Exam AUD topic 1 question 61 discussion

Actual exam question from AICPA's AUD

Question #: 61
Topic #: 1

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.

Show Suggested Answer

Suggested Answer: B 🗳️
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.

by gemazyni at April 5, 2025, 4:07 p.m.

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