When financial statements are affected by a material departure from generally accepted accounting principles,the auditors should:
A)Issue an unmodified opinion with a basis for modification paragraph.
B)Withdraw from the engagement.
C)Issue an "except for" qualification or an adverse opinion.
D)Issue an "except for" qualification or a disclaimer of opinion.

Question

Quizplus · Accepted Answer

A material departure from generally accepted accounting principles (GAAP) can result in misleading financial statements. In such cases, auditors should issue an "except for" qualification or an adverse opinion, as required by auditing standards. A qualified opinion expresses a limitation on the scope of the audit, the adequacy of disclosures, or a departure from GAAP that does not overshadow the financial statements taken as a whole. An adverse opinion indicates that the financial statements are materially misstated and hence, not reliable. The auditor should also provide appropriate disclosures in the audit report to explain the nature and extent of the departure from GAAP. A disclaimer of opinion would be appropriate only when the auditor is unable to obtain sufficient audit evidence to support any opinion. Withdrawing from the engagement would be the most extreme option and should only be resorted to in rare cases, such as a conflict of interest or lack of independence.

When Financial Statements Are Affected by a Material Departure from Generally