When the Financial Statements Contain a Material Departure from GAAP

question 51

Multiple Choice

When the financial statements contain a material departure from GAAP that the auditor believes is justified, where should the justification appear?

• A) In a footnote.
• B) In a paragraph added before the scope paragraph.
• C) In the opening paragraph.
• D) In a paragraph added before the opinion paragraph.

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Definitions:

Tax Audit

An examination or review by tax authorities to verify the accuracy of taxes filed by an individual or organization.

Expressly State

To explicitly specify or declare something in a clear and unequivocal manner.

Agency by Operation of Law

A legal principle that creates an agency relationship due to circumstances or law rather than an agreement between the agent and principal.

Charges

Fees or financial obligations imposed by an entity for services rendered or as penalties for non-compliance with laws or regulations.