Advanced Auditing & Professional EthicsQuestion 5831 of 2
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As per SA 705 (Revised), when the auditor concludes that misstatements are both material and pervasive to the financial statements, the auditor shall issue:

Options

AA Qualified Opinion.
BAn Adverse Opinion.
CA Disclaimer of Opinion.
DAn Unmodified Opinion with Emphasis of Matter paragraph.
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Correct Answer

✅ Option B — An Adverse Opinion.

All Options:

  • AA Qualified Opinion.
  • BAn Adverse Opinion. ✓
  • CA Disclaimer of Opinion.
  • DAn Unmodified Opinion with Emphasis of Matter paragraph.

Detailed Solution & Explanation

Correct Answer: Option **B** Explanation: According to SA 705 (Revised), 'Modifications to the Opinion in the Independent Auditor's Report': - If misstatements are material but NOT pervasive: Qualified Opinion. - If misstatements are BOTH material and pervasive (and sufficient appropriate audit evidence has been obtained): Adverse Opinion. - If the auditor is unable to obtain sufficient appropriate audit evidence and the possible effects are both material and pervasive: Disclaimer of Opinion.

More Questions from Advanced Auditing & Professional Ethics

Under the Chartered Accountants Act, 1949, First Schedule, Part I, Clause (2), a Chartered Accountant in practice is deemed to be guilty of professional misconduct if he pays or allows or agrees to pay or allow, directly or indirectly, any share, commission or brokerage in the fees or profits of his professional business, to:

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