What opinion should be issued if management omit cash flow statement?

  • Creator
    Topic
  • May 27, 2011 at 6:20 pm #160365
    Account Ant
    Participant

    Is it qualified or adverse? I got confused. Help me out here please.

    Thank you.

    FAR 70,89
    REG November 2014
    BEC Didn't even look at it.
    AUD 83

Viewing 7 replies - 1 through 7 (of 7 total)
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  • May 27, 2011 at 6:21 pm #283066
    jbeans2009
    Participant

    qualified

    May 27, 2011 at 6:24 pm #283067
    Last_First_MI
    Participant

    from a prior post yes it was agreed as qualified and also on the exam usually you will never have to differentiate between a qualified and adverse usually just either or as they are judgment calls of the auditor and up to amount of materiality.

    May 27, 2011 at 6:28 pm #283068
    jbeans2009
    Participant

    In Wiley and Yaeger they specifically state that missing cash flow statement is qualified. I'm not sure if they'd ask you to differentiate on the exam itself, although I do believe that in Wiley questions, they may ask you to choose between qualified and adverse on this particular question.

    May 27, 2011 at 6:38 pm #283069
    MeghanCPA
    Participant

    I agree the report is QUALIFIED (Special Situation). The auditor modified the Intro and Opinion Paragraph and also add explanatory before the opinion paragraph.

    I am confused regarding the following scenario: If the client holds a note payable from a customer and the customer declared bankruptcy before Year end, does the client need to adjust the FS. Also, if the client does not adjust the FS, what report does the auditor issue: Modified, Qualified or Adverse?

    May 27, 2011 at 6:40 pm #283070
    kb24
    Participant

    I think they generally avoid having you choose between qualified and adverse opinions because the criteria for the two are the same e.g. departure from GAAP, etc. The decision as to which one to use is a judgment call. However, as everyone else has said, Wiley and Becker specifically state that omission of the SOCF results in a qualified opinion not an adverse one.

    FAR 4/1/11 - 89
    AUD 4/15/11 - 85
    REG 4/29/11 - 80
    BEC 5/13/11 - 85

    May 27, 2011 at 7:23 pm #283071
    Account Ant
    Participant

    Thank you guys, I just confirmed with AU 508.43, 44

    It is qualified, and under departure from GAAP.

    FAR 70,89
    REG November 2014
    BEC Didn't even look at it.
    AUD 83

    June 16, 2011 at 7:09 am #283072
    HighMileageDude
    Participant

    @Account Ant, Becker's ch1 audit SIM asks this question and the answer to it is AU 508.44. When I first saw it, I put AU 508.43…if i recall there is a slight difference that makes 44 the correct answer

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