When an adverse opinion is expressed, the opinion paragraph should include a direct reference to:
A) A note to the financial statements which discusses the basis for the opinion.
B) The Auditor's Responsibility section of the audit report which discusses the basis for the opinion rendered.
C) A separate paragraph (section) which discusses the basis for the opinion rendered.
D) The consistency in the application of generally accepted accounting principles.

Question

Quizplus · Accepted Answer

When an adverse opinion is expressed, a separate paragraph (section) should be included in the audit report which discusses the basis for the opinion rendered. This paragraph should explain the nature and size of the departure from GAAP, the reason for the departure, and the quantitative effects on the financial statements. It should also refer to the note to the financial statements which discusses the basis for the opinion, but it is not necessary to reference the Auditor's Responsibility section of the report or mention consistency in GAAP application.

When an Adverse Opinion Is Expressed, the Opinion Paragraph Should