n, which of the following should be included in the opinion paragraph?     The reasons the financial statements are misleading     A reference to a separate  paragraph that describes the reason for the adverse opinion including a quantification of the impact on the financial statements.     A statement that indicates the financial statements are fairly presented except for a reason that is described in the separate paragraph.

Question 15       As Review of Financial Statements under SSARS is not considered an audit engagement the accountant need not be independent. Answers: True   False

Question 4 Respond to each of the following independent situations involving auditor reports. For each scenario (1)identify the reporting issue involved; (2) explain the type of opinion that should be issued; (3) identify any requiredmodifications of the standard auditor'sreport. The auditor has a disagreem ent with a client overthe adequacy of the recorded bad debt expense and allowance for doubtful accounts. The auditor is convinced that the expense and allowance are understatedby amaterial (but not highly material) amount, but the client has refused to adjust the accounts. 1.4 The auditor has issued a report on a client's financial statem ents prepared on a regulatory basis of accounting. The auditor is also preparing to issue a separate report- on the same client's GAAP financial statements, which will be issued to the public. The auditor feels that the issuance of the report on the regulatory basis statements should be disclosed in the report on the GAAP statements. The auditor…

Negative Assurance in Review Reports. One portion of the report on a review services engagement is the following: “Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformitywith generally accepted accounting principles [or another framework for financial reporting].”Required:a. Is this paragraph a “negative assurance” given by the accountants?b. Why is negative assurance generally prohibited in audit reports?c. What justification is there for permitting negative assurance in a review services report on unaudited financial statements and on interim financial information?