Question 1

If the auditor failed to confirm receivables when that should have been done and it may be too late to confirm now,what should the auditor do?

Accepted Answer

A) Issue an adverse opinion. 
B) Extend the previous work done on subsequent collections to help determine that the receivables existed and were properly valued at the balance sheet date. 
C) Automatically decide that the previously issued audit report cannot be supported in light of the omitted procedures. 
D) Issue a disclaimer of opinion. 
A) Issue an adverse opinion. 
B) Extend the previous work done on subsequent collections to help determine that the receivables existed and were properly valued at the balance sheet date. 
C) Automatically decide that the previously issued audit report cannot be supported in light of the omitted procedures. 
D) Issue a disclaimer of opinion.

Question 2

After the balance sheet date but prior to the audit report date,the client decides to acquire Bargain Company to obtain a significant increase in revenues.The auditor's report would probably include the statement: "except for the acquisition of Bargain Company...".

Accepted Answer

A) True 
 B)False

Question 3

Andrews Corporation adopted an accounting principle that is a material departure from GAAP.The auditor determined that the financial statements are fairly presented,except for this specifically identifiable GAAP departure,and therefore would issue a disclaimer of opinion.

Accepted Answer

A) True 
 B)False

Question 4

PCAOB guidance does not identify which of the following situations as one in which the auditor will modify the audit report on ICFR effectiveness?

Accepted Answer

A) When there is a restriction on the scope of the engagement. 
B) When there is other information contained in management's annual report on ICFR. 
C) When elements of management's annual report on internal control are incomplete or improperly presented. 
D) When the annual report includes a copy of the annual certification pursuant to Section 302 of the Sarbanes-Oxley Act. 
A) When there is a restriction on the scope of the engagement. 
B) When there is other information contained in management's annual report on ICFR. 
C) When elements of management's annual report on internal control are incomplete or improperly presented. 
D) When the annual report includes a copy of the annual certification pursuant to Section 302 of the Sarbanes-Oxley Act.

Question 5

If the firm auditing a company realizes that it is not independent with respect to the client,it will issue a disclaimer of opinion based on the inherent GAAP violation imposed by the audit firm.

Accepted Answer

A) True 
 B)False

Question 6

What are the five basic types of financial statement audit reports?

Accepted Answer

Audit reports can be:
1. Unqua

Question 7

If the auditor determines that management's annual report on internal controls is incomplete or not properly presented,the auditor's report will include an explanatory paragraph that describes the reasons for this determination.

Accepted Answer

A) True 
 B)False

Question 8

During the course of an audit of the financial statements of Glover Industries,a CPA is refused permission to inspect the minutes from the board of director's meetings.The CPA is instead offered a certified copy of all resolutions and actions involving accounting matters. REQUIRED: Which type of audit report would you suggest be issued this year and why?

Accepted Answer

The auditor should issue a disclaimer of

Question 9

Qualified opinions can only be issued by auditors for which of the following?

Accepted Answer

A) Violations of GAAP. 
B) Scope limitations. 
C) Going concern. 
D) Lack of independence. 
E) Either A or B. 
A) Violations of GAAP. 
B) Scope limitations. 
C) Going concern. 
D) Lack of independence. 
E) Either A or B.

Question 10

If a client expensed the acquisition cost of some assets that should have been capitalized and depreciated over their useful lives,which of the following would be incorrect?

Accepted Answer

A) A qualified opinion would be appropriate. 
B) The opinion paragraph should be modified to include language such as: "except for the effects of not capitalizing the acquisition costs of some assets..." 
C) An explanatory paragraph should include the effects of the subject matter of the qualification,where practicable. 
D) An explanatory paragraph should be modified to include language such as: "subject to the qualified act..." 
A) A qualified opinion would be appropriate. 
B) The opinion paragraph should be modified to include language such as: "except for the effects of not capitalizing the acquisition costs of some assets..." 
C) An explanatory paragraph should include the effects of the subject matter of the qualification,where practicable. 
D) An explanatory paragraph should be modified to include language such as: "subject to the qualified act..."

Question 11

When it is discovered that an important audit procedure was not performed,the SEC imposes sanctions against the audit firm responsible.

Accepted Answer

A) True 
 B)False

Question 12

An audit of the Flagler Company,a diamond mining company,brings to light the fact that its equipment has been marked up to the owners' expectation of market values.Such a situation will most likely result in which type of opinion?

Accepted Answer

A) Disclaimer. 
B) Review. 
C) Adverse. 
D) Unqualified with explanatory language. 
A) Disclaimer. 
B) Review. 
C) Adverse. 
D) Unqualified with explanatory language.

Question 13

According to the AICPA's audit reporting principles,which of the following is incorrect?

Accepted Answer

A) The purpose of an audit is to enhance the degree of confidence that users can place in the financial statements. 
B) The purpose of an audit is achieved when an auditor expresses an opinion on the financial statements. 
C) The auditor expresses an opinion as to whether the financial statements are free of material misstatement or states that an opinion cannot be expressed. 
D) The auditor provides positive assurance that the financial statements are free of errors,either intentional or unintentional. 
A) The purpose of an audit is to enhance the degree of confidence that users can place in the financial statements. 
B) The purpose of an audit is achieved when an auditor expresses an opinion on the financial statements. 
C) The auditor expresses an opinion as to whether the financial statements are free of material misstatement or states that an opinion cannot be expressed. 
D) The auditor provides positive assurance that the financial statements are free of errors,either intentional or unintentional.

Question 14

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?

Accepted Answer

A) Except for. 
B) Subject to. 
C) With the exception of. 
D) With the qualification of. 
A) Except for. 
B) Subject to. 
C) With the exception of. 
D) With the qualification of.

Question 15

Which of the following is an example of the contents of an opinion paragraph found in an unqualified audit report?

Accepted Answer

A) "We have audited...." 
B) "Nothing came to our attention..." 
C) "The financial statements referred to above present fairly..." 
D) "An audit includes examining,on a test basis..." 
A) "We have audited...." 
B) "Nothing came to our attention..." 
C) "The financial statements referred to above present fairly..." 
D) "An audit includes examining,on a test basis..."

Question 16

If omitted audit procedures cannot be performed,the auditor should extend previous work done and modify the report,if necessary.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a change included in PCAOB's new reporting standard AS 3101?

Accepted Answer

A) Specific mention of comprehensive income and notes to the financial statements. 
B) An affirmative statement that the audit firm is registered with the PCAOB. 
C) A new disclosure that includes the year in which the audit firm began serving consecutively as the client's auditor. 
D) A new report title,"Report of Independent Registered Public Accounting Firm." 
A) Specific mention of comprehensive income and notes to the financial statements. 
B) An affirmative statement that the audit firm is registered with the PCAOB. 
C) A new disclosure that includes the year in which the audit firm began serving consecutively as the client's auditor. 
D) A new report title,"Report of Independent Registered Public Accounting Firm."

Question 18

Under PCAOB standards (AS 3101)approved in 2017,all U.S.public companies will be required to disclose whether any critical audit matter (CAM)arose during the current period audit or state that there was none.

Accepted Answer

A) True 
 B)False

Question 19

If the auditor has no reservations about the fairness of the financial statements but believes there is a remote possibility that resolution of an uncertainty will have a material effect on the financial statements,which of the following would the auditor issue?

Accepted Answer

A) A disclaimer of opinion. 
B) An unqualified opinion with no report modifications. 
C) An adverse opinion. 
D) An unqualified opinion with explanatory paragraphs. 
A) A disclaimer of opinion. 
B) An unqualified opinion with no report modifications. 
C) An adverse opinion. 
D) An unqualified opinion with explanatory paragraphs.

Question 20

After an audit report is issued,the auditor discovers through a peer review that an important audit procedure has been omitted.In this case,what should the auditor do?

Accepted Answer

A) Notify all parties known to be relying on the report. 
B) Immediately request the client recall the report. 
C) Contact his or her professional liability insurance carrier. 
D) Determine whether the report can still be supported in light of the omitted procedure. 
A) Notify all parties known to be relying on the report. 
B) Immediately request the client recall the report. 
C) Contact his or her professional liability insurance carrier. 
D) Determine whether the report can still be supported in light of the omitted procedure.

If the auditor failed to confirm receivables when that should have been done and it may be too late to confirm now,what should the auditor do?

After the balance sheet date but prior to the audit report date,the client decides to acquire Bargain Company to obtain a significant increase in revenues.The auditor's report would probably include the statement: "except for the acquisition of Bargain Company...".

Andrews Corporation adopted an accounting principle that is a material departure from GAAP.The auditor determined that the financial statements are fairly presented,except for this specifically identifiable GAAP departure,and therefore would issue a disclaimer of opinion.

PCAOB guidance does not identify which of the following situations as one in which the auditor will modify the audit report on ICFR effectiveness?

If the firm auditing a company realizes that it is not independent with respect to the client,it will issue a disclaimer of opinion based on the inherent GAAP violation imposed by the audit firm.

What are the five basic types of financial statement audit reports?

If the auditor determines that management's annual report on internal controls is incomplete or not properly presented,the auditor's report will include an explanatory paragraph that describes the reasons for this determination.

Qualified opinions can only be issued by auditors for which of the following?

If a client expensed the acquisition cost of some assets that should have been capitalized and depreciated over their useful lives,which of the following would be incorrect?

When it is discovered that an important audit procedure was not performed,the SEC imposes sanctions against the audit firm responsible.

An audit of the Flagler Company,a diamond mining company,brings to light the fact that its equipment has been marked up to the owners' expectation of market values.Such a situation will most likely result in which type of opinion?

According to the AICPA's audit reporting principles,which of the following is incorrect?

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?

Which of the following is an example of the contents of an opinion paragraph found in an unqualified audit report?

If omitted audit procedures cannot be performed,the auditor should extend previous work done and modify the report,if necessary.

Which of the following is not a change included in PCAOB's new reporting standard AS 3101?

Under PCAOB standards (AS 3101)approved in 2017,all U.S.public companies will be required to disclose whether any critical audit matter (CAM)arose during the current period audit or state that there was none.

If the auditor has no reservations about the fairness of the financial statements but believes there is a remote possibility that resolution of an uncertainty will have a material effect on the financial statements,which of the following would the auditor issue?

After an audit report is issued,the auditor discovers through a peer review that an important audit procedure has been omitted.In this case,what should the auditor do?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Filters

Exam 15: Audit Reports

If the auditor failed to confirm receivables when that should have been done and it may be too late to confirm now,what should the auditor do?

After the balance sheet date but prior to the audit report date,the client decides to acquire Bargain Company to obtain a significant increase in revenues.The auditor's report would probably include the statement: "except for the acquisition of Bargain Company...".

Andrews Corporation adopted an accounting principle that is a material departure from GAAP.The auditor determined that the financial statements are fairly presented,except for this specifically identifiable GAAP departure,and therefore would issue a disclaimer of opinion.

PCAOB guidance does not identify which of the following situations as one in which the auditor will modify the audit report on ICFR effectiveness?

If the firm auditing a company realizes that it is not independent with respect to the client,it will issue a disclaimer of opinion based on the inherent GAAP violation imposed by the audit firm.

What are the five basic types of financial statement audit reports?

If the auditor determines that management's annual report on internal controls is incomplete or not properly presented,the auditor's report will include an explanatory paragraph that describes the reasons for this determination.

Qualified opinions can only be issued by auditors for which of the following?

If a client expensed the acquisition cost of some assets that should have been capitalized and depreciated over their useful lives,which of the following would be incorrect?

When it is discovered that an important audit procedure was not performed,the SEC imposes sanctions against the audit firm responsible.

An audit of the Flagler Company,a diamond mining company,brings to light the fact that its equipment has been marked up to the owners' expectation of market values.Such a situation will most likely result in which type of opinion?

According to the AICPA's audit reporting principles,which of the following is incorrect?

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?

Which of the following is an example of the contents of an opinion paragraph found in an unqualified audit report?

If omitted audit procedures cannot be performed,the auditor should extend previous work done and modify the report,if necessary.

Which of the following is not a change included in PCAOB's new reporting standard AS 3101?

Under PCAOB standards (AS 3101)approved in 2017,all U.S.public companies will be required to disclose whether any critical audit matter (CAM)arose during the current period audit or state that there was none.

If the auditor has no reservations about the fairness of the financial statements but believes there is a remote possibility that resolution of an uncertainty will have a material effect on the financial statements,which of the following would the auditor issue?

After an audit report is issued,the auditor discovers through a peer review that an important audit procedure has been omitted.In this case,what should the auditor do?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Filters