When an auditor is faced with a material departure from GAAP that is pervasive,the audit report should contain
A)an unqualified opinion.
B)a qualified opinion with an explanatory paragraph.
C)an adverse opinion.
D)a disclaimer of opinion.

Question

Quizplus · Accepted Answer

A pervasive material departure from GAAP indicates that the financial statements are materially misstated and not in compliance with GAAP. An adverse opinion is appropriate in such situations as it conveys that the financial statements are materially misstated and not reliable. An adverse opinion is a serious warning to users of the financial statements of the material departure from GAAP.

When an Auditor Is Faced with a Material Departure from GAAP