Final answer:
An auditor should conduct an audit and prepare a report on an entity's rent and royalty revenues to provide an opinion on the accuracy and fairness of the financial statements, without providing recommendations for improvement.
Step-by-step explanation:
When an auditor is asked to express an opinion on an entity's rent and royalty revenues, the auditor should conduct an audit of the entity's rent and royalty revenues. This involves reviewing financial statements, assessing the adequacy of the revenue recognition, verifying that transactions are accurately recorded and are legitimate, and ensuring that disclosures are appropriate. The auditor must also prepare a report on the findings which typically includes an opinion on whether the financial statements fairly present the financial position of the entity in accordance with the applicable financial reporting framework.
The auditor is not expected to provide recommendations for improving the entity's rent and royalty revenues as the primary role is to provide an independent and objective opinion on the accuracy and fairness of the financial statements.