Question 1

When an adverse, qualified, or disclaimer of opinion is issued, ASA 705 requires that the auditor's report includes:

Accepted Answer

A)  a clear description of all the substantive reasons for the opinion. 
B)  where practicable, a quantification of the possible effect on the financial report. 
C)  both A and B 
D)  none of the above 
A)  a clear description of all the substantive reasons for the opinion. 
B)  where practicable, a quantification of the possible effect on the financial report. 
C)  both A and B 
D)  none of the above

Question 2

Which one of the following is NOT a condition requiring departure from an unmodified opinion?

Accepted Answer

A)  a materially misstated financial report 
B)  inability to obtain sufficient appropriate audit evidence 
C)  both A and B 
D)  none of the above 
A)  a materially misstated financial report 
B)  inability to obtain sufficient appropriate audit evidence 
C)  both A and B 
D)  none of the above

Question 3

Under what conditions is a disclaimer of opinion issued?

Accepted Answer

A disclaimer of opinion is issued whenev

Question 4

It is more difficult to evaluate the materiality of potential errors resulting from a scope limitation than from a:

Accepted Answer

A)  misstatement in the financial report. 
B)  going concern disclosure. 
C)  both A and B 
D)  none of the above 
A)  misstatement in the financial report. 
B)  going concern disclosure. 
C)  both A and B 
D)  none of the above

Question 5

The appropriate date for the report is the one on which the auditor completes the most important auditing procedures in the field.

Accepted Answer

A) True 
 B)False

Question 6

Identify five deficiencies or weaknesses in the following audit report.
Audit Report
To the Management of XYZ Ltd
We have audited the financial report of XYZ Ltd for the year ended on 30 June 2004.
Directors' responsibility for the financial report
The directors of the entity are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards.This responsibility includes designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit.We conducted our audit in accordance with Australian Accounting Standards.These Accounting Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.The procedures selected depend on the auditor's judgement, including the assessment of the risks of misstatement in the financial report, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
Auditor's opinion
In our opinion, the financial report presents fairly in accordance with Australian Accounting Standards the financial position of XYZ Ltd and its performance.
Willie Ticket
A partner of the firm
CA Partners
Sydney NSW

Accepted Answer

Deficiencies include the following:
.The

Question 7

In the auditor's responsibility paragraph of the audit report, the use of the term 'reasonable assurance' is intended to indicate that:

Accepted Answer

A)  no misstatements exist in the financial statements. 
B)  there is a possibility that material misstatements still exist in the financial statements. 
C)  no material misstatements exist in the financial statements. 
D)  there is a possibility that immaterial misstatements still exist in the financial statements. 
A)  no misstatements exist in the financial statements. 
B)  there is a possibility that material misstatements still exist in the financial statements. 
C)  no material misstatements exist in the financial statements. 
D)  there is a possibility that immaterial misstatements still exist in the financial statements.

Question 8

Discuss the impact of e-commerce on audit reporting.

Accepted Answer

Most public companies provide access to

Question 9

When a significant uncertainty exists and this has NOT been disclosed:

Accepted Answer

A)  a scope limitation will need to be reported. 
B)  an inability to form an opinion must be used. 
C)  a qualified or an adverse opinion is required, depending on materiality. 
D)  an unmodified opinion with an emphasis of matter section is appropriate. 
A)  a scope limitation will need to be reported. 
B)  an inability to form an opinion must be used. 
C)  a qualified or an adverse opinion is required, depending on materiality. 
D)  an unmodified opinion with an emphasis of matter section is appropriate.

Question 10

Where there are scope limitations, the size of potential errors is important in determining the appropriate form of the audit report.

Accepted Answer

A) True 
 B)False

Question 11

Because the auditor was engaged to undertake the audit after the year-end and was unable to physically examine inventory, the auditor has not accumulated sufficient appropriate evidence to determine whether the financial report is presented fairly.The auditor must depart from the unmodified audit report because the:

Accepted Answer

A)  scope of the audit has been restricted by circumstances beyond either the client's or the auditor's control. 
B)  auditor has lost independence. 
C)  financial report has not been prepared in accordance with accounting standards. 
D)  scope of the audit has been limited. 
A)  scope of the audit has been restricted by circumstances beyond either the client's or the auditor's control. 
B)  auditor has lost independence. 
C)  financial report has not been prepared in accordance with accounting standards. 
D)  scope of the audit has been limited.

Question 12

In an adverse or disclaimer of opinion report, the auditor:

Accepted Answer

A)  believes that the effects are material. 
B)  believes that the effects are pervasive. 
C)  both A and B 
D)  none of the above 
A)  believes that the effects are material. 
B)  believes that the effects are pervasive. 
C)  both A and B 
D)  none of the above

Question 13

An adverse opinion is used when there has been a material and pervasive misstatement.

Accepted Answer

A) True 
 B)False

Question 14

An example of an indicator of a business's inability to continue as a going concern is an arrears or discontinuance of dividends.

Accepted Answer

A) True 
 B)False

Question 15

Angel Pty Ltd's financial report includes two balance sheets and profit and loss accounts.One set is drawn up in accordance with applicable accounting standards, and the other set is drawn up without complying with one standard, which the directors consider to make the accounts misleading.The auditors concur.The audit report should, therefore, contain:

Accepted Answer

A)  an adverse opinion. 
B)  a qualified opinion with an emphasis of matter section. 
C)  a disclaimer of opinion. 
D)  an unmodified opinion with an emphasis of matter section. 
A)  an adverse opinion. 
B)  a qualified opinion with an emphasis of matter section. 
C)  a disclaimer of opinion. 
D)  an unmodified opinion with an emphasis of matter section.

Question 16

Discuss how materiality affects audit reporting decisions.

Accepted Answer

When determining the appropriate audit r

Question 17

Which of the following types of opinion is a report other than an unmodified report?

Accepted Answer

A)  disclaimer of opinion 
B)  adverse 
C)  qualified 
D)  all of the above 
A)  disclaimer of opinion 
B)  adverse 
C)  qualified 
D)  all of the above

Question 18

An adverse opinion is used when there has been a material and pervasive scope restriction caused by the client.

Accepted Answer

A) True 
 B)False

Question 19

An audit report is appropriate:

Accepted Answer

A)  whenever a public accounting firm assists a client in preparing financial reports. 
B)  only when an audit is conducted. 
C)  whenever a public accounting firm is associated with financial reports. 
D)  none of the above 
A)  whenever a public accounting firm assists a client in preparing financial reports. 
B)  only when an audit is conducted. 
C)  whenever a public accounting firm is associated with financial reports. 
D)  none of the above

Question 20

When the auditor concludes that there is substantial doubt about the entity's ability to continue as a going concern, and this has been adequately disclosed in the financial statements, the appropriate audit report is:

Accepted Answer

A)  an adverse opinion with an emphasis of matter section. 
B)  a qualified opinion with an emphasis of matter section. 
C)  an unmodified opinion with no emphasis of matter section. 
D)  an unmodified opinion with an emphasis of matter section. 
A)  an adverse opinion with an emphasis of matter section. 
B)  a qualified opinion with an emphasis of matter section. 
C)  an unmodified opinion with no emphasis of matter section. 
D)  an unmodified opinion with an emphasis of matter section.

When an adverse, qualified, or disclaimer of opinion is issued, ASA 705 requires that the auditor's report includes:

Which one of the following is NOT a condition requiring departure from an unmodified opinion?

Under what conditions is a disclaimer of opinion issued?

It is more difficult to evaluate the materiality of potential errors resulting from a scope limitation than from a:

The appropriate date for the report is the one on which the auditor completes the most important auditing procedures in the field.

In the auditor's responsibility paragraph of the audit report, the use of the term 'reasonable assurance' is intended to indicate that:

Discuss the impact of e-commerce on audit reporting.

When a significant uncertainty exists and this has NOT been disclosed:

Where there are scope limitations, the size of potential errors is important in determining the appropriate form of the audit report.

In an adverse or disclaimer of opinion report, the auditor:

An adverse opinion is used when there has been a material and pervasive misstatement.

An example of an indicator of a business's inability to continue as a going concern is an arrears or discontinuance of dividends.

Discuss how materiality affects audit reporting decisions.

Which of the following types of opinion is a report other than an unmodified report?

An adverse opinion is used when there has been a material and pervasive scope restriction caused by the client.

An audit report is appropriate:

When the auditor concludes that there is substantial doubt about the entity's ability to continue as a going concern, and this has been adequately disclosed in the financial statements, the appropriate audit report is:

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Other auditing and assurance engagements

Filters

Exam 18: Audit reporting

When an adverse, qualified, or disclaimer of opinion is issued, ASA 705 requires that the auditor's report includes:

Which one of the following is NOT a condition requiring departure from an unmodified opinion?

Under what conditions is a disclaimer of opinion issued?

It is more difficult to evaluate the materiality of potential errors resulting from a scope limitation than from a:

The appropriate date for the report is the one on which the auditor completes the most important auditing procedures in the field.

In the auditor's responsibility paragraph of the audit report, the use of the term 'reasonable assurance' is intended to indicate that:

Discuss the impact of e-commerce on audit reporting.

When a significant uncertainty exists and this has NOT been disclosed:

Where there are scope limitations, the size of potential errors is important in determining the appropriate form of the audit report.

In an adverse or disclaimer of opinion report, the auditor:

An adverse opinion is used when there has been a material and pervasive misstatement.

An example of an indicator of a business's inability to continue as a going concern is an arrears or discontinuance of dividends.

Discuss how materiality affects audit reporting decisions.

Which of the following types of opinion is a report other than an unmodified report?

An adverse opinion is used when there has been a material and pervasive scope restriction caused by the client.

An audit report is appropriate:

When the auditor concludes that there is substantial doubt about the entity's ability to continue as a going concern, and this has been adequately disclosed in the financial statements, the appropriate audit report is:

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Other auditing and assurance engagements

Filters