[donnychristal]

Ok so I know that we cannot issue piecemeal audit opinions. e.g. unmodified in BS and modified in I/S. But I have been reading and there are some exceptions that I saw. Can someone explain why piecemeal is okay under this situation?

Exception 1: Comparable F/S
If you cannot observe the prior year beginning inventory, you can actually issue disclaimer on IS, CF, AND unmodified on B/S. That’s not considered piecemeal?

Exception 2: NINJA MCQ question
Park, CPA, was engaged to audit the financial statements of Tech Co., a new client, for the year ended December 31, 20X1. Park obtained sufficient appropriate audit evidence for all of Tech’s financial statement items, except Tech’s opening inventory. Due to inadequate financial records, Park could not verify Tech’s January 1, 20X1, inventory balances. Park’s opinion on Tech’s 20X1 financial statements most likely will be:

A. a disclaimer opinion issued on both the balance sheet and the income statement.
B. an unmodified opinion issued on the balance sheet and a disclaimer opinion issued on the income statement.

B is the correct answer. I get it. Normally I would choose B but after the reading and I thought ‘oh we cannot piecemeal opinions’ so I chose A.

Please help clarify these questions here. Much appreciated!!

FAR - 75
AUD - 64/71
BEC - 85

[Anonymous]

Simply don't overthink in these kind of questions.

[jc510]

I think because even with the scope limitation, inventory can be valued at year-end on the BS (lower cost or market). However, you can't have an opinion on the IS other than disclaimer because the auditor can not value Cost of good sold on the IS.

[Anonymous]

@jc510 you are right but he means that this is a peacemeal opinion

The only way I can think of it is that a disclaimer is not an opinion
What I think is that we can't give adverse with unqualified

[CageTheCPA]

Ugh, these questions are the worst. A piecemeal opinion is, for instance, kind of like disclaiming the BS as a whole but then saying Cash or AR are in conformity with GAAP.You can't do that.

In this question, the auditor is concerned with the year-end balance for inventory and may be able to use other means to get comfortable with that balance (for example, the ending inventory balance could solely consist of a purchase made on 12/31). Since they couldn't verify beginning inventory which flows to COGS on the IS, they can't issue an opinion on the IS. Does this help?

[Author]

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