Exam 12: Reports on Audited Financial Statements

If a departure from GAAP is material (but not pervasive),a(n)_____________________________ opinion on the entity's financial statements should be issued.

Auditors who are reporting on financial statements that contain a material departure from generally accepted accounting principles should include an additional paragraph and

Auditors most likely would issue a disclaimer of opinion on the entity's financial statements because of

In which of the following situations would auditors ordinarily choose between expressing a qualified opinion or an adverse opinion on the entity's financial statements?

R.Wolfe became the new auditor for Royal Corporation,succeeding C. Mason, who audited the financial statements last year. Wolfe needs to report on Royal's comparative financial statements and should disclose in the report an explanation about other auditors having audited the prior year

In which of the following circumstances would auditors be most likely to express an adverse opinion?

If financial statements contain an immaterial departure from accounting principles,the auditors can render a(n)

When reporting on _____________________________________,auditors should indicate that these statements have been derived from the complete set of financial statements,which have been audited.

An adverse opinion indicates that the financial statements are not presented in conformity with GAAP.

Auditors' decision to select between a qualified opinion or adverse opinion for a departure from GAAP would depend upon the materiality and __________________________ of the effects of the departure.

When other independent auditors are involved in the current audit of parts of the entity's business,the group auditors may issue a report that

In each of the following circumstances,indicate by appropriate letter which of the following types of opinions should be rendered on the entity's financial statements. A. Unqualified B. Qualified C. Adverse D. Disclaimer

Charlie Company's comparative financial statements include the financial statements of the prior year that were audited by predecessor auditors whose report on those financial statements is not presented.If the predecessor's report was qualified,the successor auditors should

Assume that auditors prepare separate reports on the entity's financial statements and internal control over financial reporting.Following are various phrases and characteristics associated with auditors' reports.For each phrase or characteristic,indicate by letter whether the phrase or characteristic is related to the report on the entity's financial statements,report on the entity's internal control over financial reporting,both reports,or neither report. A. Report on entity's financial statements. B. Report on internal control over financial reporting. C. Both reports. D. Neither report.

The opinion paragraph of the standard report on the entity's financial statements identifies and describes omitted or inadequate ____________________________.

Under which of the following circumstances would a disclaimer of opinion on the entity's financial statements not be appropriate?

The introductory paragraph of the auditors' report identifies management's responsibility for the financial statements.

A(n)________________________ is a situation in which auditors are unable to gather sufficient appropriate evidence.

The scope paragraph of the standard report on the entity's financial statements does not include the statement

If a justified departure from GAAP exists,auditors would issue an unqualified opinion but would modify the scope paragraph to describe the departure and its monetary effects.