Exam 12: Reports on Audited Financial Statements

Which of the following paragraphs or sections of the group auditors' report is modified to identify the extent of component auditor involvement in the audit of group financial statements?

When a previously expressed opinion is updated from qualified to unmodified, the auditors' report on comparative financial statements should

Auditors would not normally issue a qualified opinion on the entity's financial statements when

Holmes, CPA, assisted Williams Corporation in preparing its financial statements and gave Williams permission to use Holmes's name in communications containing these financial statements. If Holmes did not audit the financial statements, what type of opinion should be expressed?

Which of the following scope limitations would ordinarily be of most concern to the auditors?

Management determined it was probable that a pending litigation claim would result in a material loss. The loss was disclosed in the footnotes to the financial statements but was not accrued in the income statement. If the auditors believe an accrual should be made, what type of report should be issued?

When auditors conclude that a material and pervasive departure from GAAP exists in an entity's financial statements, which of the following phrases would most likely be included in their report?

The group auditors decide not to refer to the audit of component auditors who audited a subsidiary of the group financial statements. After making inquiries about the component auditors' professional reputation and independence, the group auditor most likely would

After considering management's plans, an auditor concludes that there is substantial doubt about a client's ability to continue as a going concern for a reasonable period of time. The auditor's responsibility includes

Restrictions imposed by an entity prohibited the observation of physical inventories, which accounted for 35 percent of total assets. Alternative auditing procedures were not feasible, although the auditors were able to examine satisfactory evidence for all other items in the financial statements. The auditors would most likely express

Harris & Thompson were engaged to audit Smart Corp's comparative financial statements for the years ended December 31, Year 1 and Year 2. The Year 1 financial statements were presented in accordance with generally accepted accounting principles, but the Year 2 financial statements were determined to be materially misstated. As a result, Harris & Thompson should

Harris is auditing the financial statements of Cole Corp., an energy company. The FASB requires that these financial statements must be accompanied by supplementary mineral reserve information. If this required information is materially misstated, what type of report should Harris issue?

Which of the following best reflects the auditors' reporting responsibility under generally accepted auditing standards? other Information Accompanying Required supplementary the Financial statements Information A. Exception Required B. Exception Exception C. Required Required D. Recruired Exception

An auditor who is unable to form an opinion on a new client's opening inventory balances may issue an unmodified opinion on the current year's

In which of the following should an auditors' report refer to the lack of consistency when there is a change in accounting principle that is significant?

How do auditors make the following representations when issuing the standard auditors' report? Consistent Application of Accounting Independence Principles Requirement A. Implicitly Explicitly B. Explicitly Implicitly C. Implicitly Explicitly D. Explicitly Explicitly

Auditors should disclose the substantive reasons for expressing an adverse opinion on the entity's financial statements in

On which of the following matters would it not be appropriate for the auditors to report using an explanatory paragraph?

When financial statements contain a departure from GAAP, the auditors should explain the unusual circumstances in a separate paragraph and express an opinion that is

The auditors have determined that there is substantial doubt about an entity's ability to continue as a going concern. When considering the appropriateness of management's disclosures and severity of the uncertainty, all of the following reports could be issued, except