4 cpa 02787 management believes and the auditor is

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Unformatted text preview: "d" is incorrect. As long as the auditor's scope has not been limited, the auditor may report on only one financial statement. 4. CPA-02787 Management believes and the auditor is satisfied that a material loss probably will occur when pending litigation is resolved. Management is unable to make a reasonable estimate of the amount or range of the potential loss, but fully discloses the situation in the notes to the financial statements. If management does not make an accrual in the financial statements, the auditor should express a(an): a. b. c. d. Qualified opinion due to a scope limitation. Qualified opinion due to a departure from GAAP. Unqualified opinion with an explanatory paragraph. Unqualified opinion in a standard auditor's report. CPA-02787 Choice "d" is correct. If a contingent liability is probable, but not estimable, and it is disclosed in the footnotes, the auditor issues an unqualified audit report without an explanatory paragraph. Choice "a" is incorrect. When a contingent liability is probable, but not estimable, it should be disclosed in the footnotes. A qualified opinion due to a...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING audit cpa taught by Professor Becker during the Fall '12 term at Keller Graduate School of Management.

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