Explanatory and Opinion Paragraphs

Kobyashi Moru reports its inventory, fixed assets, depreciation and cost of goods sold on a current value basis (fair market value on the date of the financial statements). Such accounting violates the cost principle of US GAAP. There is a disclosure of the pertinent facts stating this in a footnote on the key financial statements. What factors as the auditor of record, should you consider in deciding whether to issue a qualified or an adverse opinion in your final audit report? Prepare the following paragraphs that include the appropriate language. a. A qualified opinion b. An adverse opinion

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