Submitted by: Submitted by olychka
Views: 783
Words: 1032
Pages: 5
Category: Business and Industry
Date Submitted: 12/06/2011 11:35 PM
Olga Volynets
PI-2
1..What type of audit report (unqualified opinion, qualified opinion,
adverse opinion, disclaimer of opinion) should the auditors generally issue in each of
the following situations? Explain.
A.Client-imposed restrictions significantly limit the scope of the auditors’ procedures.
With a scope of limitation an auditor will normally give a qualified opinion or a disclaimer of opinion.
However, due to the fact that the client deliberately imposed restrictions on the auditor, it is reasonable to question the client’s intentions. This is clearly a sign that the client is trying to withhold important information, and under such circumstances a disclaimer of opinion must be given. Sufficient evidence regarding the fairness of the presentation of the financial statements is not present and the auditor must issue a disclaimer of opinion, which basically means no opinion.
B. The auditors decide to make reference to the report of another CPA firm as a basis, in
part, for the auditors’ opinion.
By making a reference to other auditors divides the responsibility for the engagement between participating CPA firms, issuing a shared responsibility report. This happens in circumstances when a company owns subsidiaries in different locations and more than one auditor is required. The responsibility divided among auditors does not answer the question of the type of report to issue, therefore we can’t say whether a qualified, unqualified, or a disclaimer of opinion will be issued. When an auditor refers to other auditors he/she chooses to rely on the work performed by other auditors.
C.The auditors believe that the financial statements have been presented in conformity
with generally accepted accounting principles in all respects, except that a loss
contingency that should be disclosed through a note to the financial statements is not
included.
Whenever an adequate disclosure is absent either an adverse or a qualified opinion must be...