If there is a material misstatement in the financial statements that is related to a specific account in the financial statements,the auditor should
A)in the basis for qualified opinion modification paragraph,the auditor should include a description and quantification of the financial effects of the misstatement,if at all possible.If it is not possible to quantify the misstatements,the auditor should state this is the basis for adverse opinion modification paragraph.
B)in the basis for modification paragraph,the auditor should include a description and quantification of the financial effects of the misstatement,if at all possible.If it is not possible to quantify the misstatements,the auditor should state this is the basis for modification paragraph.
C)in the basis for adverse opinion modification paragraph,the auditor should include a description and quantification of the financial effects of the misstatement,if at all possible.If it is not possible to quantify the misstatements,the auditor should state this is the basis for disclaimer of opinion modification paragraph.
D)include in the basis for modification paragraph,a description explaining how the disclosure is misstated.

Question

Quizplus · Accepted Answer

The correct choice is B because it accurately describes the auditor's responsibility to include a description and quantification of the financial effects of the misstatement in the basis for modification paragraph of their report, if possible. If quantification is not possible, this fact should also be stated in the basis for modification paragraph. This approach aligns with auditing standards that require clear communication of the nature and impact of misstatements found during the audit. Choices A, C, and D suggest incorrect procedures or paragraphs for dealing with misstatements.

If There Is a Material Misstatement in the Financial Statements