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Question
Leases have been capitalized by the client but refuse to capitalize them in the financial statements; Which of the following reporting options does an auditor have if the amounts pervasively distort the financial statements?
Leases have been capitalized by the client but refuse to capitalize them in the financial statements; Which of the following reporting options does an auditor have if the amounts pervasively distort the financial statements?
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Solution
The correct option is C Adverse opinion
The auditor shall express an adverse opinion when the auditor having obtained sufficient and appropriate audit evidence, concludes that misstatements, individually or in aggregate are both material and pervasive to the financial statements. Here, auditor has the evidence and it is incorrect to not capitalize the same in the financial statements.
The auditor shall express an adverse opinion when the auditor having obtained sufficient and appropriate audit evidence, concludes that misstatements, individually or in aggregate are both material and pervasive to the financial statements.
Here, auditor has the evidence and it is incorrect to not capitalize the same in the financial statements.
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