Area IV: Forming Conclusions and Reporting — CPA Practice Question 51

How to approach this question

Restatement of Prior Year: 1. Fix the numbers. 2. Fix the Opinion (to Unmodified). 3. Add Emphasis Paragraph ('Hey, we changed our mind about last year').

Full Answer

B.Express an unmodified opinion on the restated prior year statements and include an emphasis-of-matter paragraph describing the restatement.✓ Correct

B

When prior period financial statements are restated to correct a material misstatement, the auditor should express an unmodified opinion on the restated statements and include an emphasis-of-matter paragraph (or explanatory paragraph for issuers) disclosing that the previously issued financial statements have been restated for the correction of a misstatement.

Common mistakes

Thinking a restatement requires a Qualified opinion. Restatement FIXES the error, so the opinion is clean.

How to approach this question

Full Answer

Common mistakes

Practice the full CPA AUD Practice Exam 2

More questions from this exam