For each of the following brief scenarios assume that you ar

For each of the following brief scenarios, assume that you are the CPA reporting on the client’s financial statements. Match the type of opinion that best fits the circumstance. Note slight differences, such as when a misstatement is pervasive or the fact pattern indicates pervasiveness. Do not read more into the circumstance than what is presented. Unless stated otherwise, assume that the information presented is material to the financial statements.

QUESTION 1 0.0000 For each of the following brief scenarios, assume that you are the CPA reporting on the client\'s financial statements. Match the type of opinion that best fits the circumstance. Note slight differences, such as when a misstatement is pervasive or the fact pattern indicates pervasiveness. Do not read more into the circumstance than what is presented. Unless stated otherwise, assume that the information presented is material to the financial statements. A Your client has declined to depreciate its assets ADVERSE this year because the depreciation expense B. would reduce the year\'s small income to a loss and the dollar amount is pervasive. UNQUALIFIED PLUS ADDITIONAL LANGUAGE C. DISCLAIMER D. B A client\'s financial statements follow GAAP, but UNQUALIFIED you wish to emphasize that the client is a subsidiary of Webster Corporation in the audit report.

Solution

A. Adverse opinion should be given as it is not following GAAP and indulged in misrepresentation of accounts.

B. Unqualified plus additional language.

C. Unqualified plus additional language for the change in remaining life.

D. Unqualified report plus additional language that the change will bring material effect in future.

E. Disclaimer should be given for the loss to be calculated, Otherwise unqualified report should be issued.

F. Unqualified report to be issued for this financial year.