A1 - Opinions

Question 1

Scope of the auditor’s examination is affected by conditions that preclude the application of a necessary auditing procedure

Answer 1

Disclaimer or Qualified

Question 2

The auditor decides to make reference to the report of a component auditor as a basis, in part, for expressing an opinion on group financial statements

Answer 2

Unmodified - reference to component auditor is made in the Auditor’s Responsibility paragraph and the Opinion paragraph

Question 3

The company changed its method of accounting for long term construction contracts, but management was justified in making the change. The new method is acceptable under GAAP, and the change was accounted for prospectively

Answer 3

Qualified or Adverse - GAAP issue. Had to be accounted for retrospectively

Question 4

Doubt about the company’s ability to continue as a going concern is fully disclosed in the notes to the financial statements

Answer 4

Unmodified with Emphasis of Matter

Question 5

The F/S are subject to an uncertainty that will likely result in a material loss. Management has been unable to estimate the amount of potential loss, but has properly disclosed the details of the situation

Answer 5

Unmodified - since the loss is probable, but not estimable the proper treatment is disclosure only

Question 6

The company changed its method of valuating inventory, but management did not have appropriate justification for the change. The change had a material but not pervasive effect on the F/S and is properly disclosed

Answer 6

Qualified

Question 7

A predecessor auditor’s unmodified opinion for a prior year’s report on comparative financial statements is NOT PRESENTED

Answer 7

Unmodified with Other Matter

Question 8

Required supplementary information is omitted from the financial statements

Answer 8

Unmodified with Other Matter