Chris Yerkes, an independent auditor, was engaged to perform an audit of the financial report of Apex Ltd one month after its financial year had ended. Although the inventory count was not observed by Yerkes and accounts receivable
Were not confirmed by direct communication with debtors, Yerkes was able to gain satisfaction by applying alternative
Auditing procedures. Yerkes' auditor's report will probably contain:
A) an unmodified opinion and an Emphasis of Matter paragraph.
B) a qualified opinion.
C) an unmodified opinion.
D) either a qualified opinion or a disclaimer of opinion.

Question

Quizplus · Accepted Answer

Yerkes was able to gain satisfaction through alternative auditing procedures, and therefore, there is no reason to issue a qualified opinion or disclaimer of opinion. As the auditor did not observe the inventory count and confirm accounts receivable, an Emphasis of Matter paragraph could be included in the auditor's report to make investors aware of the issue. However, the overall opinion would be unmodified.

Chris Yerkes, an Independent Auditor, Was Engaged to Perform an Audit