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:

Unmodified Opinion.

Qualified Opinion.

Adverse Opinion.

Disclaimer of Opinion.

How to approach this question

Specific Rule: Omission of Cash Flows = Qualified Opinion (usually).

Full Answer

B.Qualified Opinion.✓ Correct

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.

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