Question

When auditors conclude that a material and pervasive departure from GAAP exists in an entity's financial statements, which of the following phrases would most likely be included in their report
Do not present fairly in all material respects

Answer 1

Answer:

Do not present fairly in all material respects

Explanation:

In auditing, this kind of conclusion by the auditor is referred to as an adverse opinion.

An adverse opinion is expressed by the auditor in the auditor's report on a company's financial statement when there is a material misstatement which its impact can be pervasive on the financial statements.

This adverse opinion is normally expressed only when the financial statements pervasively not in line with Generally Accepted Accounting Principles GAAP.

For instance, an adverse opinion will be expressed by the auditor when a company refuses to consolidate a material subsidiary.