Under which of the following set of circumstances might the auditors disclaim an opinion?
A)The financial statements contain a departure from generally accepted accounting principles,the effect of which is material.
B)The group auditors decide to make reference to the report of component auditor who audited a subsidiary.
C)There has been a material change between periods in the method of application of accounting principles.
D)The auditors cannot observe ending inventory nor confirm accounts receivable and cannot obtain sufficient evidence using alternative procedures.

Question

Quizplus · Accepted Answer

If the auditors cannot observe ending inventory nor confirm accounts receivable and cannot obtain sufficient evidence using alternative procedures, they may disclaim an opinion on the financial statements. This is because the lack of sufficient evidence means that the auditors cannot provide assurance as to the accuracy and completeness of the financial statements. A disclaimer of opinion is issued when the auditor is unable to express an opinion on the financial statements due to limitations on the scope of the audit or lack of sufficient evidence. Option A would result in an adverse opinion, B would result in an unmodified opinion with an emphasis of matter paragraph, and C would result in a qualified or adverse opinion.

Under Which of the Following Set of Circumstances Might the Auditors