Audit Report Modifications. Complete problem below. List a represents the types of opinions the auditor ordinarily would issue and List B represents the report modifications [if any] that would be necessary. Select as the best answer for each situation [items 1 to 6] the type of opinion and modifications, if any, the auditor would normally select. The types of opinions in List A and the report modifications in List B may be selected once, more than once, or not at all. The paper should be 2-3 pages.
Items 1 through 6 present various independent factual situations an auditor might encounter in conducting an audit. For each situation assume:
•The auditor is independent.
•The auditor previously expressed an unqualified opinion on the prior year’s financial statements.
•Only single-year (not comparative) statements are presented for the current year.
•The conditions for an unqualified opinion exist unless contradicted in the factual situations.
•The conditions stated in the factual situations are material.
• • No report modifications are to be made except in response to the factual situation.
1. In auditing the long-term investments account, an auditor is unable to obtain audited financial statements for an investee located in a foreign country. The auditor concludes that sufficient appropriate audit evidence regarding this investment cannot be obtained.
2. Due to recurring operating losses and working capital deficiencies, an auditor has substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time. However, the financial statement disclosures concerning these matters are adequate.