Types of Audit Opinions

question 16

Essay

Types of Audit Opinions.
A CPA has completed an audit of the financial statements of a long-haul trucking company for the year ended December 31, 2014. Prior to 2014, the company depreciated its trucks over 10 years. However, during 2014, the company determined that a more realistic estimated life for its trucks was 8 years and computed the 2014 depreciation on the basis of the revised estimate. The CPA is satisfied that the 8 year estimate is reasonable, but the change will have a material effect on the comparability of the company's financial statements. The company adequately disclosed the change in estimated useful lives of its trucks and the effect of the change on 2014 income in a note to the financial statements.
REQUIRED:
Which type of audit report would you suggest be issued on the 2014 financial statements and why?

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Definitions:

Record Budget

A detailed financial document recording projected revenue and expenditure over a specific period, often indicating a surplus or deficit.

Dot.com Bubble

A period of excessive speculation and investment in Internet-based companies during the late 1990s, leading to a market crash in 2000-2001.

Budget Deficits

Occurs when government expenditures exceed revenues, leading to a shortfall that must be financed through borrowing.

Full Employment

A situation where all available labor resources are being used in the most efficient way possible, typically characterized by very low unemployment rates.