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

When presenting comparative financial statements with a predecessor auditor's unmodified report not shown, what should the successor auditor indicate?

1. The predecessor auditor expressed a qualified opinion

2. There is no need to mention the predecessor auditor

3. The predecessor auditor expressed an unmodified opinion

4. Only the current year's financial statements are being audited

The correct answer is: The predecessor auditor expressed an unmodified opinion

When presenting comparative financial statements without showing the predecessor auditor's unmodified report, the successor auditor should inform the readers that the predecessor auditor expressed an unmodified opinion on the prior year’s financial statements. This is crucial because it provides context and reliability to the comparative financial information being presented. By acknowledging the predecessor's opinion, the new auditor maintains transparency regarding the quality and integrity of the previous financial statements, helping users of the financial statements understand the continuity of the audit opinion. This approach adheres to professional standards and ensures that stakeholders have a complete picture of the audit history. Failing to mention the predecessor auditor could create uncertainty about the reliability of the information for the earlier period. The option that states there is no need to mention the predecessor auditor overlooks the importance of this context, while the other options either misrepresent the predecessor's opinion or focus incorrectly on the current year’s audit status only. By stating that an unmodified opinion was expressed by the predecessor auditor, the successor auditor establishes trust and credibility for the financial statements being reviewed.