Question: 1) The attacks of September 11 were analyzed in specifics by Emerging Issues Task Force (EITF). On September 20, 2001, EITF discussed whether the losses of September 11, 2001, should be reported as extraordinary losses. At first, EITF decided that the losses should be reported as extraordinary except for insurance companies, which should report the losses as part of income from continuing operations. One week later, however, EITF changed its decision, indicating that the losses and costs incurred because of September 11 should be part of continuing operations. What are your thoughts on the criteria used for Extraordinary Items and how useful are they if the application may be subjective as the above indicates? Please provide some ideas and thoughts we can discuss.
2) Describe the reporting options when there is a material problem identified in the financial statements (i.e., they are not in conformity with GAAP). Also describe the reporting options when there is a material problem with the audit (i.e., in some way, the auditor could not follow GAAS). Include in your answer both the type of opinion and which paragraphs would be affected.