The auditors conclude that an entity's illegal act, which has a material effect on the financial statements, has not been properly accounted for or disclosed. Depending on the overall materiality and pervasiveness of the effect of this illegal act on the financial statements, the auditors should express either a(n)
A)adverse opinion or a disclaimer of opinion.
B)qualified opinion or an adverse opinion.
C)disclaimer of opinion or an unqualified opinion with a separate explanatory paragraph.
D)unqualified opinion with a separate explanatory paragraph or a qualified opinion.

Question

Quizplus · Accepted Answer

When an illegal act has a material effect on the financial statements and has not been properly accounted for or disclosed, auditors may express a qualified opinion if the issue is material but not pervasive. If the issue is both material and pervasive, an adverse opinion is appropriate.

The Auditors Conclude That an Entity's Illegal Act, Which Has