In which of the following circumstances will it be most likely that an adverse opinion is considered appropriate?
A)The auditor is not independent with respect to the enterprise being audited.
B)The statements are not in conformity with generally accepted accounting principles due to a departure from GAAP with an immaterial effect on the financial statements.
C)The statements are not in conformity with generally accepted accounting principles regarding pension plans.
D)A client-imposed scope limitation prevents the auditor from obtaining sufficient appropriate audit evidence.

Question

Quizplus · Accepted Answer

An adverse opinion is appropriate when the financial statements are not in conformity with generally accepted accounting principles that have a material impact on the financial statements. This circumstance is described in option C, where the statements are not in conformity with GAAP regarding pension plans. Options A and D suggest that the auditor's independence or ability to conduct an audit has been compromised, which would require a disclaimer or qualified opinion, respectively. Option B suggests a departure from GAAP with an immaterial impact, which would result in an unqualified opinion with an explanatory paragraph.

In Which of the Following Circumstances Will It Be Most