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

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Under what condition can an auditor express an opinion on accounts receivable when they have disclaimed an opinion on the overall financial statements?

If the auditor also reports on the current asset portion of the balance sheet.
When the report on accounts receivable is for internal use only.
When the report on accounts receivable is separate from the disclaimer.
If the report discloses reasons for the disclaimer of opinion.

The correct answer is: When the report on accounts receivable is separate from the disclaimer.

The ability for an auditor to express an opinion on accounts receivable while having disclaimed an opinion on the overall financial statements hinges on the distinction and separation of the reports. When the report on accounts receivable is crafted as a separate document, it allows for the possibility of an independent assessment of that specific area. This separation emphasizes that the auditor's opinion on accounts receivable is based on the evidence gathered specifically for that segment, which may be sufficient and appropriate. Moreover, a separate report on accounts receivable implies that the auditor has conducted an examination of that area independent of the overall financial statement issues that led to the disclaimer. This enables users of the accounts receivable report to understand the level of assurance provided specifically about that asset category, which might not be affected by the deficiencies present in the overall financial statement audit.