Assume you are the partner in charge of the 2012 audit of Bashir Corporation, a private company. The audit report has not yet been prepared. In each independent situation following, indicate the appropriate action to be taken.
-Bashir Corporation carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a highly material amount, and the effects are pervasive throughout the financial statements.
A) Issue a standard unmodified audit report.
B) Issue an qualified report in the form of a qualification of both the scope and opinion.
C) Issue an qualified report in the form of a qualification of the opinion only.
D) Issue an unmodified opinion with an emphasis of a matter paragraph.
E) Issue an unmodified opinion with modified wording.
F) Issue an adverse opinion.
G) Disclaim an opinion.

Question

Quizplus · Accepted Answer

Bashir Corporation's practice of carrying property, plant, and equipment at current market values, when it significantly and pervasively affects the financial statements, deviates from the generally accepted accounting principles (GAAP). This deviation leads to the financial statements not being presented fairly in all material respects. Therefore, an adverse opinion is appropriate as it indicates that the financial statements do not accurately reflect the company's financial position.

Assume You Are the Partner in Charge of the 2012