In which of the following circumstances may auditors issue a standard report on the entity's financial statements?
A) The entity changed accounting principles having an immaterial effect on the entity's financial position, results of operations, and cash flows.
B) The auditors wish to emphasize a matter regarding the financial statements.
C) The financial statements are affected by a departure from a generally accepted accounting principle explained and justified by Rule 203 of the AICPA Code of Professional Conduct.
D) The auditors have not been able to audit a substantial portion of the balance sheet because of a circumstance-imposed scope limitation.

Question

Quizplus · Accepted Answer

In accordance with auditing standards, auditors may issue a standard report when they determine that the financial statements are free from material misstatement. In this case, the entity changed accounting principles that had an immaterial effect on the financial statements, which would not affect the auditors' ability to issue a standard report. Options B, C, and D all involve circumstances that may require the auditors to modify their report or issue an adverse opinion.

In Which of the Following Circumstances May Auditors Issue a Standard