In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?
A)The client has had significant transactions with related entities that the auditor wants to emphasize.
B)The financial statements are not in conformity with FASB requirements regarding the capitalization of leases.
C)The auditor is not independent.
D)There is substantial doubt about the entity's ability to continue as a going concern.

Question

Quizplus · Accepted Answer

An adverse opinion is issued when the financial statements materially depart from accounting standards and are not fairly presented. In this case, not conforming to FASB requirements regarding the capitalization of leases would be a basis for an adverse opinion because it indicates a significant departure from Generally Accepted Accounting Principles (GAAP).

In Which of the Following Circumstances Would an Auditor Be