when they discover that two individuals assigned to the audit-Senior Auditor, Lady Gaga and Tax Partner, Pink- have material investments in Meaty Dresses.
6
Paisley Inc. has changed its estimate of likely doubtful accounts from 2% of credit sales to 3%. The auditor believes the change to be reasonable.
7
Rascal Flatts Company has departed from GAAP in the way that they applied fair value, but Buffet and the other auditors on the engagement consider the method used to be justified in the situation.
8
Client Nelly Co. will not make essential corporate minutes available to the auditor.
9
Chesney Co.'s inventory records were deficient and the assigned auditor was required to satisfy herself that the inventory was properly stated using alternative procedures. Buffet reviewed the work and he is satisfied with the results of those procedures.
Explanation / Answer
1. Adverse opinion
2. Unmodifed with an explanatory paragraph before the opinion
3. When Joint auditors are appointed for an organization, all the joint auditors are liable for their report. Moreover, no single joint auditor can escape from accepting responsibility. The actual opinion is no where effected with this issue.
4. Unqualified opinion
5. If the partner himself have material investments in the company, he is disqualified to continue as an auditor. If his staff are found to have material investments in the company in which the are auditing, the audited area by the staff having substancial interest should be audited again.
6. Unqualified opinion
7. Qualified opinion
8. Unmodified opinion with modified wording, but no explanatory paragraph.
9. Unqualified opinion
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