Question

Question 18

Auditors communicate the results of an audit in an audit report. Of the four categories of audit reports, which one indicates that while the auditor believes the financial statements are fairly presented, very material departures from GAAP, and the scope of the audit may have been substantially restricted?

		a)Qualified
		b)Standard unqualified
		c)Unqualified with explanatory paragraph

Answer 1

Correct Answer:

a)Qualified is correct answer because when the auditor believes that all financial statements are fairly presented and scope of audit is limited and left some material information to follow the guidelines of GAAP.

Incorrect answers:

b)Standard unqualified not an answer of above explanation because standard unqualified report issued by auditor when he believes that all the audit conditions are followed and there is no significant misstatements are left to be corrected and auditor believe that financial statement is fairly presented as per the guidelines of GAAP.

c)Unqualified with explanatory paragraph is not an answer because unqualified with explanatory paragraph report issued by auditor when he believes that financial statements are fairly presented ,but auditor thinks that some additional information is required.

So answer is option(a) or Qualified