[Anonymous]

I’m sure I’ve overstayed my welcome on this forum with the frequent questions, but hopefully they’re helping other people too. The question is: Is missing a part in the F/S (such as the statement of CF, income statement, etc.) considered a…

“GAAP Issue” because it is a violation of GAAP requirements, and thus requires a qualified or adverse opinion? OR a “GAAS Issue” because it does not provide the auditor with all info and is thus a scope limitation, requiring a qualified or disclaimer of opinion?

To me it seems like a bit of both…. would it always be considered a qualified opinion anyway, or is adverse/disclaimer even a possibility? Thanks for all the help guys

[Anonymous]

Oh, and here's the Becker MCQ that got me thinking about this:

If a publicly held company issues financial statements that purport to present its financial position and results of operations but omits the statement of cash flows, the auditor ordinarily will express a(an):

a. Unmodified opinion with an emphasis-of-matter paragraph.

b. Disclaimer of opinion.

c. Qualified opinion.

d. Review report.

Choice “c” is correct. If a company issues financial statements that purport to present financial position and results of operations but omits the related statement of cash flows, the auditor will normally conclude that the omission requires qualification of the opinion.

I think that makes sense, but I answered “B. Disclaimer of opinion” because I thought missing the statement of CF was a pervasive scope limit.

[peetree]

I think of it this way.

Does management refusing to issue a statement of cash flows affect your scope or audit procedures? Not really, as you'll still be able to audit them how you see appropriate.

It will affect how financial statement users read and analyze the financial statements and thus would be a GAAP issue.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[Anonymous]

Yea it's a GAAP issue because they are not presenting what they are required to. The client refusing to present one of the FS does not have any effect on the auditors performing audit work.

[Author]

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