When is an adverse audit opinion generally appropriate?
Correct answer: A. When financial statements contain material and pervasive misstatements
- A. When financial statements contain material and pervasive misstatements
- B. When the auditor finds no material misstatement
- C. When the auditor cannot attend the inventory count but obtains other evidence
- D. When management corrects all material errors before the report date
Explanation
An adverse opinion is issued when misstatements are both material and pervasive, so the financial statements do not present fairly. A limitation on evidence may instead lead to a qualified opinion or disclaimer, depending on its severity.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
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
162 free Auditing MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Auditing questions
Which situation most directly threatens an auditor’s independence?
Which statement best describes the purpose of audit working papers?
Which audit evidence is generally considered more reliable?
What is the main distinction between accounting and auditing?
How does an investigation usually differ from a routine financial statement audit?
An independent audit of financial statements provides which level of assurance about the absence of material misstatement?