Explanation:
Choice "F" is the correct opinion. This is a scope limitation. Either a disclaimer of opinion (if the
item is very material) or an "except for" qualified opinion (if the item is material) should be
issued.
QUESTION: 165
This question presents independent factual situations an auditor might encounter in conducting
an audit. List B represents the report modifications (if any) that would be necessary. Select as
the best answer for each item, the action the auditor normally would take. The report
modifications in List B may be selected once, more than once, or not at all.
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.
Item to Be Answered
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.
List B Report Modifications

A. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph
without modifying the three standard paragraphs.
B. Describe the circumstances in an explanatory paragraph following the opinion paragraph
without modifying the three standard paragraphs.
C. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph
and modify the opinion paragraph.
D. Describe the circumstances in an explanatory paragraph following the opinion paragraph and
modify the opinion paragraph.
E. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph
and modify the scope and opinion paragraphs.
F. Describe the circumstances in an explanatory paragraph following the opinion paragraph and
modify the scope and opinion paragraphs.
G. Describe the circumstances within the scope paragraph without adding an explanatory
paragraph.
H. Describe the circumstances within the opinion paragraph without adding an explanatory
paragraph.
I. Describe the circumstances within the scope and opinion paragraphs without adding an
explanatory paragraph.
J. Issue the standard auditor's report without modification.

Answer(s): E
Explanation:
Choice "E" is the correct modification. The situation calls for a qualified opinion or a disclaimer
of opinion, but none of the choices adequately describes a disclaimer. Therefore, a qualified
opinion is the best answer. The circumstances should be described in an explanatory paragraph
preceding the opinion paragraph and the scope and opinion paragraphs should be modified.
https://Free-Braindumps.com

Free AICPA CPA-Auditing Exam Braindumps (page: 80)

CPA-Auditing Exam Discussions & Posts