Question

An investor reading the financial statements of The Sundby Corporation observes that the statements are accompanied by an unmodified auditors' report. From this the investor may conclude that:Answers:Any disputes over significant accounting issues have been settled to the auditors' satisfaction.The auditors are satisfied that Sundby is operationally efficient.The auditors have ascertained that Sundby's financial statements have been prepared accurately.Informative disclosures in the financial statements but not necessarily in the footnotes are to be regarded as reasonably adequate.

Answer 1

The correct option is that any disputes over significant accounting issues have been settled to auditor's satisfaction

Step-by-step explanation:

The auditor does not certify that the company has operated efficiently,rather the auditor's report provides an assurance that the financial statement in material respect have been prepared in accordance with generally acceptable accounting standard such as the International Financial Reporting Standards(IFRS) , The U.S GAAP e.t.c

As a result of the above,it is undoubtedly clear that the auditor's report does not certify in its entirety that financial statements are accurate.

For the auditor's report to be unmodified , there has to be some high level of satisfaction in terms of significant accounting issues.