Zag Co. issues financial statements that present financial position and results of operations, but Zag omits the related statement of cash flows. Zag would like to engage Brown, CPA, to audit its financial statements without the statement of cash flows although Brown's access to all of the information underlying the basic financial statements would not be limited. Under the circumstances, Brown most likely would
A)add an explanatory paragraph to the standard report that justifies the omission.
B)refuse to accept the engagement as proposed because of the client-imposed scope limitation.
C)explain to Zag that the omission requires a qualification of the auditors' opinion.
D)prepare the statement of cash flows as an accommodation to Zag and express an unqualified opinion.

Question

Quizplus · Accepted Answer

The omission of the statement of cash flows is a departure from generally accepted accounting principles (GAAP), which would require the auditor to qualify the opinion.

Zag Co Issues Financial Statements That Present Financial Position and Results