Auditors found that the entity has not capitalized a material amount of leases in the financial statements.When considering the overall materiality of this departure from GAAP,the auditors would choose which reporting options?
A) Unqualified opinion or disclaimer of opinion.
B) Unqualified opinion or qualified opinion.
C) Explanatory paragraph with unqualified opinion or an adverse opinion.
D) Qualified opinion or adverse opinion.

Question

Quizplus · Accepted Answer

The material departure from GAAP regarding the non-capitalization of leases would result in a restriction on the scope of the audit and a potential material misstatement in the financial statements. Therefore, the auditors would have to issue either a qualified opinion or an adverse opinion. An unqualified opinion or a disclaimer of opinion would not be appropriate as the departure from GAAP is considered material. An explanatory paragraph with an unqualified opinion would not be sufficient as the departure from GAAP is material to the financial statements.

Auditors Found That the Entity Has Not Capitalized a Material