When an auditor is faced with a material departure from GAAP that is pervasive,which of the following should the audit report contain?
A)An unqualified opinion.
B)A qualified opinion with an explanatory paragraph.
C)An adverse opinion.
D)A disclaimer of opinion.

Question

Quizplus · Accepted Answer

A pervasive material departure from GAAP represents a significant issue that has a substantial impact on the financial statements as a whole. In this case, the audit report should contain an adverse opinion. This type of opinion is given when the financial statements are materially misstated such that they do not conform to GAAP, making them highly unreliable. The adverse opinion states that the financial statements are not fairly stated in accordance with GAAP and should not be relied on by the users.

When an Auditor Is Faced with a Material Departure from GAAP