Charlie Company's Comparative Financial Statements Include the Financial Statements of the Prior

question 115

Multiple Choice

Charlie Company's comparative financial statements include the financial statements of the prior year that were audited by predecessor auditors whose report on those financial statements is not presented. If the predecessor's report was qualified, the successor auditors should

• A)indicate in their report the substantive reasons for the qualification issued by the predecessor auditors.
• B)request the entity to reissue the predecessor's report on the prior years' statements.
• C)issue an updated comparative report on the entity's financial statements, indicating the involvement of component auditors.
• D)express an opinion only on the current year's financial statements and make no reference to the prior years' financial statements or opinion.

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Definitions:

Faithfully Representative

A qualitative characteristic of financial information that ensures the data accurately reflects the economic phenomena it represents.

Neutral

An unbiased position or stance that does not favor any side in a conflict or competition.

Verifiable

The quality of information that occurs when independent observers, using the same methods, obtain similar results.

Faithful Representation

Numbers and descriptions match what really existed or happened—they are factual.