Audit and Assurance Practice Exam 2025 – The Complete All-in-One Guide for Exam Success!

When there is a departure from Generally Accepted Accounting Principles (GAAP) that misleads, the appropriate audit report to issue is one that communicates the issue clearly to the users of the financial statements. An unqualified opinion with a description of the departure serves that purpose, as it indicates that, although the financial statements are generally in accordance with GAAP, there is a significant issue that needs to be highlighted.

This type of report allows the auditor to acknowledge the overall fairness of the financial statements while also bringing attention to the specific departure from GAAP that may mislead users. By providing a description of the departure, the auditor emphasizes the importance of the issue and informs users about the nature and implications of the misleading information.

An unqualified opinion without explanation would not serve the users’ interest, as it implies that there are no issues with the financial statements, despite the presence of a GAAP departure. A qualified opinion without mention of GAAP does not sufficiently inform the users about the significant departure. An adverse opinion without explanation does indicate that the financial statements do not present fairly in conformity with GAAP, but it is more severe than what is warranted if the departure is just misleading without rendering the entire financial statement unreasonable.

Thus, an unqualified opinion