For each of the following situations,indicate by letter the type of report most likely to be issued.
A.Unqualified opinion,no modification.
B.Unqualified opinion,explanatory paragraph for consistency.
C.Unqualified opinion,explanatory paragraph for Rule 203.
D.Unqualified opinion,explanatory paragraph for emphasis of a matter.
E.Unqualified opinion,explanatory paragraph for a going-concern uncertainty.
F.Qualified opinion.
G.Disclaimer of opinion
____ 1.The entity has a lawsuit pending against it.There is significant uncertainty about the outcome of the lawsuit,which could have a highly material impact on the viability of the entity.Management has provided adequate disclosure of the lawsuit in the footnotes accompanying the financial statements.
____ 2.The entity has a lawsuit pending against it and it is probable that the entity will lose the suit.Management has accrued the best estimate of the loss and provided adequate disclosure.It is not expected that this lawsuit will have a significant effect on the entity's ability to continue as a going concern.
____ 3.The entity has a lawsuit pending against it and it is probable that the entity will lose the suit.Management has not accrued the best estimate of the loss but has provided information in the footnotes.It is not expected that this lawsuit will have a significant effect on the entity's ability to continue as a going concern.
____ 4.Based on recent analysis of usage,the entity has changed the useful life of its office equipment from five to four years.This change is reflected in the depreciation amounts computed for the current year.
____ 5.The entity uses an accounting principle for a class of transactions that is not acceptable under current GAAP.The entity believes and the auditors concur that the financial statements would be misleading if GAAP were to be followed.
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q104: When presenting reports on the entity's financial
Q105: For each of the following words and
Q106: Why must auditors issue a report when
Q107: Assume that auditors prepare separate reports on
Q108: In each of the following circumstances,indicate by
Q110: Murray & Co.,CPAs,completed the audit of Classic,Inc.,a
Q111: When reporting on _,auditors should indicate that
Q112: Indicate the type of report on the
Q113: For each of the following sentences or
Q114: Auditors' decision to select between a qualified
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents