When the financial statements contain a material departure from GAAP that the auditor believes is justified,justification
A)should appear in a footnote.
B)should appear in a paragraph added before the scope paragraph.
C)should appear in the opening paragraph.
D)should appear in a paragraph added before the opinion paragraph.

Question

Quizplus · Accepted Answer

If the auditor determines that there is a material departure from GAAP, but also concludes that such departure is justified, the justification should be disclosed in a separate paragraph added before the opinion paragraph. This is done to ensure that the reader of the financial statements is aware of both the departure and the justification before reading the auditor's opinion. Therefore, choice D is the correct answer.

When the Financial Statements Contain a Material Departure from GAAP