Exam 18: Reports on Audited Financial Statements

When there has been a change in accounting principle that materially affects the comparability of the comparative financial statements presented for a public company and the auditor concurs with the change, the auditor should

Which of the following circumstances normally does not affect the consistency phrase in the auditor's standard report?

A scope limitation sufficient to preclude an unqualified opinion always will result when management

An auditor must disclaim an opinion when the auditor lacks independence.

When expressing an opinion on a specified account or item in the financial statements, the auditor need only consider that account or item. However, the auditor must have audited the entire set of financial statements if this engagement requires a report on the entity's

A scope limitation results from an inability to obtain sufficient appropriate evidence about some component of the financial statements.

Auditing standards define special purpose financial statements as including those prepared under the following base(s)

An auditor may reasonably issue an "except for" qualified opinion for

The following four situations require a modification to the standard unqualified/unmodified audit report. Identify the modification required for each. a. Opinion based in part on the report of another auditor. b. Going concern. c. Lack of consistency. d. Additional emphasis.

The predecessor auditor, after properly communicating with the successor auditor, has reissued a report because the entity desires comparative financial statements. The predecessor auditor's report should make

Discuss the conditions that prohibit the auditor from issuing an unqualified/unmodified opinion and the types of reports that the auditor may issue for a financial statement audit.

When reporting on comparative financial statements where the financial statements of the prior year have been examined by a predecessor auditor whose report is not presented, the successor auditor should make

Management believes and the auditor is satisfied, that a material loss probably will occur when pending litigation is resolved. Management is unable to make a reasonable estimate of the amount or range of the potential loss, but fully discloses the situation in the notes to the financial statements. If the auditor wishes to call attention to the matter and management does not make an accrual in the financial statements, the auditor should issue a(an)

A going concern issue requires a modification of the three-paragraph standard unqualified audit report (public company).