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

question 93

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-year statements.
• C) Issue an updated comparative report on the entity's financial statements, indicating the division of responsibility.
• D) Express an opinion only on the current-year financial statements and make no reference to the prior-year financial statements or opinion.

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Definitions:

Past Practice

A term used in labor relations to refer to a customary practice that, over time, has become an accepted way of doing things despite not being formally written into a contract.

Arbitrators

Neutral third parties chosen to settle disputes outside of court, whose decisions are typically binding.

Arbitration Case

A legal dispute that is resolved outside of court by an arbitrator, whose decision is typically binding on both parties.

Turnover

The rate at which employees leave a business and are replaced by new employees, which can affect organizational performance and continuity.