An auditor should generally issue a qualified opinion when a material misstatement or limitation is:
Correct answer: B. Material but not pervasive
- A. Immaterial and isolated
- B. Material but not pervasive
- C. Pervasive and fundamental
- D. Limited only to cash transactions
Explanation
A qualified opinion is appropriate when the matter is material but does not affect the financial statements pervasively. A pervasive misstatement may require an adverse opinion, while a pervasive scope limitation may require a disclaimer.
Last updated
About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
Practise Auditing
50 free Auditing MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
Related questions
A disclaimer of opinion is generally issued when the auditor cannot obtain sufficient appropriate evidence and the possible effects are:
A material fire occurs at a factory after the reporting date and relates to conditions arising after that date. What should generally be done?
An auditor discovers a significant deficiency in internal control. What is the most appropriate action?
An auditor increases substantive testing after assessing a high risk of material misstatement. This is mainly an example of:
An auditor normally issues an unmodified opinion when the financial statements are, in all material respects, prepared in accordance with the applicable framework and what condition also exists?