Question

In which one of the following instances would an auditor most likely issue a standard unqualified opinion without explanatory language?

a. Management's disclosures are missing or inadequate.
b. There is substantial doubt about the entity's ability to continue as a going concern.
c. There is a significant limitation on the scope of the engagement.
d. There is an immaterial deviation from GAAP related to capitalizing repairs.

Answer 1

Auditors would most likely issue a standard unqualified opinion without explanatory language when there is an immaterial deviation from GAAP related to capitalizing repairs.

Step-by-step explanation:

An auditor would most likely issue a standard unqualified opinion without explanatory language in scenario d. when there is an immaterial deviation from GAAP related to capitalizing repairs. In this instance, the auditor does not find any significant departures from generally accepted accounting principles (GAAP) that would affect the financial statements as a whole.

• Example: If a company chooses to capitalize repairs that are considered immaterial according to GAAP guidelines, but everything else in the financial statements complies with GAAP, the auditor would likely issue an unqualified opinion.