Question

The opinion paragraph of the audit report for Schnook Co. states that the financial statements "do not present fairly". Which type of audit report is this?

a. Improper.
b. Adverse.
c. Disclaimer.
d. Qualified.

Answer 1

A qualified report is issued when the auditor believes the financial statements do not present fairly in all material respects.

Step-by-step explanation:

This type of audit report is called a qualified report. In a qualified report, the auditor expresses an opinion that the financial statements are not presented fairly in all material respects. This can be due to a limitation in the scope of the audit or a departure from generally accepted accounting principles (GAAP).