Question 1

An emphasis of a matter may result in which of the following?

Accepted Answer

A) A disclaimer of an audit opinion. 
B) A qualified audit opinion. 
C) An adverse opinion. 
D) An unqualified audit opinion with an explanatory paragraph. 
A) A disclaimer of an audit opinion. 
B) A qualified audit opinion. 
C) An adverse opinion. 
D) An unqualified audit opinion with an explanatory paragraph.

Question 2

The auditor should only provide an opinion on the financial statements if the opinion indicates that the financial statements are fairly stated in all material respects.

Accepted Answer

A) True 
 B)False

Question 3

The term "except for" is used in the opinion paragraph of an audit report that will be qualified for a GAAP violation that is not pervasive.

Accepted Answer

A) True 
 B)False

Question 4

In which one of the following instances would an auditor most likely issue an adverse opinion?

Accepted Answer

A) Management declines to present earnings per share in the income statement. 
B) There is substantial doubt about the entity's ability to continue as a going concern. 
C) There is a material dollar misstatement that is pervasive in the financial statements. 
D) The client does not allow the auditor to send confirmations to its three largest customers. 
A) Management declines to present earnings per share in the income statement. 
B) There is substantial doubt about the entity's ability to continue as a going concern. 
C) There is a material dollar misstatement that is pervasive in the financial statements. 
D) The client does not allow the auditor to send confirmations to its three largest customers.

Question 5

When an auditor is faced with a material departure from GAAP that is pervasive,which of the following should the audit report contain?

Accepted Answer

A) An unqualified opinion. 
B) A qualified opinion with an explanatory paragraph. 
C) An adverse opinion. 
D) A disclaimer of opinion. 
A) An unqualified opinion. 
B) A qualified opinion with an explanatory paragraph. 
C) An adverse opinion. 
D) A disclaimer of opinion.

Question 6

Audit reports are designed to promote clear communication between the auditor and the financial statement user. Which of the following is not delineated in the audit report?

Accepted Answer

A) What was audited and the relative responsibilities of the client and the auditor. 
B) The experience level of the audit team. 
C) The nature of the audit opinion formulation process. 
D) The auditor's opinion on the fairness of the financial statements. 
A) What was audited and the relative responsibilities of the client and the auditor. 
B) The experience level of the audit team. 
C) The nature of the audit opinion formulation process. 
D) The auditor's opinion on the fairness of the financial statements.

Question 7

What can a user of financial statements infer from an unqualified opinion on the financial statements?

Accepted Answer

A) The auditor found no instances of error or fraud. 
B) The auditor has no reservations about the fairness of presentation. 
C) The auditor is satisfied that management is both credible and competent. 
D) All of the above can be inferred by the user. 
A) The auditor found no instances of error or fraud. 
B) The auditor has no reservations about the fairness of presentation. 
C) The auditor is satisfied that management is both credible and competent. 
D) All of the above can be inferred by the user.

Question 8

The PCAOB's reporting standard AS 3101 adopted in 2017 retains the "pass/fail" opinion that has been in effect for many decades.

Accepted Answer

A) True 
 B)False

Question 9

In which one of the following cases would an auditor most likely issue a qualified opinion?

Accepted Answer

A) There is a highly material,and very pervasive departure from SFAS No.141 and No.142. 
B) There is a change in accounting principles promulgated by the FASB. 
C) There is an immaterial dollar misstatement on the financial statements. 
D) There is one material departure from GAAP that affects only two accounts. 
A) There is a highly material,and very pervasive departure from SFAS No.141 and No.142. 
B) There is a change in accounting principles promulgated by the FASB. 
C) There is an immaterial dollar misstatement on the financial statements. 
D) There is one material departure from GAAP that affects only two accounts.

Question 10

Which of the following statements regarding the reporting of critical audit matters (CAMs)under PCAOB guidance is incorrect?

Accepted Answer

A) Matters that are material to the financial statements but do not relate to accounts or disclosures are not CAMs. 
B) If no CAMs arose during the audit,the audit report should not contain any reference to CAMs. 
C) The disclosure of CAMs under PCAOB guidance is similar to disclosure of KAMs under IAASB guidance. 
D) All of the above are incorrect. 
A) Matters that are material to the financial statements but do not relate to accounts or disclosures are not CAMs. 
B) If no CAMs arose during the audit,the audit report should not contain any reference to CAMs. 
C) The disclosure of CAMs under PCAOB guidance is similar to disclosure of KAMs under IAASB guidance. 
D) All of the above are incorrect.

Question 11

Inconsistent application of accounting principles by the client is a GAAP violation and would result in a qualified audit report.

Accepted Answer

A) True 
 B)False

Question 12

A justified departure from GAAP may result in which of the following?

Accepted Answer

A) A disclaimer of an audit opinion. 
B) An unqualified audit opinion with an explanatory paragraph. 
C) An adverse opinion. 
D) A qualified opinion. 
A) A disclaimer of an audit opinion. 
B) An unqualified audit opinion with an explanatory paragraph. 
C) An adverse opinion. 
D) A qualified opinion.

Question 13

The AICPAs Auditing Standards Board voted in 2017 to consider aligning its guidance with PCAOB standards related to disclosure of critical audit matters.

Accepted Answer

A) True 
 B)False

Question 14

The auditor will modify the audit report on ICFR effectiveness when management's annual certification pursuant to Section 302 of the Sarbanes-Oxley Act is misstated.

Accepted Answer

A) True 
 B)False

Question 15

In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?

Accepted Answer

A) The client has had significant transactions with related entities that the auditor wants to emphasize. 
B) The financial statements are not in conformity with FASB requirements regarding the capitalization of leases. 
C) The auditor is not independent. 
D) There is substantial doubt about the entity's ability to continue as a going concern. 
A) The client has had significant transactions with related entities that the auditor wants to emphasize. 
B) The financial statements are not in conformity with FASB requirements regarding the capitalization of leases. 
C) The auditor is not independent. 
D) There is substantial doubt about the entity's ability to continue as a going concern.

Question 16

Unqualified reports Under what circumstances would an auditor issue an unqualified opinion modified by an explanatory paragraph?

Accepted Answer

An explanatory paragraph would be added

Question 17

When an auditor lacks independence with respect to a client,which of the following should the auditor issue?

Accepted Answer

A) A disclaimer of opinion. 
B) An adverse opinion. 
C) A qualified opinion with explanatory paragraph. 
D) An unqualified opinion. 
A) A disclaimer of opinion. 
B) An adverse opinion. 
C) A qualified opinion with explanatory paragraph. 
D) An unqualified opinion.

Question 18

A client company has a history of negative cash flow trends and continuing losses.Which type of opinion will the auditor most likely issue?

Accepted Answer

A) Adverse. 
B) Unqualified with explanatory language. 
C) Qualified. 
D) Disclaimer of opinion. 
A) Adverse. 
B) Unqualified with explanatory language. 
C) Qualified. 
D) Disclaimer of opinion.

Question 19

An auditor can issue a disclaimer of opinion because of an inability to obtain sufficient appropriate evidence.

Accepted Answer

A) True 
 B)False

Question 20

As described by the AICPA,the purpose of an audit is to enhance the degree of confidence that users can place in the financial statements.

Accepted Answer

A) True 
 B)False

An emphasis of a matter may result in which of the following?

The auditor should only provide an opinion on the financial statements if the opinion indicates that the financial statements are fairly stated in all material respects.

The term "except for" is used in the opinion paragraph of an audit report that will be qualified for a GAAP violation that is not pervasive.

In which one of the following instances would an auditor most likely issue an adverse opinion?

When an auditor is faced with a material departure from GAAP that is pervasive,which of the following should the audit report contain?

Audit reports are designed to promote clear communication between the auditor and the financial statement user. Which of the following is not delineated in the audit report?

What can a user of financial statements infer from an unqualified opinion on the financial statements?

The PCAOB's reporting standard AS 3101 adopted in 2017 retains the "pass/fail" opinion that has been in effect for many decades.

In which one of the following cases would an auditor most likely issue a qualified opinion?

Which of the following statements regarding the reporting of critical audit matters (CAMs)under PCAOB guidance is incorrect?

Inconsistent application of accounting principles by the client is a GAAP violation and would result in a qualified audit report.

A justified departure from GAAP may result in which of the following?

The AICPAs Auditing Standards Board voted in 2017 to consider aligning its guidance with PCAOB standards related to disclosure of critical audit matters.

The auditor will modify the audit report on ICFR effectiveness when management's annual certification pursuant to Section 302 of the Sarbanes-Oxley Act is misstated.

In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?

Unqualified reports Under what circumstances would an auditor issue an unqualified opinion modified by an explanatory paragraph?

When an auditor lacks independence with respect to a client,which of the following should the auditor issue?

A client company has a history of negative cash flow trends and continuing losses.Which type of opinion will the auditor most likely issue?

An auditor can issue a disclaimer of opinion because of an inability to obtain sufficient appropriate evidence.

As described by the AICPA,the purpose of an audit is to enhance the degree of confidence that users can place in the financial statements.

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

An emphasis of a matter may result in which of the following?

The auditor should only provide an opinion on the financial statements if the opinion indicates that the financial statements are fairly stated in all material respects.

The term "except for" is used in the opinion paragraph of an audit report that will be qualified for a GAAP violation that is not pervasive.

In which one of the following instances would an auditor most likely issue an adverse opinion?

When an auditor is faced with a material departure from GAAP that is pervasive,which of the following should the audit report contain?

Audit reports are designed to promote clear communication between the auditor and the financial statement user. Which of the following is not delineated in the audit report?

What can a user of financial statements infer from an unqualified opinion on the financial statements?

The PCAOB's reporting standard AS 3101 adopted in 2017 retains the "pass/fail" opinion that has been in effect for many decades.

In which one of the following cases would an auditor most likely issue a qualified opinion?

Which of the following statements regarding the reporting of critical audit matters (CAMs)under PCAOB guidance is incorrect?

Inconsistent application of accounting principles by the client is a GAAP violation and would result in a qualified audit report.

A justified departure from GAAP may result in which of the following?

The AICPAs Auditing Standards Board voted in 2017 to consider aligning its guidance with PCAOB standards related to disclosure of critical audit matters.

The auditor will modify the audit report on ICFR effectiveness when management's annual certification pursuant to Section 302 of the Sarbanes-Oxley Act is misstated.

In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?

Unqualified reports Under what circumstances would an auditor issue an unqualified opinion modified by an explanatory paragraph?

When an auditor lacks independence with respect to a client,which of the following should the auditor issue?

A client company has a history of negative cash flow trends and continuing losses.Which type of opinion will the auditor most likely issue?

An auditor can issue a disclaimer of opinion because of an inability to obtain sufficient appropriate evidence.

As described by the AICPA,the purpose of an audit is to enhance the degree of confidence that users can place in the financial statements.

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