| | Restrictions imposed by a company prohibited the observation of physical inventories, which accounted for 35% of all assets and 45% of gross profit. Alternative audit procedures were not feasible, although the auditor was able to examine satisfactory evidence for all other items in the financial statements. |
| | An auditor who is reporting on financial statements that contain a material departure from generally accepted accounting principles that is not pervasive. |
| | The entity has a lawsuit pending against it. There is significant uncertainty about the outcome of the lawsuit, which could have a significant impact on the viability of the entity. Management has provided adequate disclosure of the lawsuit in the footnotes accompanying the financial statements. |
| | The audit was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), no material misstatements were found by the auditor. |
| | The client changed its method of accounting for depreciation. The auditor does not agree with the change. The effect of the change is material but not pervasive in the financial statements. |
| | The auditors conclude that an entity's illegal act, which has a material and pervasive effect on the financial statements, was not properly accounted for or disclosed. |
| | The entity has a lawsuit pending against it. It is probable that the entity will lose the suit. Management has not accrued the best estimate of the loss but has provided information in the footnotes. It is not expected that the lawsuit will have a significant effect on the entity's ability to continue as a going concern. |
| | Based on recent analysis of usage, the entity has changed the useful life of its office equipment from five to four years. This change is reflected in the depreciation amounts computed for the current year. |
| | Subsequent to accepting the audit of Hunter Corp, the auditors determined they are not independent because of a financial interest in Hunter held by a newly-admitted partner. |
| | In completing the audit of Hill Corp, Jones assessed the ability of Hill Corp as a going concern to be questionable. Hill Corp could not provide Jones with substantial evidence to reduce the uncertainty of Hill Corp's future existence. |
| | Manson Inc changed its estimates for calculating bad debt expense. Your audit revealed the changes were made correctly, and you agree with the changes. |
| | The opinion paragraph of this audit report reads: "In our opinion, except for the possible effects of the matter described in Basis for Qualified Opinion Paragraph..." |
| | Your client has a subsidiary in another state. In your audit, you use your firm's local audit staff to audit the subsidiary. You assume responsibility for the work of these other auditors. |
| | Since Sarbanes-Oxley Act of 2002, firms are more likely to issue these reports for going-concern uncertainties. |
| | Your client has capitalizable leases but refuses to capitalize them in the financial statements. Not capitalizing the leases results in material misstatements that extensively permeate the financial statements. |
