When an adverse opinion is given,all the substantive reasons for the opinion must be disclosed in the report in explanatory paragraphs.

Question

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This is a requirement of generally accepted auditing standards (GAAS) in the United States. The auditor must disclose all substantive reasons for an adverse opinion in the report to provide transparency and clarity to users of the financial statements. Failure to do so could result in a lack of trust in the auditor and the financial statements they are auditing.

When an Adverse Opinion Is Given,all the Substantive Reasons for the Opinion