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

What should an auditor do if they express a qualified opinion due to a prior period's noncompliance with GAAP and the statements are now restated?

1. Continue to express a qualified opinion

2. Express an unmodified opinion on the restated statements

3. Be accompanied by the original report

4. Qualify the opinion on the restated financial statements

The correct answer is: Express an unmodified opinion on the restated statements

When an auditor expresses a qualified opinion due to a prior period's noncompliance with Generally Accepted Accounting Principles (GAAP), and subsequent financial statements are restated to correct this noncompliance, the auditor should assess the impact of these adjustments on the current financial statements. In such a scenario, when the restated financial statements are presented fairly in accordance with GAAP, the auditor is then in a position to express an unmodified opinion. An unmodified opinion indicates that the auditor believes the financial statements provide a true and fair view of the company's financial position and are in compliance with GAAP for the current period. This follows the principle that if the prior issues have been adequately addressed and the financial statements have been restated satisfactorily to comply with GAAP, the auditor can conclude that the statements are now reliable and free from material misstatement. Considering the alternative approaches mentioned, continuing to express a qualified opinion would not reflect the fact that the issues have been resolved. Accompanying the original report is unnecessary in the context of presenting the restated financials if they are in compliance. Qualifying the opinion on the restated financial statements would imply that there are still some unresolved issues, which contradicts the nature of the restatement meant to rectify