List a represents the types of opinions the auditor ordinarily would issue and List B represents the...

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List a represents the types of opinions the auditor ordinarily would issue and List B represents the report modifications [if any] that would be necessary. Select as the best answer for each situation [items 1 to 6] the type of opinion and modifications, if any, the auditor would normally select. The types of opinions in List A and the report modifications in List B may be selected once, more than once, or not at all. The paper should be 2-3 pages.
	
Document Preview: Audit Report Modifications 1.  Audit Report Modifications  Complete problem below. List a represents the types of opinions the auditor ordinarily would issue and List B represents the report modifications [if any] that would be necessary. Select as the best answer for each situation [items 1 to 6] the type of opinion and modifications, if any, the auditor would normally select. The types of opinions in List A and the report modifications in List B may be selected once, more than once, or not at all. The paper should be 2-3 pages. Problem: Items 1 through 6 present various independent factual situations an auditor might encounter in conducting an audit. For each situation assume: Assume:• The auditor is independent.• The auditor previously expressed an unqualified opinion on the prior year’s financial statements.• Only single-year (not comparative) statements are presented for the current year.• The conditions for an unqualified 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.Situations:1. In auditing the long-term investments account, an auditor is unable to obtain audited financial statements for an investee located in a foreign country. The auditor concludes that sufficient appropriate audit evidence regarding this investment cannot be obtained. 2. Due to recurring operating losses and working capital deficiencies, an auditor has substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time. However, the financial statement disclosures concerning these matters are adequate.3. A principal auditor decides to take responsibility for the work of another CPA who audited a wholly owned subsidiary of the entity and issued an unqualified opinion. The total assets and revenues of the subsidiary represent 17 percent and 18 percent, respectively,...

Robert · Accepted Answer

SOLUTION 1:
In auditing the long-term investments account, an auditor is unable to obtain audited financial 
statements for an investee located in a foreign country. The auditor concludes that sufficient 
appropriate audit evidence regarding this investment cannot be obtained.
F. Either a disclaimer of opinion or an "except for" qualified opinion.
L. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph, and 
modify the scope and opinion paragraphs.
The given situation is an example of scope limitation because auditor is unable to obtain 
sufficient information i.e. he is not able to get audited financial statements for investee. Under 
situation of scope limitation either qualified opinion or disclaimer of opinion is issued. The 
decision regarding issuance of qualified opinion or disclaimer of opinion is dependent on the 
assessment of significance of scope limitation.
SOLUTION 2:
Due to recurring operating losses and working capital deficiencies, an auditor has substantial 
doubt about an entity’s ability to continue as a going concern for a reasonable period of time. 
However, the financial statement disclosures concerning these matters are adequate.
B. An unqualified opinion
I. Describe the circumstances in an explanatory paragraph following the opinion paragraph 
without modifying the three standard paragraphs.

List a represents the types of opinions the auditor ordinarily would issue and List B represents the report modifications [if any] that would be necessary. Select as the best answer for each situation...

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