Respond 9

Question 1

As you have studied, audit reports may contain different opinion and/or contain various explanatory paragraphs. The most commonly report that is issued is the standard unqualified.

What is the difference between the different opinions and/or explanatory paragraphs? How does the issuance of a report other than standard unqualified impact a company? Explain.

Respond to this… Unqualified opinion says the financial statements are fair and accurate and follow GAAP (Auditor's Opinion, n.d.). This opinion shows the financial statements are free of any misrepresentations (Henderson, n.d.).

“Qualified opinion contains exceptions, which may include the scope of the audit” (Auditor's Opinion, n.d.).  This opinion says the company’s financial records do not follow GAAP; but do not have any misrepresentations (Henderson, n.d.).

Adverse opinion contains major exceptions or warning (Auditor's Opinion, n.d.). The financial records do not follow GAAP and there are major misrepresentations (Henderson, n.d.).  This is the worst type of opinion (Henderson, n.d.).

Disclaimer of Opinion is where the auditor is unable to complete the audit report. One reason this could happen is if there is an absence of appropriate financial records (Henderson, n.d.).

Anything other than Unqualified can impact a company in many ways. The company may not be able to obtain financing. Investors may not be willing to invest. If customers found out they may give their business to a company that has an unqualified opinion. I know personally I wouldn’t want to work for a company that has anything but an unqualified opinion. I would be concerned that the business will not be successful.

 

Auditor's Opinion. (n.d.). Retrieved from Investopedia: http://www.investopedia.com/terms/a/auditors-opinion.asp

Henderson, K. J. (n.d.). What Are the 4 Types of Audit Reports? Retrieved from Chron: http://smallbusiness.chron.com/4-types-audit-reports-3794.html

Question 2

Consider the following statement:

"Employers should be able to replace permanent workers during a strike."

Do you agree? Explain why.

Respond to this… Yes I agree that employers should be able to replace workers during a strike.  I agree with this only to the extent of "during the strike".  This is where companies hire temporary workers for the duration of the strike.  If employees go on strike and the company attempts to permanently replace them then I would not agree.

The reasons I feel that a company should be able to hire temporary workers is to keep the business going.  If a company were unable to do this then the company could go under and the striking workers wouldn't have a place to return to work.  It appears both beneficial for the employee (striker) and the company (employer).

If an employer were unable to keep doing business with the use of temporary workers then the company would have to bend to every demand made by a striking labor force.  Often times the purpose for a strike is legitimate and calls for better treatment of the employees or a wage increase that accounts for cost of living increases.  However, if employees were to band together and demand ridiculous wage increases or put together a list of unrealistic demands then the company would suffer and ultimately fail.

In addition I think that the company should have to be in current negotiations with the striking labor force in order to come to an end agreement that returns the original workers back to work and the company progressing forward.  If no negotiations are taking place then the temporary workers are essentially mis-labeled full time employees.