When auditors lack independence, which of the following is true about the report on the entity's financial statements that should be issued?
A)The auditors should disclaim an opinion and should state specifically that they are not independent.
B)The auditors should disclaim an opinion but not mention that they are not independent.
C)The auditors should issue an unqualified opinion with an explanatory paragraph stating that they are not independent.
D)The auditors should issue a qualified opinion with an explanatory paragraph stating that they are not independent.

Question

Quizplus · Accepted Answer

When auditors lack independence, they should disclaim an opinion and should specifically state that they are not independent. This is required by the International Standards on Auditing (ISA) and the Generally Accepted Auditing Standards (GAAS). Disclaiming an opinion informs users that the audit could not be conducted in accordance with professional standards and that the financial statements may not be reliable.

When Auditors Lack Independence, Which of the Following Is True