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

What must an auditor include when associated with financial statements that have not been audited?

1. Adverse opinion

2. Compilation report

3. Disclaimer of opinion

4. Qualified opinion

The correct answer is: Disclaimer of opinion

When an auditor is associated with financial statements that have not been audited, the appropriate action is to issue a disclaimer of opinion. This is because the auditor does not provide any assurance on the financial statements since they have not conducted an audit. A disclaimer indicates that the auditor is not expressing an opinion on the reliability of those financial statements because they lack sufficient evidence or have not undergone the rigorous processes typical of an audit. A disclaimer is particularly important as it informs users of the financial statements that they should not rely on them for making decisions, given that no assurance has been provided. This clear communication helps users understand the limitations and risks associated with using the unaudited statements. The other options represent different types of opinions or reports that apply in distinct situations. For instance, an adverse opinion suggests that the financial statements are materially misstated, which is not applicable if the financial statements have not been audited at all. A compilation report is generally used for compiled financial statements, where the accountant presents financial information without providing any assurance but does perform some level of analytical procedures. A qualified opinion occurs when the auditor has identified certain exceptions but concludes that the financial statements are still fairly presented in all material respects, which again would not apply in this case of unaudited financials