Auditors should disclose the substantive reasons for expressing an adverse opinion on the entity's financial statements in an additional paragraph
A) Preceding the scope paragraph.
B) Preceding the opinion paragraph.
C) Following the opinion paragraph.
D) In the footnotes to the financial statements.

Question

Quizplus · Accepted Answer

According to the PCAOB standards, the auditor should include an additional paragraph that discloses the substantive reasons for expressing an adverse opinion immediately before the opinion paragraph in the auditor's report. This will help the users of the financial statements to understand the key issues that led the auditor to express an adverse opinion on the financial statements. It is also important to note that disclosing the reasons for the opinion in the footnotes or preceding the scope paragraph might not provide enough visibility to the auditors' opinion on the financial statements.

Auditors Should Disclose the Substantive Reasons for Expressing an Adverse