Exam 12: Reports on Audited Financial Statements

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?

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

Which of the following statements is not included in the Basis for Opinion Section of the standard (unmodified) report on the entity's financial statements?

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

When component auditors are involved in the audit of group financial statements, the group auditors are required to

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?

Charlie Company's comparative financial statements include the financial statements of the prior year that were audited by predecessor auditors whose report on those financial statements is not presented. If the predecessor's report was qualified, the successor auditors should

When disclaiming an opinion due to a client-imposed scope limitation, auditors should describe the nature of the scope limitation and modify the

What is the major difference between a reissued report and an updated report?

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

Zag Co. issues financial statements that present financial position and results of operations, but Zag omits the related statement of cash flows. Zag would like to engage Brown, CPA, to audit its financial statements without the statement of cash flows although Brown's access to all of the information underlying the basic financial statements would not be limited. Under the circumstances, Brown most likely would

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?

If the auditors obtains sufficient appropriate evidence on the entity's accounts receivable balance by alternative procedures because it is impracticable to confirm accounts receivable, the opinion on the entity's financial statements should be unqualified and would

Which of the following best describes the auditors' responsibility when financial statements are presented in comparative format?

Under which of the following circumstances would a disclaimer of opinion on the entity's financial statements not be appropriate?

The auditors' report on the entity's financial statements included language disclosing a difference of opinion between the auditors and the entity for which the auditors believed an adjustment to the financial statements should be made. The Opinion on the Financial Statements section of the auditors' report should express a(n)

Green, CPA, was engaged to audit the financial statements of Essex Co. after its fiscal year had ended. The timing of Green's appointment and the start of fieldwork made confirmation of accounts receivable by direct communication with the customers not feasible. However, Green applied other procedures and was satisfied as to the reasonableness of the account balances. Green's auditors' report most likely contained a(n)

Which of the following situations would not result in auditors adding an explanatory paragraph without modifying the remainder of the report?

When an entity will not permit inquiry of outside legal counsel, the auditors' report on the entity's financial statements will ordinarily contain a(n)

When there has been a change in accounting principles, but the effect of the change on the comparability of the financial statements is not material, the auditors should