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Items 1 through 5 present various independent factual situations an auditor might encounter in conducting an audit of a nonpublic company. For each situation, assume:
Items through present various independent factual situations an auditor might encounter in conducting an audit of a nonpublic company. For each situation, assume:
The auditor is independent.
The auditor previously expressed an unmodified opinion on the prior years financial statements.
The nonpublic audit client is presenting singleyear not comparative financial statements.
The conditions for an unmodified opinion exist unless contradicted in the factual situations.
The conditions stated in the factual situations are material.
No report modifications are to be made except in response to the factual situation.
The Report Alteration part of the problem only addresses the need to add an additional section or a paragraph to an existing section. Other parts of the audit report may be affected that are not examined in this question.
Required:
Below are the types of opinions the auditor ordinarily would issue and report modifications if any relating to an additional paragraph or section that would be necessary. Select as the best answer for each situation items through the type of opinion and alterations, if any, the auditor would normally select. For each situation items through also provide the report alteration under PCAOB standards for audits of public companies.
Types of Opinions Report Alteration
A Unmodified H Add a section preceding the Opinion section.
B Qualified I. Add a section immediately following the Opinion section.
C Adverse J Add a section at a point following the Basis for Opinion section.
D Disclaimer K Add a paragraph to the Opinion section.
E Qualified or adverse L Add a paragraph to the Basis for Opinion section.
F Qualified or disclaimer M Issue unmodified report without alteration.
G Disclaimer or adverse
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