When an auditor issues an adverse opinion,which of the following should be included in the opinion paragraph?
A)The financial statement effects of the departure from GAAP.
B)A statement that indicates that the financial statements are fairly stated except for a reason that is described in the separate paragraph.
C)A reference to a separate paragraph that describes the reason for the adverse opinion.
D)The reasons that the financial statements are misleading.

Question

Quizplus · Accepted Answer

When an auditor issues an adverse opinion, the opinion paragraph should include a reference to a separate paragraph that describes the reason for the adverse opinion. This is because the separate paragraph should contain the details of the scope limitation, departure from GAAP, or other issues that led to the adverse opinion. The financial statement effects of the departure from GAAP may also be included in the separate paragraph, but not necessarily in the opinion paragraph. The auditor should not provide the reasons that the financial statements are misleading in the opinion paragraph. The second option is also incorrect because it implies that the financial statements are fairly stated except for a specific issue, while adverse opinions indicate that the financial statements are not fairly stated as a whole.

When an Auditor Issues an Adverse Opinion,which of the Following