In which of the following situations would an auditor ordinarily issue an unqualified audit Opinionwithout an explanatory paragraph?

Here is the solution for Which of the following situations would an auditor ordinarily issue an unqualified audit opinion without an explanatory paragraph?. The solution is given after the options.

Which of the following situations would an auditor ordinarily issue an unqualified audit opinion without an explanatory paragraph?

The auditor wishes to emphasize that the entity had significant related party transactions.

The auditor decides to make reference to the report of another auditor as a basis, in part, for the auditor’s opinion.

The entity issues financial statements that present financial position and results of operations, but omits the statement of cash flows.

The auditor has substantial doubt about the entity’s ability to continue as a going concern, but the circumstances are fully disclosed in the financial statements.

Correct Answer

The auditor decides to make reference to the report of another auditor as a basis, in part, for the auditor’s opinion.

Explanation:

The auditor decides to make reference to the report of another auditor as a basis, in part, for the auditor’s opinion. is the answer for Which of the following situations would an auditor ordinarily issue an unqualified audit opinion without an explanatory paragraph?

Conclusion:

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Last Updated on February 1, 2022 by Admin 3

• AUD CPA : All Parts

• The auditor wishes to emphasize that the entity had significant related party transactions.
• The auditor decides to make reference to the report of another auditor as a basis, in part, for the auditor’s opinion. 
• The entity issues financial statements that present financial position and results of operations, but omits the statement of cash flows.
• The auditor has substantial doubt about the entity’s ability to continue as a going concern, but the circumstances are fully disclosed in the financial statements.

Explanation: 
Choice “B” is correct. An auditor would generally issue an unqualified audit opinion without an explanatory paragraph when the auditor decides to make reference to the report of another auditor as a basis, in part, for the auditor’s opinion. The auditor would modify his/her report [all three paragraphs], but would not add an explanatory paragraph.
Choices “A” and “D” are incorrect. An auditor ordinarily would issue an unqualified opinion with an explanatory paragraph if he or she wishes to emphasize that the entity had significant related party transactions, or if the auditor has substantial doubt about the entity’s ability to continue as a going concern [even if the circumstances are fully disclosed in the financial statements].
Choice “C” is incorrect. If the entity issues financial statements that present financial position and results of operations but omit the statement of cash flows, the opinion will be qualified.

• AUD CPA : All Parts

In which of the following situations would an auditor ordinarily issue an unqualified audit opinion without an explanatory paragraph?
A. The auditor wishes to emphasize that the entity had significant related party transactions.
B. The auditor decides to make reference to the report of another auditor as a basis, in part, for the auditor’s opinion.
C. The entity issues financial statements that present financial position and results of operations, but omits the statement of cash flows.
D. The auditor has substantial doubt about the entity’s ability to continue as a going concern, but the circumstances are fully disclosed in the financial statements.