[greeneyesCPA]

Under which of the following circumstances would a disclaimer of opinion not be appropriate?

a. The auditor is unable to determine the amounts associated with an employee fraud scheme.

b. Management does not provide reasonable justification for a change in accounting principles.

c. The client refuses to permit the auditor to confirm certain accounts receivable or apply alternative procedures to verify their balances.

d. The chief executive officer is unwilling to sign the management representation letter.

Which one is correct??????

FAR Passed
BEC Passed
AUD Passed
REG Passed

[Anonymous]

Answer E:

E. I passed with an 88 and never have to worry about questions like this again! 😀

Sorry, that was completely out of line. I agree with B.

I suggest that you go to your local bookstore and buy the Wiley book, it has a great chart that summarizes the decisions. If you study it hard enough and look for it, you can really summarize the chart by just learning the exceptions.

[goodluck2everyone]

Uncertainty is one of the reasons for giving a disclaimer of opinion

The keyword here is “employee”. If it involved management, then materiality doesn't matter. If it involves employees, then the fraud must be material. For example, you wouldn't withdraw from the engagement if you found out that Jane stole a stapler.

The amount of fraud is unknown in this case and there isn't sufficient audit evidence to surmise what the amount is, therefore there is uncertainty and a disclaimer is appropriate.

I hope that helps?

BEC- 80
REG- 68, 71, July
AUD- 61 , 84
FAR- -- 75 🙂

[greeneyesCPA]

@CPApending…. thank you for the tip on the opinions. However, what's a good way/easy way to remember changes to the audit report paragraphs????

FAR Passed
BEC Passed
AUD Passed
REG Passed

[Author]

Replies