Types of Audit Opinions

question 41

Essay

Types of Audit Opinions
For each of the following independent situations, determine the type of opinion that will most likely be issued by the firm auditing the financial statements of a U.S. company.
1.The client will not allow the auditor to view the minutes for the entire year under audit and beyond.
2.The auditor finds that the firm is not independent of the client on the last day of fieldwork.
3.The client declines to include a statement of cash flow in the financial statements.
4.The client fails to record an immaterial amount of insurance paid in advance as an asset.
5.The client does not record impairment of goodwill and will not depreciate property and equipment. Both are considered very material.
6.There is substantial doubt about the client's ability to continue as a going concern.

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Definitions:

Illegal Dumping

The improper disposal of waste at a non-approved location.

Duty of Loyalty

is an ethical and legal obligation requiring individuals, often corporate directors or employees, to act in the best interest of their company or employer, avoiding conflicts of interest.

Duty of Care

A legal obligation imposed on individuals or entities requiring adherence to a standard of reasonable care to prevent harm to others.

Illegal Dividends

Dividends distributed by a company despite it not having sufficient profits or legally available capital, violating corporate law or its own articles of incorporation.