The AICPA’s Auditing Standards Executive Committee, concurring with its Commission on Auditors’ Responsibilities, has proposed that auditors’ “subject to” opinions be eliminated on the grounds that they do not convey useful information to statement readers. This article reports on the results of a survey undertaken to determine whether CFAs agree.
Using eight actual contingency situations covering a broad range of both asset realization and litigation issues, the survey asked respondents how they thought each case should and would be disclosed. The majority of responses indicated that a qualified opinion or disclaimer should have been used to disclose each contingency. The CFAs apparently believe that “subject to” opinions provide useful information, hence are valuable extensions of the auditor’s attest function.
On the other hand, the survey also revealed that CFAs do not understand the way auditors handle contingency situations. Respondents’ predictions of how contingencies would be disclosed were not, in the majority of cases, borne out by auditors’ actual disclosures, although they proved more accurate for litigation contingencies than for asset realization contingencies.