Question 1

An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material misstatement in the inventory balance. Management refuses to correct the misstatement. The auditor concludes the misstatement is material but NOT pervasive. Which opinion should be issued?

Accepted Answer

Matrix: Issue = Misstatement. Level = Material but Not Pervasive -> Qualified. (If Pervasive -> Adverse).

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Confusing Adverse (Pervasive) with Qualified (Not Pervasive).

An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material misstatement in the inventory balance. Management refuses to correct the misstatement. The auditor concludes the misstatement is material but NOT pervasive. Which opinion should be issued?

How to approach this question

Full Answer

Common mistakes

Practice the full CPA AUD Practice Exam 4

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