In which of the following circumstances would a qualified opinion be appropriate?
A) The statements are not in conformity with generally accepted accounting principles regarding stock options plans and these misstatements do not have pervasive effect on the financial statements
B) The statements are not in conformity with generally accepted accounting principles regarding stock options plans and these misstatements have pervasive effect on the financial statements
C) The auditor has been unable to obtain sufficient competent evidential matter
D) The principal auditors decide to withdraw from the engagement due to distrust of management

Question

Quizplus · Accepted Answer

A qualified opinion is appropriate when the financial statements contain material misstatements that are not pervasive. In this case, the misstatement regarding stock options plans is not pervasive and only affects a specific area of the financial statements, thus a qualified opinion is appropriate. Option B would require an adverse opinion, option C would require a disclaimer of opinion, and option D would require withdrawal from the engagement, not a qualified opinion.

In Which of the Following Circumstances Would a Qualified Opinion