An auditor's report that refers to the use of an accounting principle at variance with generally accepted accounting principles contains the words, "In our opinion, with the foregoing Explanation, the financial statements referred to above present fairly...." This is considered an:

Question

Quizplus · Accepted Answer

Choice "D" is correct. "In our opinion, with the foregoing Explanation the FS referred to above present fairly" is an example of inappropriate reporting. When an auditor's report refers to the use of an accounting principle at variance with GAAP, the words, "in our opinion, except for the effects of the matters discussed in the preceding paragraph, the FS referred to above present fairly…" should be used. Choice "A" is incorrect. An adverse opinion would include the phrase, "...do not present fairly..." Choice "B" is incorrect. A qualified opinion would include the phrase, "In our opinion, except for the [problem] discussed in the preceding paragraph…" Choice "C" is incorrect. An unqualified opinion would not include the phrase "with the foregoing " in an explanatory paragraph.

An Auditor's Report That Refers to the Use of an Accounting