[Jchen]

Can someone could be kindly advise this question:

Management of Edgington Industries plans to disclose an uncertainty as follows:

The Company is a defendant in a lawsuit alleging infringement of certain patent rights and claiming damages. Discovery proceedings are in progress. The ultimate outcome of the litigation cannot presently be determined. Accordingly, no provision for any liability that may result upon adjudication has been made in the accompanying financial statements.

The auditor is satisfied that sufficient audit evidence supports management’s assertions about the nature and disclosure of the uncertainty. What type of opinion should the auditor express under these circumstances under U.S. auditing standards?

a. Unqualified without an explanatory paragraph.

b. Unqualified with an explanatory paragraph.

c. “Except for” qualified.

d. Disclaimer of opinion.

Should I choose A or B?

[FIFOisbetterthanLIFO]

The answer is A. There is no need to write up an explanatory paragraph in the opinion.

FAR - Passed (82)
BEC - Passed (76)
AUD - Passed (89)
REG - Passed! (81)
AICPA Ethics

Licensed CPA

[Jchen]

But according to Wiley, there are two resolution, one is with an emhasis-of-matter paragraph, and another is disclaimer.

I'm so confused..

[Author]

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