When auditors conclude that a material and pervasive departure from GAAP exists in an entity's financial statements, which of the following phrases would most likely be included in their report?
A)"Do not present fairly."
B)"Except for the effects of the matter described in the Basis for Qualified Opinion Section of our report…"
C)"We were engaged to audit the accompanying financial statements."
D)"As a result of the departures discussed in the Opinion Section of our report…"

Question

Quizplus · Accepted Answer

A material and pervasive departure from GAAP would result in a qualified or adverse opinion, which includes the phrase "do not present fairly" in the auditor's report. Choice B is a reference to a disclaimer of opinion, C is a standard opening paragraph, and D is too vague and does not specifically address the departure from GAAP.

When Auditors Conclude That a Material and Pervasive Departure from GAAP