Taylor Ltd has disclosed the fact that they are being sued for $1 million. Taylor Ltd reported a profit for the year of $10 million and has total assets of $15 million. You conclude that disclosure of the litigation is adequate. What
Type of opinion should you express on the financial report of Taylor Ltd?

Question

Quizplus · Accepted Answer

The disclosure of the litigation for $1 million is material but not pervasive to Taylor Ltd's financial statements. Therefore, an unmodified opinion can still be given. However, an emphasis of matter paragraph should be included in the auditor's report to draw attention to the litigation. This would result in an unmodified opinion with an emphasis of matter.

Taylor Ltd Has Disclosed the Fact That They Are Being