ExpertMedium1 markMultiple Choice
CPA · Question 56 · Area IV: Reporting
An auditor is auditing the financial statements of a nonissuer. The auditor discovers that the client has omitted the Statement of Cash Flows. Management refuses to present it. What is the appropriate opinion?
An auditor is auditing the financial statements of a nonissuer. The auditor discovers that the client has omitted the Statement of Cash Flows. Management refuses to present it. What is the appropriate opinion?
Answer options:
A.
Unmodified Opinion.
B.
Qualified Opinion.
C.
Adverse Opinion.
D.
Disclaimer of Opinion.
How to approach this question
Specific Rule: Omission of Cash Flows = Qualified Opinion (usually).
Full Answer
B.Qualified Opinion.✓ Correct
Qualified Opinion.
The omission of the statement of cash flows is a departure from GAAP. Generally, this results in a qualified opinion, not an adverse opinion, unless the omission makes the financial statements as a whole misleading.
Common mistakes
Thinking omission of a statement is always Adverse.
Practice the full CPA AUD Practice Exam 4
78 questions · hints · full answers · grading
More questions from this exam
Q01A CPA firm is performing an audit of a nonissuer, TechInnovate Inc. The engagement partner's spou...HardQ02An auditor is performing an audit of an issuer, Global Corp, in accordance with PCAOB standards. ...HardQ03A CPA is performing an audit of a county government entity that receives federal financial assist...HardQ04During the audit of an employee benefit plan subject to ERISA, the auditor discovers that the pla...HardQ05An auditor is evaluating the 'integrity' principle of the AICPA Code of Professional Conduct. Whi...Medium