Exam 3: Audit Reports

An adverse opinion is issued when the auditor believes

An auditor who issues a qualified opinion because sufficient appropriate evidence was not obtained should describe the limitations in an explanatory paragraph.The auditor should also modify the

In most audits,the auditor issues a(n)

The auditor's responsibility section of the standard unmodified opinion audit report states that the auditor is

An auditor can express a qualified opinion due to a

The following is a portion of an adverse audit report issued for a public company.(Note: A separate report was issued on the effectiveness of internal control over financial reporting.) Independent Auditor's Report To the shareholders of Wallace Corporation We have audited the accompanying balance sheet of Wallace Corporation as of December 31,2016,and the related statements of income,retained earnings,and cash flows for the year then ended.These financial statements are the responsibility of the company's management.Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion. The company has excluded from property and debt in the accompanying balance sheet certain lease obligations that,in our opinion,should be capitalized in order to conform with generally accepted accounting principles.If these lease obligations were capitalized,property would be increased by $14,500,000,long-term debt by $13,200,000,and retained earnings by $1,300,000 as of December 31,2016,and net income and earnings per share would be increased by $1,300,000 and $2.25,respectively,for the year then ended. Required: Complete the above adverse audit report by preparing the opinion paragraph.Do not date or sign the report.

Auditors usually make the materiality judgment by referring to a standard checklist.

An auditor should issue a qualified opinion with an explanatory paragraph whenever there is a material uncertainty affecting the financial statements.

Describe the standard unmodified opinion audit report to be issued for an audit of a private company.Begin by specifying the eight parts of the report,and then discuss the contents of each part.

Changes in reporting entities,such as the inclusion of an additional company in combined financial statements,affect comparability but not consistency,and therefore do not require an explanatory paragraph in the audit report.

After the auditor determines whether any conditions exist which require a departure from a standard unmodified opinion audit report,the next step in the decision process is to

The date of the auditor's report is indicative of the last day of the auditor's responsibility for the review of significant events occurring after the balance sheet date.

The unmodified opinion audit report with emphasis-of-matter paragraph does not meet the criteria of a complete audit with satisfactory results.

In auditing the long-term investments account,Arens,CPA,is unable to obtain audited financial statements for an investee located in a foreign country.Levine concludes sufficient appropriate audit evidence regarding this investment cannot be obtained. For each of the following situations below,identify the appropriate opinion type and report modification by selecting a choice from the appropriate tables below.

As a result of management's refusal to permit the auditor to physically examine inventory,the auditor must depart from the unmodified opinion audit report because

The standard unmodified audit report

Which of the following statements are True for the standard unmodified opinion audit report of a nonpublic entity? I. The introductory paragraph states that management is responsible for the preparation and content of the financial statements. II. The scope paragraph states that the auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management.

When there is a scope restriction,what type of audit report can be issued?

Section 404(b)of the Sarbanes Oxley Act requires that the auditor of a public company attest to management's report on the efficiency of internal controls over financial reporting.

There are four conditions that must be met before an auditor can issue a standard unmodified opinion audit report for the audit of a private company.Please discuss each of these five conditions.