When Auditors Conclude That a Material and Pervasive Departure from GAAP

question 27

Multiple Choice

When auditors conclude that a material and pervasive departure from GAAP exists in an entity's financial statements, which of the following phrases would most likely be included in their report?

• A)"Do not present fairly."
• B)"Except for the effects of the matter described in the Basis for Opinion section of our report…"
• C)"We were engaged to audit the accompanying financial statements."
• D)"As a result of the departures discussed in the Opinion on the Financial Statements section of our report…"

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Definitions:

Repeat-purchase Item

A product or service that is bought by consumers on a regular basis due to its continuing need or satisfaction.

Free Riders

Individuals or entities that benefit from resources, goods, or services without paying for them or contributing to their provision.

Production Costs

The expenses incurred in the manufacture of goods or services, including raw materials, labor, and overhead costs.

Benefit

An advantage or gain received from a product or service.