Your client has experienced a major data breach with lawsuits and fines pending of significant and uncertain amounts.These events are disclosed in the client's financial statements and are clearly explained in the notes.How do these events affect the independent auditor's report?
A)The auditor would issue an unmodified auditor's report.
B)The auditor would include an Emphasis of Matter paragraph titled "Data Breach" to highlight the events.
C)The auditor would include an Other Matters paragraph titled "Data Breach" to highlight the amounts.
D)The auditor issue a modified audit opinion due to the size of the uncertainty.

Question

Quizplus · Accepted Answer

The independent auditor would include an Emphasis of Matter paragraph titled "Data Breach" to highlight the events. While the financial statements have been clearly explained in the notes, the auditor has a responsibility to draw attention to the events and their potential impact on the financial statements. This is done through an Emphasis of Matter paragraph, which is a way for the auditor to highlight important matters that are appropriately disclosed in the financial statements. This would be included in an otherwise unmodified auditor's report.

Your Client Has Experienced a Major Data Breach with Lawsuits