Exam 3: Audit Reports

The phrase "auditing standards generally accepted in the United States of America" can be found in the opinion paragraph of a standard, unqualified audit report for a non-public company.

The standard audit report for non-public entities refers to GAAS and GAAP in which sections?

Which of the following scenarios does not result in a qualified opinion?

The scope paragraph of the auditor's responsibility section of the audit report issued for financial statements of a non-public company should refer to generally accepted auditing standards .

Financial statement users are typically more concerned with an unqualified report with explanatory paragraphs than they are with a disclaimer of opinion.

When the client fails to make adequate disclosure in the body of the statements or in the related footnotes, it is the responsibility of the auditor to:

Examples of unqualified opinions which contain modified wording (without adding an explanatory paragraph)include:

An auditor can express a qualified opinion due to a:

The management's responsibility section of the standard audit report for a non-public company states that the financial statements are:

Misstatements must be compared with some measurement base before a decision can be made about materiality.A commonly accepted measurement base includes:

When there is uncertainty about a company's ability to continue as a going concern, the auditor's concern is the possibility that the client may not be able to continue its operations or meet its obligations for a "reasonable period of time." For this purpose, a reasonable period of time is considered not to exceed:

Which of the following is least likely to cause uncertainty about the ability of an entity to continue as a going concern?

Which of the following requires recognition in the auditor's opinion as to consistency?

EPM, Inc., is a private manufacturing company with a calendar year-end.Their financial statements include a balance sheet, a statement of income, statement of cash flows, and statement of stockholders' equity.For the most recent audit, Harrington and Perry, LLP, audited the 2011 and 2012 financial statements.The auditors completed all significant fieldwork on March 5, 2013 and issued the audit report on March 16, 2013. Required: Consider all the facts given and write the standard unqualified auditor's report, including all eight sections of the report.

All of the following would require an emphasis of matter paragraph except for:

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.

The appropriate audit report date for a standard nonqualified audit report for a non-public entity should be the:

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.

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.

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