Types of Audit Opinions For each of the following independent situations, determine the type of opinion that will most likely be issued by the firm auditing the financial statements of a U.S. company. 1 . The client will not allow the auditor to view
the minutes for the entire year under audit and beyond. 2 . The auditor finds that the firm is not independent of the client on the last day of fieldwork. 3 . The client declines to include a statement of cash flow in the financial statements. 4 . The client fails to record an immaterial amount of insurance paid in advance as an asset. 5 . The client does not record impairment of goodwill and will not depreciate property and equipment. Both are considered very material. 6 . There is substantial doubt about the client's ability to continue as a going concern.
1 . Qualified or Disclaimer of opinion (although most auditors will disclaim a client imposed scope limitation).
2 . Disclaimer of opinion for the auditor's impaired independence.
3 . Qualified opinion because of the GAAP violation that does not overshadow the remainder of the financial statements.
4 . Unqualified opinion with no modifications due to immateriality.
5 . Most likely adverse due to the extent of materiality and the pervasiveness to the financial statements.
6 . Most likely unqualified with an explanatory paragraph. In some reporting situations, doubt about the client continuing as a going concern is such that the auditor does not believe that an additional paragraph to an unqualified opinion is appropriate.
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