Delta Life Insurance Co. prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission. If Wall, CPA, Delta’s auditor, discovers that the statements are not suitably titled, Wall should
- Disclose any reservations in an explanatory paragraph and qualify the opinion.
- Apply to the state insurance commission for an advisory opinion.
- Issue a special statutory basis report that clearly disclaims any opinion.
- Explain in the notes to the financial statements the terminology used.