[Anonymous]

When Financial statements contain a departure from U.S. GAAP because, due to unusual circumstances, the statement would otherwise be misleading, the auditor should express an opinion that is

A. Unmodified
B.Qualified
C. Adverse
D. Qualified or adverse, depending on pervasiveness

The answer is A , according to the Becker book. My question is, departure from GAAP. isn’t it “Qualified or adverse, depending on pervasiveness”?

 

 

[Anonymous]

@Chrisli the way I read it was that since it was due to unusual circumstances that maybe it was possibly something in accordance with a special purpose framework since it says “would otherwise be misleading” which would require an Emphasis of Matter paragraph. While studying Becker MC's what I found was that I always tried to read too much into it. It says a departure from GAAP but it doesn't say it is material and/or pervasive which is the reason I think it would be an unqualified opinion with maybe an emphasis of matter paragraph. Tricky. On the exam I found that questions tend to be more descriptive to where it will give you enough information to determine how material and/or pervasive a departure from GAAP/GAAS is.

[rzrbkfaith]

This was something that was emphasized in the lecture. The goal of the financial statements is to inform the user. If GAAP would have been used, the statements would have been misleading. Because the ultimate goal of financial statements is informing the user, it is of utmost importance that the financial statements are NOT misleading in any way. In that case, a departure from GAAP is justified. Because our opinion is on whether the financials are misleading due to a material misstatement, you would issue an unmodified opinion. This is a good one to memorize because the real world does not reflect this at all.

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[Anonymous]

Thank you guys. I really appreciate it.

[Author]

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