Adverse Opinion

Question 1

Define pervaisive?

Answer 1

Huge F/S implications.

• Not confined to specific elements of the F/S
• Represent a substantial of the F/S
• Impact the disclosure of the F/S

Question 2

Three types of modified options?

Answer 2

Qualified
Adverse
Disclaimer of opinion

Question 3

What is the ONLY reason for an adverse opinion?

Answer 3

Significant misstatement, material, AND pervasive!

Question 4

What changes in the audit report when you issue and adverse opinion?

Answer 4

1) Introduction- No change
2) Management responsiblity- No change
3) Auditors Responsibility- One word change in last sentence to include “adverse”
4) Add paragraph- Basis for adverse opinion
5) Opinion paragraph “In our opinion, because of the significance of the matter discussed in the basis for adverse opinion, the consolidated financial statements referred to above DO NOT PRESENT FAIRLY….”