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

Under which circumstance would an auditor typically not express an unmodified opinion?

1. Not receiving audited statements of a consolidated investee

2. Omitting quarterly financial data required by the SEC

3. Emphasizing an important subsequent event

4. Material change in accounting principles between periods

The correct answer is: Not receiving audited statements of a consolidated investee

An auditor typically does not express an unmodified opinion when they do not receive sufficient appropriate audit evidence to support the audit conclusions. In the scenario where audited statements of a consolidated investee are not received, the auditor cannot adequately assess the financial position and performance of the investee, which would result in a limitation on the scope of the audit. This lack of evidence affects the auditor's ability to provide an unmodified opinion because an unmodified opinion requires assurance that financial statements are free from material misstatement and that there is sufficient appropriate evidence to support the conclusions reached. The other circumstances listed would warrant different types of opinions or additional disclosures, but they do not inherently limit the auditor's scope of the audit as severely as the inability to obtain audited statements of a consolidated investee. For instance, omitting required quarterly financial data might lead to a qualified opinion, but it does not limit the auditor’s ability to gather evidence regarding the existing financial statements. Similarly, emphasizing an important subsequent event may result in an emphasis-of-matter paragraph but would not affect the unmodified status if the financial statements were otherwise fair. Finally, a material change in accounting principles may require additional disclosures, but as long as those disclosures are made, the auditor could still issue an unmodified