[Igotthis]

I had this one question that I am stuck on from the Becker Final Exam. The question is:

The fourth standard of reporting states that he report shall contain either an expression of opinion regarding the financial statements, taken as a whole, or an assertion to the effect that an iopion cannot be expressed. which of the following would be prohibited by this standard?

A. An auditor is hired to render an opinion on the BLS only

B. The auditor disclaims an opinion on the entire set of financial stmts

C. The auditor disclaims an opinion on the income instatement and on the stmt of cash flows, but renders and unqualified opinion on the balance sheet

D. None of the above are prohibited by the fourth standard of reporting

The Answer is D but I am not sure why the answer is not C.

The reason why I think it is C because wouldn’t disclaiming an opinion on two of the statements and unqualified opinion on the balance sheet kind of overshadow the disclaimer opinions?

Thank you in advance!!!!

[Tootsie]

You can have different opinions on the financial statements. Here is a citation from PCAOB regarding having piece meal opinions:

Piecemeal opinions (expressions of opinion as to certain identified items in financial statements) should not be expressed when the auditor has disclaimed an opinion or has expressed an adverse opinion on the financial statements taken as a whole because piecemeal opinions tend to overshadow or contradict a disclaimer of opinion or an adverse opinion.

Does this help?

FAR - 76
AUD - 88!!! DONE!!!!!!!!
BEC - 76
REG - 77

never, never, never give up

[sbarkerACPA]

I think this one of the situations where there is not enough evidence to provide an opinion that those two are not free from material mistatements. However the sufficient evidence is available to provide an opinion for the balance sheet as long as the scope limitation is not created by mngt.

For example, they couldn't verify COGS which was like 75% of the statement and they couldn't be satisified through the use of other procedures. Then they will disclaim bc scope limitation. They were able to verify the balances and evidence was available to support an unqualified opinion on the Balance Sheet.

Hope this helps…

BEC: 74;81
AUD: 77
REG: 71; 80
FAR: 78
License for CPA----APPROVED
CPA Class of 2013

[Igotthis]

Yup, this helps 100%.

So because the disclaimer opinion was not on ALL the financial statements as a whole but only on 2 of the statements, that is why having a unqualified opinion is allowed on balance sheet is allowed. Gotcha!

Thanks again Tootsie!

[Tootsie]

@Igotthis, glad to help. The PCAOB website search engine has helped me a lot with topics that I don't fully understand. I highly recommend it.

FAR - 76
AUD - 88!!! DONE!!!!!!!!
BEC - 76
REG - 77

never, never, never give up

[Author]

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