What category of audit report does each scenario fall into? The company is in the airline leasing

What category of audit report does each scenario fall into? 

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The company is in the airline leasing business. During the year, they changed the 1. 2 depreciation method for the planes, which had a material effect on depreciation expense. During the year, your client changed the useful lives of significant manufacturing fixed assets. This change has a material effect on the current year's financial statements. You Unmodified opinion - standard wording agree with the change. The client has a significant investment in a foreign subsidiary. You are unable to verify the 2. 1 3. assets at the subsidiary. 2 Unmodified opinion with added explanatory paragraph (emphasis-of-matter) Because of declining profitability and a negative working capital balance, the auditor has doubt about whether the company will continue in existence. Management's plan to raise Unmodified opinion - changes to standard report wording 4. additional capital do not mitigate those concerns. A principal auditor wishes to share responsibility with another CPA who audited a wholly- owned subsidiary of the entity and issued an unqualified opinion. The total assets and Qualified opinion - GAAP departure revenues of the subsidiary represent 13% and 18%, respectively, of the total assets and 5. revenues of the entity being audited. 4. You were engaged by the client to perform the audit after year-end. You were unable to observe the highly material ending balance in inventory and were unable to satisfy Qualified opinion - Scope limitation 6. yourself using alternative procedures. Harrison automotive changed from straight-line to accelerated declining-balance depreciation. The change has a material effect on current year depreciation expense and Disclaimer of opinion 7. will be highly material in future periods. Intelligis Electronics is a manufacturer of advanced electrical components. During the year, changes in the market resulted in a significant decrease in the demand for their products, Adverse opinion which are now being sold significantly below cost. Management refuses to write-off the 8. products or to increase the reserve for obsolescence. The company is in the airline leasing business. During the year, they changed the 1. 2 depreciation method for the planes, which had a material effect on depreciation expense. During the year, your client changed the useful lives of significant manufacturing fixed assets. This change has a material effect on the current year's financial statements. You Unmodified opinion - standard wording agree with the change. The client has a significant investment in a foreign subsidiary. You are unable to verify the 2. 1 3. assets at the subsidiary. 2 Unmodified opinion with added explanatory paragraph (emphasis-of-matter) Because of declining profitability and a negative working capital balance, the auditor has doubt about whether the company will continue in existence. Management's plan to raise Unmodified opinion - changes to standard report wording 4. additional capital do not mitigate those concerns. A principal auditor wishes to share responsibility with another CPA who audited a wholly- owned subsidiary of the entity and issued an unqualified opinion. The total assets and Qualified opinion - GAAP departure revenues of the subsidiary represent 13% and 18%, respectively, of the total assets and 5. revenues of the entity being audited. 4. You were engaged by the client to perform the audit after year-end. You were unable to observe the highly material ending balance in inventory and were unable to satisfy Qualified opinion - Scope limitation 6. yourself using alternative procedures. Harrison automotive changed from straight-line to accelerated declining-balance depreciation. The change has a material effect on current year depreciation expense and Disclaimer of opinion 7. will be highly material in future periods. Intelligis Electronics is a manufacturer of advanced electrical components. During the year, changes in the market resulted in a significant decrease in the demand for their products, Adverse opinion which are now being sold significantly below cost. Management refuses to write-off the 8. products or to increase the reserve for obsolescence.

Answer rating: 100% (QA)

1 2 Unmodified opinion with added explanatory paragraph 2 6 Dis... View the full answer