Question

Comparative financial statements for a public company include the prior year's statements, which were audited by a predecessor auditor. The predecessor's report is not presented along with the comparative financial statements. If the predecessor's report was unqualified, the successor should...

1) Issue an unqualified opinion on the current year's financial statements
2) Issue a qualified opinion on the current year's financial statements
3) Issue an adverse opinion on the current year's financial statements
4) Issue a disclaimer of opinion on the current year's financial statements

Answer 1

If the predecessor's report was unqualified, the successor should issue an unqualified opinion on the current year's financial statements.

Step-by-step explanation:

If the predecessor's report was unqualified, the successor should issue an unqualified opinion on the current year's financial statements. This is because an unqualified opinion means that the financial statements are presented fairly and are in accordance with generally accepted accounting principles (GAAP). As the successor auditor, there is no indication of any material misstatements or issues with the financial statements, so an unqualified opinion would be appropriate.