If the firm auditing a company realizes that it is not independent with respect to the client, it will issue disclaimer of opinion based on the inherent GAAP violation imposed by the audit firm.

Question

Quizplus · Accepted Answer

A lack of independence by the audit firm is an issue of auditor ethics and objectivity, not a GAAP violation. The firm would likely withdraw from the engagement rather than issue a disclaimer of opinion.

If the Firm Auditing a Company Realizes That It Is