When the auditor is unable to determine the amounts associated with the illegal acts of client personnel because of an inability to obtain adequate evidence,the auditor should issue a(n)
A) "Subject to" qualified opinion.
B) Disclaimer of opinion.
C) Adverse opinion.
D) Unqualified/unmodified opinion with a separate explanatory/emphasis-of-matter paragraph.

Question

Quizplus · Accepted Answer

A disclaimer of opinion is appropriate when the auditor is unable to obtain sufficient audit evidence and concludes that the possible effects on the financial statements could be both material and pervasive. This is the case when the auditor is unable to determine the amounts associated with illegal acts of client personnel. A qualified opinion is not appropriate, as the auditor is unable to estimate the financial effects of the illegal acts. An adverse opinion is only appropriate when the financial statements are materially misstated. An unqualified/unmodified opinion with a separate explanatory/emphasis-of-matter paragraph is not appropriate, as it suggests that the financial statements are free from material misstatement, which is not the case when the auditor is unable to determine the amounts associated with illegal acts of client personnel.

When the Auditor Is Unable to Determine the Amounts Associated