Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

If an independent CPA has not audited or reviewed financial statements but is associated with them, what type of report must be issued?

1. Opinion with modifications

2. Disclaimer of opinion

3. Audit report

4. Review statement

The correct answer is: Disclaimer of opinion

When an independent CPA has not conducted an audit or review of financial statements but is still associated with them, the appropriate type of report to issue is a disclaimer of opinion. This scenario often arises when a CPA has prepared the financial statements or has used them in some capacity without performing the usual procedures associated with an audit (which provides reasonable assurance) or a review (which provides limited assurance). Since the CPA has not gained sufficient knowledge or evidence regarding the financial statements, they cannot express an opinion or assurance about them. The disclaimer of opinion communicates that the CPA is not in a position to provide any assurance regarding the financial statements due to the absence of a thorough examination. This caution protects the CPA from potential liability arising from users who might wish to rely on those financial statements, thus ensuring transparency about the level of involvement and assurance provided. The other options, such as an audit report or a review statement, would not be appropriate since those forms of reports would imply a level of scrutiny and assurance that the CPA did not apply in this situation. An opinion with modifications would be relevant in instances where the CPA has performed an audit or review but found certain issues, which is not applicable here.