When financial statements contain a departure from GAAP, the auditors should explain the unusual circumstances in a separate paragraph and express an opinion that is
A)unmodified.
B)qualified.
C)adverse.
D)qualified or adverse, depending on the overall materiality and pervasiveness of the GAAP departure.

Question

Quizplus · Accepted Answer

If financial statements contain a departure from GAAP, the auditors should explain the unusual circumstances in a separate paragraph and express an opinion that is qualified or adverse, depending on the overall materiality and pervasiveness of the GAAP departure. A qualified opinion is issued when the departure from GAAP is material but not pervasive, whereas an adverse opinion is issued when the departure from GAAP is both material and pervasive. The choice between a qualified opinion and an adverse opinion depends on the specific facts and circumstances involved. Therefore, option D is the best choice.

When Financial Statements Contain a Departure from GAAP, the Auditors