Exam 18: Audit reporting

The most common type of audit report is the 'standard unmodified audit report'.It is used when which three of the following conditions have been met? 1)The financial report is presented fairly, in all material respects, in accordance with the applicable financial reporting framework (usually Australian accounting standards). 2)The financial report is presented fairly, in all material respects, in accordance with the relevant statutory requirements (usually the Corporations Act). 3)The financial information complies with relevant statutory and other requirements. 4)The view presented by the financial report is consistent with the auditor's understanding of the entity and its environment.

The need to issue a disclaimer of opinion arises when there is a:

When a qualified opinion is issued, a clear description of all the substantive reasons should be given.

It is appropriate to issue an opinion that contains the phrase 'except for' when:

It is appropriate to issue an opinion that contains the phrase 'does not present a true and fair view' when:

Discuss three examples of how the nature of an item might affect an auditor's judgement about its materiality.

The accounting profession recognises the need for uniformity in reporting:

The phrase 'generally accepted accounting principles' can be found in the auditor's responsibility paragraph of a standard unmodified report.

The dollar amount of some misstatements cannot be accurately measured.For example, if the client were unwilling to disclose an existing legal action, the auditor must estimate its effect on:

An adverse opinion is issued when the auditor believes:

What are 'significant uncertainties', and should they always be referred to in the audit report?

Whenever an auditor issues a standard unmodified opinion, the implication is that the auditor:

Auditors sometimes encounter situations in which the outcome of a matter cannot be reasonably estimated at the time the financial report is issued.These matters are referred to as:

The primary concern in measuring materiality when a client has failed to follow an accounting standard is usually:

The auditor's responsibility section of the standard unmodified report does NOT include:

On discovering a significant uncertainty affecting the financial report, an auditor should immediately qualify the audit report.

Professional standards require that a report be issued whenever a public accounting firm is associated with financial statements.

An emphasis of matter paragraph is included in an audit report if the auditor is uncertain about whether a report has been fairly presented.

Under certain circumstances, the auditor is required to provide additional information regarding the financial report even though he or she intends to express an unmodified opinion.Normally, such explanatory information should be included in:

The introductory paragraph of the standard unmodified audit report states that the financial report: