Question 1

Discuss how materiality affects audit reporting decisions.

Accepted Answer

When determining the appropriate audit r

Question 2

Your client has experienced a major data breach with lawsuits and fines pending of significant and uncertain amounts.These events are disclosed in the client's financial statements and are clearly explained in the notes.How do these events affect the independent auditor's report?

Accepted Answer

A) The auditor would issue an unmodified auditor's report. 
B) The auditor would include an Emphasis of Matter paragraph titled "Data Breach" to highlight the events. 
C) The auditor would include an Other Matters paragraph titled "Data Breach" to highlight the amounts. 
D) The auditor issue a modified audit opinion due to the size of the uncertainty. 
A) The auditor would issue an unmodified auditor's report. 
B) The auditor would include an Emphasis of Matter paragraph titled "Data Breach" to highlight the events. 
C) The auditor would include an Other Matters paragraph titled "Data Breach" to highlight the amounts. 
D) The auditor issue a modified audit opinion due to the size of the uncertainty.

Question 3

The auditor's report of the Huge Mega Company indicates that the financial statements are fairly presented except for the goodwill balance,which does not comply with International Financial Reporting Standards.The auditor's report is

Accepted Answer

A) unmodified. 
B) unmodified with an explanatory paragraph. 
C) qualified. 
D) adverse. 
A) unmodified. 
B) unmodified with an explanatory paragraph. 
C) qualified. 
D) adverse.

Question 4

Dussault & Montgomery,the auditors of Greenwich Corp. ,relied on Groves & Padden,another PA firm,to audit the Quebec subsidiaries of Greenwich.The responsibility for the opinion to issue on the financial statements is the responsibility of

Accepted Answer

A) Greenwich Corp. 
B) Dussault & Montgomery. 
C) Groves & Padden. 
D) Dussault & Montgomery and Groves & Padden. 
A) Greenwich Corp. 
B) Dussault & Montgomery. 
C) Groves & Padden. 
D) Dussault & Montgomery and Groves & Padden.

Question 5

Julia is in the process of auditing the legal liability section of the financial statements.The controller indicated that he did not want her to contact their external lawyers and he is refusing to grant her access to the detail of the legal expense for the year and any legal invoices.What should Julia do in this situation? Indicate the steps she should take.

Accepted Answer

First,Julia should ask management to rem

Question 6

The use of the term "reasonable assurance" is intended to indicate that an audit cannot be expected to

Accepted Answer

A) completely eliminate the possibility that a material error or fraud exists. 
B) consider or search for minor errors. 
C) be compliant with the generally accepted accounting principles for every account. 
D) provide assurance of no material errors or irregularities to investors who are using the financial statements for investment decisions. 
A) completely eliminate the possibility that a material error or fraud exists. 
B) consider or search for minor errors. 
C) be compliant with the generally accepted accounting principles for every account. 
D) provide assurance of no material errors or irregularities to investors who are using the financial statements for investment decisions.

Question 7

If a misstatement is immaterial relative to the financial statements of the entity for the current period and is not expected to have a material effect in future periods,it is appropriate to issue

Accepted Answer

A) an unmodified opinion. 
B) a qualified opinion. 
C) an adverse opinion. 
D) a disclaimer of opinion. 
A) an unmodified opinion. 
B) a qualified opinion. 
C) an adverse opinion. 
D) a disclaimer of opinion.

Question 8

The new IAASB auditor's report is effective for audits and will be mandatory for listed companies for audits with a year ending

Accepted Answer

A) 31 December 2017. 
B) 31 December 2016. 
C) 31 December 2015. 
D) 31 December 2014. 
A) 31 December 2017. 
B) 31 December 2016. 
C) 31 December 2015. 
D) 31 December 2014.

Question 9

The independent auditor's opinion explains how much evidence the auditor collects during the independent audit.How much evidence is collected?

Accepted Answer

A) sufficient and appropriate evidence to provide a basis for the audit opinion 
B) sufficient evidence to state that there are no material errors in the financial statements 
C) appropriate evidence to be able to evaluate the exact accuracy of the accounting estimates 
D) sufficient and appropriate evidence to conclude the financial statements present a true and fair view of the economic events of the organization 
A) sufficient and appropriate evidence to provide a basis for the audit opinion 
B) sufficient evidence to state that there are no material errors in the financial statements 
C) appropriate evidence to be able to evaluate the exact accuracy of the accounting estimates 
D) sufficient and appropriate evidence to conclude the financial statements present a true and fair view of the economic events of the organization

Question 10

What does the key audit matters section in an auditor's report typically include?

Accepted Answer

Key audit matters include the following:

Question 11

What does a "clean" audit opinion mean?

Accepted Answer

A) an adverse opinion 
B) a disclaimer of opinion 
C) a modified opinion 
D) an unmodified opinion 
A) an adverse opinion 
B) a disclaimer of opinion 
C) a modified opinion 
D) an unmodified opinion

Question 12

The primary concern in measuring materiality when a client has failed to follow an acceptable financial reporting framework is usually

Accepted Answer

A) the total dollar error in the accounts involved,compared with some acceptable base. 
B) measurability of the dollar error. 
C) the nature of the item in error. 
D) whether it can materially affect some future period. 
A) the total dollar error in the accounts involved,compared with some acceptable base. 
B) measurability of the dollar error. 
C) the nature of the item in error. 
D) whether it can materially affect some future period.

Question 13

Both disclaimers of opinion and adverse opinions are used

Accepted Answer

A) only when the condition is highly material and pervasive. 
B) whether the condition is material or not. 
C) regardless of the auditor's independence. 
D) regardless of the client's choice of accounting method. 
A) only when the condition is highly material and pervasive. 
B) whether the condition is material or not. 
C) regardless of the auditor's independence. 
D) regardless of the client's choice of accounting method.

Question 14

Explain the difference between the corresponding figures approach and the comparative financial statements approach.

Accepted Answer

Corresponding figures approach is that t

Question 15

List the sections of an unmodified auditors' report.

Accepted Answer

The sections of an unmodified auditors'

Question 16

If the balance sheet of a company is dated December 31,2018,the audit report is dated March 6,2019,and both are released to the public on March 15,2019,this indicates that the auditor has searched for material unrecorded transactions and events that occurred up to

Accepted Answer

A) December 31,2018. 
B) March 6,2019. 
C) March 15,2019. 
D) December 31,2019. 
A) December 31,2018. 
B) March 6,2019. 
C) March 15,2019. 
D) December 31,2019.

Question 17

If inventory is the largest balance on the financial statements,a large misstatement would be so material that the auditor should issue

Accepted Answer

A) an unmodified opinion. 
B) a qualified opinion. 
C) an adverse opinion. 
D) a disclaimer of opinion. 
A) an unmodified opinion. 
B) a qualified opinion. 
C) an adverse opinion. 
D) a disclaimer of opinion.

Question 18

The phrase "in our opinion" indicates that

Accepted Answer

A) the auditor performed the audit on a test basis. 
B) the auditor's judgment can be relied upon. 
C) the auditor relied on his or her knowledge to perform the audit. 
D) there may be some information risk associated with the financial statements. 
A) the auditor performed the audit on a test basis. 
B) the auditor's judgment can be relied upon. 
C) the auditor relied on his or her knowledge to perform the audit. 
D) there may be some information risk associated with the financial statements.

Question 19

Three of the following conditions would,by themselves,require the auditor to issue a report other than an unmodified report.Which condition would permit an unmodified report?

Accepted Answer

A) The financial statements show a significant net loss for each of the last three years,including the current fiscal period. 
B) The financial statements have not been prepared in accordance with an acceptable financial reporting framework and are misleading. 
C) The auditor is not independent during the fiscal period under audit. 
D) The scope of the auditor's examination has been restricted,although the cause of the restriction was not the client's fault. 
A) The financial statements show a significant net loss for each of the last three years,including the current fiscal period. 
B) The financial statements have not been prepared in accordance with an acceptable financial reporting framework and are misleading. 
C) The auditor is not independent during the fiscal period under audit. 
D) The scope of the auditor's examination has been restricted,although the cause of the restriction was not the client's fault.

Question 20

What is the difference between a qualified,adverse,and disclaimer opinion?

Accepted Answer

Qualified opinion: the audit opinion iss

Discuss how materiality affects audit reporting decisions.

Your client has experienced a major data breach with lawsuits and fines pending of significant and uncertain amounts.These events are disclosed in the client's financial statements and are clearly explained in the notes.How do these events affect the independent auditor's report?

The auditor's report of the Huge Mega Company indicates that the financial statements are fairly presented except for the goodwill balance,which does not comply with International Financial Reporting Standards.The auditor's report is

Dussault & Montgomery,the auditors of Greenwich Corp. ,relied on Groves & Padden,another PA firm,to audit the Quebec subsidiaries of Greenwich.The responsibility for the opinion to issue on the financial statements is the responsibility of

The use of the term "reasonable assurance" is intended to indicate that an audit cannot be expected to

If a misstatement is immaterial relative to the financial statements of the entity for the current period and is not expected to have a material effect in future periods,it is appropriate to issue

The new IAASB auditor's report is effective for audits and will be mandatory for listed companies for audits with a year ending

The independent auditor's opinion explains how much evidence the auditor collects during the independent audit.How much evidence is collected?

What does the key audit matters section in an auditor's report typically include?

What does a "clean" audit opinion mean?

The primary concern in measuring materiality when a client has failed to follow an acceptable financial reporting framework is usually

Both disclaimers of opinion and adverse opinions are used

Explain the difference between the corresponding figures approach and the comparative financial statements approach.

List the sections of an unmodified auditors' report.

If the balance sheet of a company is dated December 31,2018,the audit report is dated March 6,2019,and both are released to the public on March 15,2019,this indicates that the auditor has searched for material unrecorded transactions and events that occurred up to

If inventory is the largest balance on the financial statements,a large misstatement would be so material that the auditor should issue

The phrase "in our opinion" indicates that

Three of the following conditions would,by themselves,require the auditor to issue a report other than an unmodified report.Which condition would permit an unmodified report?

What is the difference between a qualified,adverse,and disclaimer opinion?

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Other Assurance and Nonassurance Services

Filters

Exam 19: Audit Reports on Financial Statements

Discuss how materiality affects audit reporting decisions.

Your client has experienced a major data breach with lawsuits and fines pending of significant and uncertain amounts.These events are disclosed in the client's financial statements and are clearly explained in the notes.How do these events affect the independent auditor's report?

The auditor's report of the Huge Mega Company indicates that the financial statements are fairly presented except for the goodwill balance,which does not comply with International Financial Reporting Standards.The auditor's report is

Dussault & Montgomery,the auditors of Greenwich Corp. ,relied on Groves & Padden,another PA firm,to audit the Quebec subsidiaries of Greenwich.The responsibility for the opinion to issue on the financial statements is the responsibility of

The use of the term "reasonable assurance" is intended to indicate that an audit cannot be expected to

If a misstatement is immaterial relative to the financial statements of the entity for the current period and is not expected to have a material effect in future periods,it is appropriate to issue

The new IAASB auditor's report is effective for audits and will be mandatory for listed companies for audits with a year ending

The independent auditor's opinion explains how much evidence the auditor collects during the independent audit.How much evidence is collected?

What does the key audit matters section in an auditor's report typically include?

What does a "clean" audit opinion mean?

The primary concern in measuring materiality when a client has failed to follow an acceptable financial reporting framework is usually

Both disclaimers of opinion and adverse opinions are used

Explain the difference between the corresponding figures approach and the comparative financial statements approach.

List the sections of an unmodified auditors' report.

If the balance sheet of a company is dated December 31,2018,the audit report is dated March 6,2019,and both are released to the public on March 15,2019,this indicates that the auditor has searched for material unrecorded transactions and events that occurred up to

If inventory is the largest balance on the financial statements,a large misstatement would be so material that the auditor should issue

The phrase "in our opinion" indicates that

Three of the following conditions would,by themselves,require the auditor to issue a report other than an unmodified report.Which condition would permit an unmodified report?

What is the difference between a qualified,adverse,and disclaimer opinion?

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Other Assurance and Nonassurance Services

Filters