ACCOUNTING 1 Week 7 Discussion

Part 1:

An audit firm has been engaged to report on whether a material weakness that previously resulted in an adverse opinion on internal control has been remediated.

Which of the following statements is correct?

1)     If there has been an auditor change, the successor auditor may issue such a report

2)     A significant scope limitation on the auditor's procedures results in a qualified opinion or an adverse opinion

Part 2:

An accountant of an audit client made the following statement: “It is important to read the notes to financial statements, even though they are presented in technical language and are incomprehensible. Auditors may reduce their exposure to third-party liability by stating something in the notes that contradicts completely what the client has presented in the balance sheet or income statement.”

Evaluate the above statement and indicate:

a) areas of agreement, if any
b) areas of misconception, incompleteness, or fallacious reasoning included in the statement