Exam 3: Audit Reports

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

It is typically more difficult to evaluate the materiality of potential misstatements resulting from a scope limitation than for failure to follow GAAP.

Auditing standards for public companies are established by the

Which of the following is incorrect concerning scope limitations?

When a qualified or adverse opinion is issued, the qualifying paragraph is inserted

If the scope restriction imposed by the client is so material that the overall fairness of the financial statements is in question, the auditor should issue a(n)

In the auditor's responsibilities paragraph of the audit report issued for financial statements of a nonpublic company, the auditor expresses an opinion about the internal controls of the company.

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

Users of the financial statements rely on the auditor's report because of the absolute assurance the report provides.

In which of the following circumstances would an auditor most likely express an adverse opinion?

If there is a deviation in the statements' preparation in accordance with GAAP and another accounting principle was applied on a basis that was not consistent with that of the preceding year,

In which situation would the auditor be choosing between "except for" qualified opinion and an adverse opinion?

When analyzing the various types of opinions that the auditor can issue,

If the auditor lacks independence, a disclaimer of opinion must be issued

The PCAOB and the AICPA recently adopted new auditor reporting standards which are designed to make the standard audit report less informative for users.

After the balance sheet date but prior to issuance of the auditor's report the auditor learns that the client's facility in a foreign country has been expropriated. Management refuses to disclose this information in a financial statement footnote or present pro-forma data as to the effect of the event. The auditor should

When an auditor discovers a highly material GAAP violation in the financial statements and the client refuses to correct it, the auditor should issue a disclaimer of opinion.

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

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

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