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

Which phrase is appropriate in the opinion paragraph when expressing a qualified opinion?

1. No

2. Yes

3. No VS. Yes

4. Yes VS. No

The correct answer is: No

In the context of expressing a qualified opinion in an audit report, the use of the phrase "No" is appropriate because it indicates that the financial statements as a whole are not free from material misstatement due to specific issues that the auditor has identified. A qualified opinion is typically issued when there are certain exceptions to the overall fairness of the financial statements, meaning that while the financial statements are mostly accurate and reliable, there are some reservations that are clearly specified. In the opinion paragraph of a qualified opinion, the auditor must clearly outline the reasons for the qualification, which could include limitations on the scope of the audit or specific departures from generally accepted accounting principles. The phrase "No" effectively communicates the presence of material issues that detract from a clean audit opinion, distinguishing it from a standard unqualified opinion where everything is satisfactory. The other phrases would not appropriately convey the nuances of a qualified opinion. The use of "Yes" implies total agreement or a clean opinion, which contradicts the essence of a qualification. "No VS. Yes" and "Yes VS. No" suggest a duality or a comparison rather than directly stating the nature of the opinion, which could confuse the reader regarding the clarity of the auditor's stance on the financial statements. Thus