Question 1

The first step to be followed when deciding the appropriate audit report in a given set of circumstances is to

Accepted Answer

A) decide the appropriate type of report for the condition. 
B) write the report. 
C) determine whether any conditions exists requiring a departure from a standard unmodified opinion audit report. 
D) decide the materiality for each condition. 
A) decide the appropriate type of report for the condition. 
B) write the report. 
C) determine whether any conditions exists requiring a departure from a standard unmodified opinion audit report. 
D) decide the materiality for each condition.

Question 2

A lack of independence will override any other scope limitations and requires a disclaimer of opinion.

Accepted Answer

A) True 
 B)False

Question 3

The standard audit report for nonpublic entities refers to GAAS and GAAP in which sections?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 4

Indicate which changes would require an explanatory paragraph in the audit report.

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 5

When an auditor is trying to determine how changes can affect consistency and and/or comparability,he should keep in mind that

Accepted Answer

A) changes that affect comparability but not consistency require an explanatory paragraph. 
B) items that materially affect the comparability of financial statements requires a disclaimer of opinion. 
C) changes that affect consistency require an explanatory paragraph if they are material. 
D) changes that involve either comparability or consistency only need to be mentioned in the footnotes. 
A) changes that affect comparability but not consistency require an explanatory paragraph. 
B) items that materially affect the comparability of financial statements requires a disclaimer of opinion. 
C) changes that affect consistency require an explanatory paragraph if they are material. 
D) changes that involve either comparability or consistency only need to be mentioned in the footnotes.

Question 6

When the auditor concludes that there is substantial doubt about the entity's ability to continue as a going concern,the appropriate audit report could be I. an unmodified opinion audit report with an explanatory paragraph.
II) a disclaimer of opinion.

Accepted Answer

A) I only 
B) II only 
C) I or II 
D) Neither I nor II 
A) I only 
B) II only 
C) I or II 
D) Neither I nor II

Question 7

Discuss each of the five circumstances when an auditor would issue an unmodified opinion audit report with an emphasis-of-matter paragraph or nonstandard report wording.

Accepted Answer

An unmodified opinion audit report with

Question 8

In the case of a disclaimer due to lack of independence,the entire scope paragraph is excluded from the report.

Accepted Answer

A) True 
 B)False

Question 9

Under PCAOB standards

Accepted Answer

A) the standard unmodified opinion audit report is referred to as an unqualified opinion audit report. 
B) the scope paragraph states that the financial statements are the responsibility of management. 
C) internal controls of a public company must be audited every five years. 
D) the scope paragraph is the same as the scope paragraph for private companies. 
A) the standard unmodified opinion audit report is referred to as an unqualified opinion audit report. 
B) the scope paragraph states that the financial statements are the responsibility of management. 
C) internal controls of a public company must be audited every five years. 
D) the scope paragraph is the same as the scope paragraph for private companies.

Question 10

Whenever an auditor issues an audit report for a public company,the auditor can choose to issue a report in which of the following forms?
I. A combined report on financial statements and internal control over financial reporting
II. Separate reports on financial statements and internal control over financial reporting

Accepted Answer

A) I only 
B) II only 
C) either I or II 
D) neither I nor II 
A) I only 
B) II only 
C) either I or II 
D) neither I nor II

Question 11

Indicate which changes would require an explanatory paragraph in the audit report.

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

Which of the following is a correct statement regarding materiality?

Accepted Answer

A) There are well-defined guidelines that enable auditors to determine if something is material. 
B) Misstatements must be compared with some benchmark before a decision can be made about the materiality level of the failure of a company to follow GAAP. 
C) Pervasiveness is not considered when comparing potential misstatements with a base or benchmark. 
D) To evaluate overall materiality,the auditor does not combine all unadjusted misstatements. 
A) There are well-defined guidelines that enable auditors to determine if something is material. 
B) Misstatements must be compared with some benchmark before a decision can be made about the materiality level of the failure of a company to follow GAAP. 
C) Pervasiveness is not considered when comparing potential misstatements with a base or benchmark. 
D) To evaluate overall materiality,the auditor does not combine all unadjusted misstatements.

Question 13

The following is the introductory paragraph,and the Basis for Qualified Opinion paragraph for Fast Times Corporation,a nonpublic company.
Independent Auditor's Report
To the shareholders of Fast Times Corporation
We have audited the accompanying balance sheet of Fast Times Corporation as of September 30,2016,and the related statements of income,retained earnings,and cash flows for the year then ended,and the related notes to the financial statements.
Basis for Qualified Opinion
We were unable to obtain audited financial statements supporting the company's investment in a foreign affiliate stated at $1,040,000,or its equity in earnings of that affiliate of $501,000,which is included in net income,as described in Note 14 to the financial statements.Because of the nature of the company's records,we were unable to satisfy ourselves as to the carrying value of the investment or the equity in its earnings by means of other auditing procedures.
Required:
Prepare the opinion paragraph for the above audit report.Do not date or sign the report.

Accepted Answer

In our opinion,except for the effects of

Question 14

The audit report is normally addressed to the company's president or chief executive officer.

Accepted Answer

A) True 
 B)False

Question 15

Items that materially affect the comparability of the financial statements generally require disclosure in the footnotes.

Accepted Answer

A) True 
 B)False

Question 16

Auditing standards for public companies are established by the

Accepted Answer

A) SEC. 
B) FASB. 
C) PCAOB. 
D) IRS. 
A) SEC. 
B) FASB. 
C) PCAOB. 
D) IRS.

Question 17

When comparing misstatements with a measurement base,the auditor must consider the pervasiveness of the misstatement.Of the following examples,the most pervasive misstatement is a(n)

Accepted Answer

A) understatement of inventory. 
B) understatement of retained earnings caused by a miscalculation of dividends payable. 
C) misclassification of notes payable as a long-term liability when it should be current. 
D) misclassification of salary expense as a selling expense. 
A) understatement of inventory. 
B) understatement of retained earnings caused by a miscalculation of dividends payable. 
C) misclassification of notes payable as a long-term liability when it should be current. 
D) misclassification of salary expense as a selling expense.

Question 18

The phrase "accounting principles generally accepted in the United States of America" can be found in the opinion paragraph of a standard unmodified opinion report.

Accepted Answer

A) True 
 B)False

Question 19

Auditing standards in the United States allow an auditor to perform an audit of a nonpublic U.S.entity in accordance with both generally accepted auditing standards in the U.S.and the ISAs.

Accepted Answer

A) True 
 B)False

Question 20

The phrase "auditing standards generally accepted in the United States of America" can be found in the opinion paragraph of a standard unmodified opinion report for a nonpublic company.

Accepted Answer

A) True 
 B)False

Exam 3: Audit Reports

The first step to be followed when deciding the appropriate audit report in a given set of circumstances is to

A lack of independence will override any other scope limitations and requires a disclaimer of opinion.

The standard audit report for nonpublic entities refers to GAAS and GAAP in which sections?

Indicate which changes would require an explanatory paragraph in the audit report.

When an auditor is trying to determine how changes can affect consistency and and/or comparability,he should keep in mind that

When the auditor concludes that there is substantial doubt about the entity's ability to continue as a going concern,the appropriate audit report could be I. an unmodified opinion audit report with an explanatory paragraph. II) a disclaimer of opinion.

Discuss each of the five circumstances when an auditor would issue an unmodified opinion audit report with an emphasis-of-matter paragraph or nonstandard report wording.

In the case of a disclaimer due to lack of independence,the entire scope paragraph is excluded from the report.

Under PCAOB standards

Indicate which changes would require an explanatory paragraph in the audit report.

Which of the following is a correct statement regarding materiality?

The audit report is normally addressed to the company's president or chief executive officer.

Items that materially affect the comparability of the financial statements generally require disclosure in the footnotes.

Auditing standards for public companies are established by the

When comparing misstatements with a measurement base,the auditor must consider the pervasiveness of the misstatement.Of the following examples,the most pervasive misstatement is a(n)

The phrase "accounting principles generally accepted in the United States of America" can be found in the opinion paragraph of a standard unmodified opinion report.

Auditing standards in the United States allow an auditor to perform an audit of a nonpublic U.S.entity in accordance with both generally accepted auditing standards in the U.S.and the ISAs.

The phrase "auditing standards generally accepted in the United States of America" can be found in the opinion paragraph of a standard unmodified opinion report for a nonpublic company.

The Demand for Audit and Other Assurance Services

The Cpa Profession

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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