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

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What type of opinion is expressed in an auditor's report if there are material misstatements in the financial statements?

Unmodified opinion.
Qualified opinion.
Adverse opinion.
Disclaimer of opinion.

The correct answer is: Qualified opinion.

When an auditor identifies material misstatements in the financial statements but believes that the statements, taken as a whole, are still fairly presented, a qualified opinion is appropriate. This type of opinion indicates that, except for the specific identified misstatements, the financial statements are in accordance with the applicable financial reporting framework. A qualified opinion serves to highlight that while there are material issues present, they do not overshadow the overall reliability of the financial statements. This distinguishes it from other types of opinions like an adverse opinion, which signifies that the financial statements are not fairly presented due to pervasive misstatements, or a disclaimer of opinion, which occurs when the auditor is unable to obtain sufficient appropriate audit evidence to form an opinion on the financial statements. In summary, a qualified opinion reflects that there are material misstatements, but also acknowledges that, with those exceptions, the financial statements can still provide relevant and requested information.