When a client declines to include a statement of cash flows in its financial report, the auditor's report will usually:
A)include a separate paragraph that summarises the company's financing and investing activities.
B)contain either a qualified or adverse opinion because of inadequate disclosure.
C)refer to the scope limitation.
D)contain either a qualified opinion or a disclaimer of opinion on the basis of the uncertainty caused by this disagreement with those charged with governance.

Question

Quizplus · Accepted Answer

The statement of cash flows is a required financial statement, and omitting it will result in inadequate disclosure. As a result, the auditor's report will contain either a qualified or adverse opinion, as per the circumstances. Therefore, Option B is the best choice. Option A does not accurately reflect the situation, and Option C does not provide adequate information. Option D is incorrect since it refers to a scope limitation, which is a different scenario.

When a Client Declines to Include a Statement of Cash