Question
Select from the option list provided the opinion type that will likely be expressed by the auditor of a nonissuer for each of the following
Select from the option list provided the opinion type that will likely be expressed by the auditor of a nonissuer for each of the following independent material situations. Each choice may be used once, more than once, or not at all. Situation Opinion
1. Due to an increase in competition, the client lost its main customers. The auditor has a substantial doubt about the client's ability to continue as a going concern for a reasonable period of time. The client inadequately disclosed this issue in the financial statements.
2. In the client's current-year financial statements, an investment in a subsidiary is accounted for in accordance with the fair value method. The auditor agrees with management that this treatment is necessary and justified.
3. At the end of the current year, the client has a material transaction with one of its main shareholders. The auditor wants to emphasize this matter.
4. The client uses the income statement approach to account for credit loss expense. Due to a recession, the client increased the percentage of sales for credit loss expense recognition from 2% to 7%.
5. The auditor is unable to perform necessary audit procedures on the client's material share-based payment transactions.
6. The client holds a number of risky investments and has failed to hedge the risk related to the investments.
7. Many of the confirmations sent by the auditor were unreturned, and follow-up audit procedures failed to resolve the issues.
8. A significant lawsuit against the client is unresolved at year end. The auditor feels that it has been properly reported but would like to draw financial statement users' attention to the issue.
OPTIONS TO CHOOSE FROM : -
A) QUALIFIED OR ADVERSE
B) QUALIFIED OR DISCLAIMER
C) UNMODIFIED
D) UNMODIFIED WITH AN ADDITIONAL PARAGRAPH
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