ExpertHard1 markMultiple Choice
CPA · Question 73 · Area IV: Forming Conclusions and Reporting
Scenario: An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material misstatement in the opening balances that affects the current period's financial statements. The prior period was audited by another auditor, and the predecessor's report is not reissued. Management refuses to adjust the opening balances. <br/><br/>What is the appropriate audit opinion on the current period financial statements?
Scenario: An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material misstatement in the opening balances that affects the current period's financial statements. The prior period was audited by another auditor, and the predecessor's report is not reissued. Management refuses to adjust the opening balances. <br/><br/>What is the appropriate audit opinion on the current period financial statements?
Answer options:
A.
Unmodified Opinion.
B.
Qualified or Adverse Opinion.
C.
Disclaimer of Opinion.
D.
Opinion on the balance sheet only.
How to approach this question
Opening Balance Error -> Affects Current Year Income/Equity. If not fixed -> GAAP Departure -> Qualified/Adverse.
Full Answer
B.Qualified or Adverse Opinion.✓ Correct
AU-C 510 states that if the auditor concludes that the opening balances contain a misstatement that materially affects the current period's financial statements and the effect is not properly accounted for or disclosed, the auditor should express a qualified or adverse opinion.
Common mistakes
Thinking the auditor only disclaims on the opening balance.
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