The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?
Correct answer: C. Unqualified opinion
- A. Disclaimer of opinion
- B. Qualified opinion
- C. Unqualified opinion
- D. Adverse opinion
Explanation
A disclosed depreciation-method change with no material effect on the current financial statements does not require a modified opinion, even if its future effect may be significant. The auditor can therefore issue an unqualified opinion, assuming the change is acceptable and properly disclosed.
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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.
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