Swift Ltd has disclosed the fact that they are being sued for $3 million.Swift Ltd reported a profit for the year of $300 million and has total assets of $75 million.You conclude that disclosure of the litigation is adequate.What type of opinion should you express on the financial report of Swift Ltd?
A)Disclaimer of opinion.
B)Unmodified opinion with an Emphasis of Matter.
C)Unmodified opinion.
D)Qualified opinion or adverse opinion.

Question

Quizplus · Accepted Answer

The disclosure of the litigation for $3 million may require an emphasis of matter in the auditor's report to draw the users' attention to the litigation. However, it does not affect the financial statements materially, as the amount is insignificant in relation to Swift Ltd's profit and total assets. Therefore, an unmodified opinion with an emphasis of matter is the best choice. A disclaimer, qualified or adverse opinion would be inappropriate and not supported by the facts.

Swift Ltd Has Disclosed the Fact That They Are Being