[SchruteBeet]

I am studying the module in Becker on matters requiring special considerations for the auditor report. One of the points the instructors raised is that if an auditor is unable to obtain sufficient appropriate evidence regarding opening balances, he/she can issue a qualified or disclaimer of opinion on (1) either all financials or (2) all financials but the balance sheet. Why would you exclude the opinion on balance sheet?

The only reason I can think of is that since balance sheets are at a point in time, there are ways to obtain evidence about opening balances through alternative procedures. Can someone shed light?

[Anonymous]

I used to be confused about this concept as well. The reason that you can still give an unmodiifed opinion on the BS, even though you were not able to gather evidence for the beginning balance for inventory, is because you are able to perform an Inventory Observation at Year End. Thus, you can observe Inventory and predict an appropriate Inventory balance. However, you cannot give an unmodified opinion on the IS bc u need beginning inventory to help calculate COGS.

Hope that helps 🤓

[ThomasHallberg]

Thanks as well, this got me too

[Author]

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