Question

During your audit of Cuccia Coal Company, the controller, Tracy Tricks, refuses to allow you to confirm accounts receivable because she is concerned about complaints from her customers. You are unable to satisfy yourself about accounts receivable by other audit procedures and you are concerned about Tracy's true motives. What type of report should you include in your audit findings?

1) Management Letter
2) Qualified Opinion
3) Unqualified Opinion
4) Adverse Opinion

Answer 1

If the controller obstructs the audit process and accounts receivable cannot be verified, an Adverse Opinion should be included in the audit findings.

Step-by-step explanation:

If you are unable to satisfy yourself about accounts receivable by other audit procedures and you suspect that the controller, Tracy Tricks, is intentionally obstructing your audit process, you should include an Adverse Opinion in your audit findings. An Adverse Opinion is issued when the auditor concludes that the financial statements are not fairly presented and the departure from generally accepted accounting principles is material and pervasive. In this case, Tracy's refusal to allow confirmation of accounts receivable raises concerns about the accuracy of the financial statements and warrants the issuance of an Adverse Opinion.