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Week 5 Assignment

ACC410: Auditing

Problem 17-35 List A Type of Opinions 1). Either a disclaimer of opinion Or an except for qualified opinion A situation in which an auditor is unable to obtain audited financial statements for an investee represents a scope limitation. Scope limitations lead to either a qualified opinion or a disclaimer of opinion. A decision as to whether the auditors should qualify or disclaim the opinion is dependent upon their assessment of the importance of the scope limitation. Substantial doubt about an entity's ability to continue as a going concern leads to either an unqualified opinion with an explanatory paragraph, or a disclaimer. Because the combination of either an unqualified opinion or a disclaimer is not included in list A, an unqualified opinion is best. Given a situation in which an unqualified opinion is to be provided, the appropriate modification of the report is an explanatory paragraph following the opinion paragraph. A standard unqualified opinion is appropriate in circumstances in which a principal auditor takes responsibility for the work of another auditor. When a company issues financial statements that purport to present financial position and results of operations, but omit the related statement of cash flows, the auditor will normally conclude that the omission requires a qualified opinion. Qualified opinions for departures from generally accepted accounting principles require an explanatory paragraph preceding the opinion paragraph and a modified opinion paragraph. List B____ Report Modification

2) An unqualified opinion

3) An unqualified opinion

4) An "except for" qualified opinion

5) An unqualified opinion

When an auditor agrees with a change in accounting principles, a lack of consistency results in an unqualified opinion with an explanatory paragraph following the opinion paragraph, with no modification of the three standard paragraphs.

6) Either an "except for" qualified opinion or an adverse opinion.

Departures from generally accepted accounting principles result in either a qualified opinion or an adverse opinion, based on the materiality of the departures. In deciding whether a qualified or an adverse opinion should be issued, the auditors consider the materiality of the departures. Regardless of whether a qualified opinion or an adverse opinion is issued, an explanatory paragraph precedes the opinion paragraph, and the opinion paragraph is modified.

Reference Whittington, O.R. & Pany, K. (2010). Principles of auditing and other assurance services (17th ed.). Boston, MA: McGraw- Hill