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

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Which phrase should an auditor avoid when drafting a qualified opinion related to financial statement discrepancies?

Except for the matters described
Do not present fairly
With respect to certain omissions
Subject to the disclosures above

The correct answer is: Do not present fairly

When drafting a qualified opinion regarding financial statement discrepancies, the phrase "Do not present fairly" should be avoided because it implies a more severe level of issue with the financial statements than a qualified opinion typically conveys. A qualified opinion indicates that, except for specific issues identified in the report, the financial statements present fairly. This phrase strongly suggests that the overall financial statements are fundamentally flawed or misrepresented, which would in fact lean towards an adverse opinion rather than a qualified one. The essence of a qualified opinion is that while there are some discrepancies or areas of concern, the majority of the financial statements are in accordance with generally accepted accounting principles (GAAP) or applicable financial reporting frameworks. The other phrases, such as "Except for the matters described," "With respect to certain omissions," and "Subject to the disclosures above," properly indicate limitations or specific areas of concern without undermining the overall integrity of the financial statements as a whole. These phrases align with the purpose of a qualified opinion which acknowledges certain issues while still allowing for an overall positive assertion regarding the sufficiency of the financial statements.