Audit and Assurance Practice Exam

An unqualified opinion is issued by auditors when they conclude that the financial statements being audited provide a true and fair view of the entity’s financial position, results of operations, and cash flows in accordance with the applicable financial reporting framework. This means that the financial statements have been prepared in compliance with the relevant accounting standards and do not contain any material misstatements or significant discrepancies.

When an auditor expresses an unqualified opinion, it indicates that they found no issues that would lead them to question the integrity of the financial statements. This level of assurance is the most favorable outcome for an entity, as it reflects a clean bill of health in terms of financial reporting.

Options that pertain to scope limitations, material misstatements, or reportable conditions imply that there are issues or constraints regarding the audit process or the integrity of the financial statements themselves, which is contrary to what an unqualified opinion represents. Therefore, the assertion that the financial statements are fairly presented is what makes this choice correct and highlights the auditor's positive assessment.