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

If prior-year financial statements were properly restated, what type of opinion should the auditor express on those statements?

1. A qualified opinion on the restated statements

2. An unmodified opinion on the restated statements

3. A disclaimer of opinion

4. No opinion should be expressed

The correct answer is: An unmodified opinion on the restated statements

When prior-year financial statements are properly restated, the appropriate opinion for the auditor to express on those statements is an unmodified opinion. An unmodified opinion indicates that the financial statements present a true and fair view in accordance with the applicable financial reporting framework, free from material misstatement. This is the case when the restatement has been executed correctly, addressing any identified errors or misstatements from the earlier financial reporting. The restatement process implies that necessary corrections have been made to provide reliable historical financial information. When the auditor has assessed that these corrections were made following proper guidelines and that the restated financial statements offer a faithful representation of the company’s financial position and performance, an unmodified opinion reflects that assurance. In contrast, a qualified opinion may arise if there were disagreements with management regarding certain matters that could not be resolved, indicating that while the restated statements are generally accurate, there are specific areas that fall short. A disclaimer of opinion might be appropriate if the auditor could not obtain sufficient evidence to form an opinion due to significant limitations on the scope of the audit. Lastly, not expressing any opinion would be suitable in situations where the auditor is unable to evaluate the financial statements adequately. However, if restatements are done correctly and in accordance