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

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Which opinion type indicates that an auditor believes there is a material misstatement that is not pervasive?

  1. Unmodified opinion.

  2. Qualified opinion.

  3. Adverse opinion.

  4. Disclaimer of opinion.

The correct answer is: Qualified opinion.

A qualified opinion indicates that the auditor has identified a material misstatement in the financial statements, but it is not pervasive enough to warrant an adverse opinion. This type of opinion communicates to the users of the financial statements that, although there is a specific issue that may affect the financial statements, the rest of the information is fairly presented. In situations leading to a qualified opinion, the auditor will provide details about the nature of the misstatement and how it affects the financial statements in their report. This informs the users that while there is a concern, the overall integrity of the financial statements is still largely intact. An unmodified opinion suggests that the financial statements are free from material misstatement and present a true and fair view, which does not align with the presence of material misstatement. An adverse opinion would be issued if the misstatement was pervasive, indicating that the entire set of financial statements is materially misstated, which is not applicable in this case. Lastly, a disclaimer of opinion occurs when the auditor cannot obtain sufficient appropriate evidence to form an opinion and thus does not express an opinion at all, rather than indicating any misstatement’s materiality.