PA firm has been auditing Big Manufacturing Company (BMC)for several years.Last year,BMC converted its inventory and purchasing systems to a new system effective December 31,the date of the year-end.To their horror,the PA firm discovered at the beginning of the current year that there was a cut-off error in the accounts payable system of $25 million dollars last year.Neither the client nor the firm had detected that the purchases of December 31 had been omitted from the old computer system transaction processing and had been recorded only in the new computer system,understating last year's expenses.Last year's financial statements have been restated and the error disclosed in the notes to both last year's and this year's financial statements.What type of audit opinion will BMC receive this year?
A)modified
B)disclaimer
C)adverse
D)unmodified

Question

Quizplus · Accepted Answer

Given that the error from the previous year has been corrected and disclosed in the financial statements for both years, BMC can receive an unmodified opinion. This indicates that the financial statements present fairly, in all material respects, the financial position of the company.

PA Firm Has Been Auditing Big Manufacturing Company (BMC)for Several