In Which of the Following Circumstances Would an Adverse Opinion

question 56

Multiple Choice

In which of the following circumstances would an adverse opinion be appropriate?

• A)An uncertainty prevents the issuance of an unmodified report.
• B)The auditor is not independent with respect to the enterprise being audited.
• C)A client-imposed scope limitation prevents the auditor from complying with the auditing standards.
• D)The financial report is prepared on the going concern basis when it is not appropriate.

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Definitions:

Direct Labor Efficiency Variance

The difference between the actual hours of direct labor used and the standard hours expected for the production achieved.

Direct Labor Rate Variance

A financial metric used to measure the difference between the actual hourly wage paid to workers and the expected (or standard) wage rate for a specific period.

Standard Direct Labor Cost

The predetermined cost of labor assigned directly to the production of goods, based on estimated time and wage rates.

Total Overhead Variance

The difference between the actual overhead incurred and the overhead allocated to production over a period.