Question 1

Which one of the following is not a type of unqualified audit opinion issued by auditors?

Accepted Answer

A)  Standard with three paragraphs. 
B)  Includes explanatory paragraph. 
C)  Includes modifications. 
D)  Does not include the opinion paragraph. 
A)  Standard with three paragraphs. 
B)  Includes explanatory paragraph. 
C)  Includes modifications. 
D)  Does not include the opinion paragraph. D

Question 2

A reference to another auditor under U.S. auditing standards may result in which of the following?

Accepted Answer

A)  A disclaimer of an audit opinion. 
B)  A qualified audit opinion. 
C)  An adverse opinion. 
D)  An unqualified audit opinion with modified wording for all three paragraphs. 
A)  A disclaimer of an audit opinion. 
B)  A qualified audit opinion. 
C)  An adverse opinion. 
D)  An unqualified audit opinion with modified wording for all three paragraphs. D

Question 3

Restrictions on the scope of the audit whether imposed by the client or circumstances may require the auditor to issue either a qualified or an adverse opinion.

Accepted Answer

A) True 
 B)False  False

Question 4

Types of Audit Opinions.
What are the five basic types of financial statement audit reports?

Accepted Answer

Audit reports can be:
1. Stand

Question 5

Audit reports are designed to promote clear communication between the auditor and the financial statement user. Which of the following is not delineated in the audit report?

Accepted Answer

A)  What was audited and the relative responsibilities of the client and the auditor. 
B)  The experience level of the audit team. 
C)  The nature of the audit opinion formulation process. 
D)  The auditor's opinion on the fairness of the financial statements. 
A)  What was audited and the relative responsibilities of the client and the auditor. 
B)  The experience level of the audit team. 
C)  The nature of the audit opinion formulation process. 
D)  The auditor's opinion on the fairness of the financial statements.

Question 6

PCAOB Auditing Standard 5 does not identify which of the following situations as one in which the auditor will modify the audit report on ICFR effectiveness?

Accepted Answer

A)  When there is a restriction on the scope of the engagement. 
B)  When there is other information contained in management's annual report on ICFR. 
C)  When elements of management's annual report on internal control are incomplete or improperly presented. 
D)  When the annual report includes a copy of the annual certification pursuant to Section 302 of the Sarbanes-Oxley Act. 
A)  When there is a restriction on the scope of the engagement. 
B)  When there is other information contained in management's annual report on ICFR. 
C)  When elements of management's annual report on internal control are incomplete or improperly presented. 
D)  When the annual report includes a copy of the annual certification pursuant to Section 302 of the Sarbanes-Oxley Act.

Question 7

An unqualified audit opinion with an explanatory paragraph often makes reference to the footnotes of the financial statements

Accepted Answer

A) True 
 B)False

Question 8

The audit report is modified to five paragraphs as a result of another audit firm performing part of the financial statement audit.

Accepted Answer

A) True 
 B)False

Question 9

There are no differences in audit report requirements across the standards of the AICPA, PCAOB, and IAASB.

Accepted Answer

A) True 
 B)False

Question 10

When the auditor is unable to obtain sufficient, appropriate evidence concerning the beginning inventory, which is material, the report is modified by adding an explanatory paragraph prior to the opinion paragraph and appropriate modification to the scope paragraph.

Accepted Answer

A) True 
 B)False

Question 11

A justified departure from GAAP may result in which of the following?

Accepted Answer

A)  A disclaimer of an audit opinion. 
B)  An adverse opinion. 
C)  An unqualified audit opinion with an explanatory paragraph before the opinion paragraph or a qualified opinion. 
D)  A standard unqualified opinion. 
A)  A disclaimer of an audit opinion. 
B)  An adverse opinion. 
C)  An unqualified audit opinion with an explanatory paragraph before the opinion paragraph or a qualified opinion. 
D)  A standard unqualified opinion.

Question 12

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?

Accepted Answer

A)  Except for. 
B)  Subject to. 
C)  With the exception of. 
D)  With the qualification of. 
A)  Except for. 
B)  Subject to. 
C)  With the exception of. 
D)  With the qualification of.

Question 13

When the auditor is not independent with respect to a client, what must the auditor do?

Accepted Answer

A)  Not accept an audit engagement. 
B)  Include a separate paragraph in the audit report stating the lack of independence. 
C)  Provide a review report. 
D)  Report the non-compliance to the AICPA. 
A)  Not accept an audit engagement. 
B)  Include a separate paragraph in the audit report stating the lack of independence. 
C)  Provide a review report. 
D)  Report the non-compliance to the AICPA.

Question 14

After the balance sheet date but prior to the audit report date the client decides to acquire Bargain Company to obtain a significant increase in revenues. The auditor would probably give a report that includes the statement: "except for the acquisition of Bargain Company..".

Accepted Answer

A) True 
 B)False

Question 15

When financial statements contain generally accepted accounting principles in the current year that are different from the generally accepted accounting principles used in the preceding year, the auditor will typically make mention of it in the opinion.

Accepted Answer

A) True 
 B)False

Question 16

Types of Audit Opinions.
A CPA has completed an audit of the financial statements of a long-haul trucking company for the year ended December 31, 2014. Prior to 2014, the company depreciated its trucks over 10 years. However, during 2014, the company determined that a more realistic estimated life for its trucks was 8 years and computed the 2014 depreciation on the basis of the revised estimate. The CPA is satisfied that the 8 year estimate is reasonable, but the change will have a material effect on the comparability of the company's financial statements. The company adequately disclosed the change in estimated useful lives of its trucks and the effect of the change on 2014 income in a note to the financial statements.
REQUIRED:
Which type of audit report would you suggest be issued on the 2014 financial statements and why?

Accepted Answer

The auditor should issue an unqualified

Question 17

If scope limitations that are not client-imposed exist make it impossible for the auditor to form an opinion, the auditor should render an adverse opinion.

Accepted Answer

A) True 
 B)False

Question 18

Types of Audit Opinions
Subsequent to the date of the financial statements, as part of post-balance sheet date audit procedures, a CPA learned that a recent fire caused significant damage to one of the client's two manufacturing facilities. However, the loss will not be reimbursed by insurance. Newspapers in the area describe the event in detail and the event is widely known. The financial statements and related notes as prepared by the client did not disclose the fire loss.
REQUIRED:
Which type of audit report would you suggest be issued this year and why?

Accepted Answer

disclosure of this information is requir

Question 19

The scope paragraph of an unqualified opinion primarily gives information relating to which of the following?

Accepted Answer

A)  The division of responsibilities. 
B)  The final assessment of a company's standings with the audit firm. 
C)  The statements and dates under audit. 
D)  Audit planning and procedure. 
A)  The division of responsibilities. 
B)  The final assessment of a company's standings with the audit firm. 
C)  The statements and dates under audit. 
D)  Audit planning and procedure.

Question 20

The term "except for" is used in the opinion paragraph of an audit report that will be qualified for a GAAP violation that is not pervasive.

Accepted Answer

A) True 
 B)False

Which one of the following is not a type of unqualified audit opinion issued by auditors?

A reference to another auditor under U.S. auditing standards may result in which of the following?

Restrictions on the scope of the audit whether imposed by the client or circumstances may require the auditor to issue either a qualified or an adverse opinion.

Types of Audit Opinions. What are the five basic types of financial statement audit reports?

Audit reports are designed to promote clear communication between the auditor and the financial statement user. Which of the following is not delineated in the audit report?

PCAOB Auditing Standard 5 does not identify which of the following situations as one in which the auditor will modify the audit report on ICFR effectiveness?

An unqualified audit opinion with an explanatory paragraph often makes reference to the footnotes of the financial statements

The audit report is modified to five paragraphs as a result of another audit firm performing part of the financial statement audit.

There are no differences in audit report requirements across the standards of the AICPA, PCAOB, and IAASB.

When the auditor is unable to obtain sufficient, appropriate evidence concerning the beginning inventory, which is material, the report is modified by adding an explanatory paragraph prior to the opinion paragraph and appropriate modification to the scope paragraph.

A justified departure from GAAP may result in which of the following?

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?

When the auditor is not independent with respect to a client, what must the auditor do?

After the balance sheet date but prior to the audit report date the client decides to acquire Bargain Company to obtain a significant increase in revenues. The auditor would probably give a report that includes the statement: "except for the acquisition of Bargain Company..".

When financial statements contain generally accepted accounting principles in the current year that are different from the generally accepted accounting principles used in the preceding year, the auditor will typically make mention of it in the opinion.

If scope limitations that are not client-imposed exist make it impossible for the auditor to form an opinion, the auditor should render an adverse opinion.

The scope paragraph of an unqualified opinion primarily gives information relating to which of the following?

The term "except for" is used in the opinion paragraph of an audit report that will be qualified for a GAAP violation that is not pervasive.

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters

Exam 15: Audit Reports on Financial Statements

Which one of the following is not a type of unqualified audit opinion issued by auditors?

A reference to another auditor under U.S. auditing standards may result in which of the following?

Restrictions on the scope of the audit whether imposed by the client or circumstances may require the auditor to issue either a qualified or an adverse opinion.

Types of Audit Opinions. What are the five basic types of financial statement audit reports?

Audit reports are designed to promote clear communication between the auditor and the financial statement user. Which of the following is not delineated in the audit report?

PCAOB Auditing Standard 5 does not identify which of the following situations as one in which the auditor will modify the audit report on ICFR effectiveness?

An unqualified audit opinion with an explanatory paragraph often makes reference to the footnotes of the financial statements

The audit report is modified to five paragraphs as a result of another audit firm performing part of the financial statement audit.

There are no differences in audit report requirements across the standards of the AICPA, PCAOB, and IAASB.

When the auditor is unable to obtain sufficient, appropriate evidence concerning the beginning inventory, which is material, the report is modified by adding an explanatory paragraph prior to the opinion paragraph and appropriate modification to the scope paragraph.

A justified departure from GAAP may result in which of the following?

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?

When the auditor is not independent with respect to a client, what must the auditor do?

After the balance sheet date but prior to the audit report date the client decides to acquire Bargain Company to obtain a significant increase in revenues. The auditor would probably give a report that includes the statement: "except for the acquisition of Bargain Company..".

When financial statements contain generally accepted accounting principles in the current year that are different from the generally accepted accounting principles used in the preceding year, the auditor will typically make mention of it in the opinion.

If scope limitations that are not client-imposed exist make it impossible for the auditor to form an opinion, the auditor should render an adverse opinion.

The scope paragraph of an unqualified opinion primarily gives information relating to which of the following?

The term "except for" is used in the opinion paragraph of an audit report that will be qualified for a GAAP violation that is not pervasive.

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters