Harris & Thompson were engaged to audit Smart Corp's comparative financial statements for the years ended December 31,Year 1 and Year 2.The Year 1 financial statements were presented in accordance with generally accepted accounting principles,but the Year 2 financial statements were determined to be materially misstated.As a result,Harris & Thompson should
A)Issue a qualified opinion on the comparative financial statements as a whole.
B)Issue an unmodified opinion on the Year 1 financial statements and disclaim an opinion on the Year 2 financial statements.
C)Issue an unmodified opinion on the Year 1 financial statements and a qualified opinion on the Year 2 financial statements.
D)Reissue the previous opinion on the Year 1 financial statements and withdraw from the engagement.

Question

Quizplus · Accepted Answer

Harris & Thompson should issue an unmodified opinion on the Year 1 financial statements, as they were presented in accordance with generally accepted accounting principles. However, due to material misstatements in the Year 2 financial statements, they should issue a qualified opinion on those statements. This will indicate to users of the financial statements that the Year 2 financial statements are not fairly presented and require further explanation.

Harris & Thompson Were Engaged to Audit Smart Corp's Comparative