[mwcubs]

QUESTION: Auditing standards require that the independent auditor’s report shall contain either an expression of opinion regarding the financial statements, taken as a whole, or an assertion to the effect that an opinion cannot be expressed. Which of the following would be prohibited by auditing standards?

A. The auditor disclaims an opinion on the entire set of financial statements.

B. The auditor disclaims an opinion on the income statement and on the statement of cash flows, but renders an unmodified opinion on the balance sheet.

C. None of the other actions are prohibited.

D. An auditor is hired to render an opinion on the balance sheet only.

Why is C the correct answer. I would think that B is a piecemeal opinion, thus prohibited by auditing standards? I thought you could not provide assurance on one financial statement while disclaiming the rest. Any help would be appreciated.

REG 83
BEC 76
FAR 70 78
AUD 72 (1/4 Retake)

"Not trying to be sexy, just trying to get by"

[lswang]

I thought piecemeal only isn't allowed if the auditor gives a modified opinion on the financial statements as a whole because the piecemeal opinion would contradict the whole one. I think it's fine if you have enough info for one financial statement but you have to disclaim an opinion for another one. **It's been a couple of months since I studied AUD and REG has pushed everything out of my brain… I'd double check that.

Going through the PCAOB authoritative literature helped a lot for me when I was studying AUD.

FAR | 81 - July 21 15
REG | 66 - Oct 1 15 | 87 - Jan 7 16
AUD | 90 - Oct 29 15
BEC | 86 - Nov 25 15

[FAR_WARS]

As long as we have not expressed an adverse/disclaimer on THE COMPLETE SET of statements, we can give any single statement any opinion we want.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Anonymous]

If the auditor expresses an adverse opinion/disclaimer opinion on the FS as a whole, the auditor's report should not express an opinion on the other FS statements.

An audit of a single financial statement is permitted under U.S. GAAS.

The auditor may express an opinion on a single financial statement if:
1) the opinion on the specific element is not published and does not accompany the auditor's report on the FS as a whole
2) the specific element does not constitute a major portion of the complete set of FS.

It seems to me that in Choice B the auditor is expressing individual opinions on each of the statements. The answer might have been wrong if it was worded differently. For example, the auditor expressed a disclaimer on the FS as a whole AND expressed an unmodified opinion on the balance sheet. –that's wrong!

I hope that makes sense! 🙂

[Author]

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