CA has been engaged to audit the financial statements of Marchano Ltd. ,a manufacturer of toys.Several individuals are suing the company because of a toy that injured children.The company has not disclosed the lawsuit in its financial statements.What type of audit report should be issued?
A)Adverse.
B)A GAAP qualification.
C)A scope qualification.
D)Disclaimer or denial

Question

Quizplus · Accepted Answer

The company has not disclosed a material lawsuit, which is a departure from GAAP. Therefore, a GAAP qualification is appropriate.

CA Has Been Engaged to Audit the Financial Statements of Marchano