During the year under audit,Forrest Corporation experienced significant losses due to a pervasive fraud scheme.Because of the lack of documentary evidence and inability to perform appropriate auditing procedures,the auditors were unable to determine the total amount of the loss.What type of report should the auditors issue?
A)Qualified or adverse opinion.
B)Disclaimer or adverse opinion.
C)Disclaimer or qualified opinion.
D)Unmodified opinion with an other-matter paragraph.

Question

Quizplus · Accepted Answer

In this scenario, the auditors were unable to determine the full extent of the losses due to a pervasive fraud scheme. As a result, it is likely that they will be unable to obtain sufficient evidence to support their audit opinion. In such cases, the auditors may issue a disclaimer of opinion or a qualified opinion. However, as the losses are significant, and the auditors were unable to perform appropriate auditing procedures, a disclaimer of opinion is more appropriate than a qualified opinion. Therefore, the best choice is C - Disclaimer or qualified opinion.

During the Year Under Audit,Forrest Corporation Experienced Significant Losses Due