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Exam CPA Auditing and Attestation All Questions

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Exam CPA Auditing and Attestation topic 1 question 54 discussion

Actual exam question from Test Prep's CPA Auditing and Attestation
Question #: 54
Topic #: 1
[All CPA Auditing and Attestation Questions]

In which of the following situations would an auditor ordinarily choose between expressing an "except for" qualified opinion or an adverse opinion?

  • A. The auditor did not observe the entity's physical inventory and is unable to become satisfied as to its balance by other auditing procedures.
  • B. The financial statements fail to disclose information that is required by generally accepted accounting principles.
  • C. The auditor is asked to report only on the entity's balance sheet and not on the other basic financial statements.
  • D. Events disclosed in the financial statements cause the auditor to have substantial doubt about the entity's ability to continue as a going concern.
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Suggested Answer: B 🗳️
Choice "b" is correct. Failure to disclose information that is required by GAAP is a departure from GAAP.
Departures from GAAP result in a qualified or an adverse opinion.
Choice "a" is incorrect. If the auditor is unable to observe physical inventory and is unable to become satisfied through alternative means, that is a scope limitation.
Scope limitations result in either a qualified opinion or a disclaimer of opinion.
Choice "c" is incorrect. The auditor can report on one financial statement and not the others. This does not preclude issuance of an unqualified opinion.
Choice "d" is incorrect. If, after considering identified conditions and events and management's plans, the auditor concludes that substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time remains, the audit report should include an explanatory paragraph (after the opinion paragraph in the unqualified report) to reflect that conclusion.
by gemazyni at April 5, 2025, 5:41 p.m.

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