CPA Audit Practice Exam

In a situation where an audit of a specific element leads to a modified opinion, it is imperative to understand the implications for the complete set of financial statements. When a specific element is audited and results in a modified opinion—such as a qualified or adverse opinion—there is a necessity to reflect that modification in the overall opinion on the complete set of financial statements.

A modified opinion on a specific element does not inherently dictate an adverse opinion for the complete financial statements; rather, the audit may support a qualified opinion instead. This may occur if the issues related to the specific element do not extend to the entirety of the financial statements. The qualified opinion would indicate that except for the specific element in question, the financial statements present a true and fair view.

An adverse opinion is much more severe and is given when the entirety of the financial statements is materially misstated, which is not necessarily the case if the issue relates only to one element. Therefore, if a specific element audit results in modification, a qualified opinion accompanying the complete set is a more likely and appropriate stance to reflect that while there are issues present, the rest of the financial statements may still be acceptable.

Overall, the modification to the specific element can significantly influence how the complete financial statements are