Question 1

There is substantial doubt about the client's ability to continue as a going concern.

Accepted Answer

1. Qualified or disclaimer of opinion (a

Question 2

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

Accepted Answer

A) Management will not sign a management representation letter. 
B) Management declines to provide a statement of cash flows. 
C) The auditor is independent of the client. 
D) The auditor is unable to confirm receivables but performs alternative procedures. 
A) Management will not sign a management representation letter. 
B) Management declines to provide a statement of cash flows. 
C) The auditor is independent of the client. 
D) The auditor is unable to confirm receivables but performs alternative procedures.

Question 3

Which of the following statements regarding key audit matters (KAMs)is not correct?

Accepted Answer

A) The auditor issues a separate opinion on identified KAMs. 
B) The order of presentation of individual KAMs is a matter of professional judgment. 
C) KAMs are a subset of matters communicated to those charged with corporate governance. 
D) The nature of a KAM will vary according to the client's industry. 
A) The auditor issues a separate opinion on identified KAMs. 
B) The order of presentation of individual KAMs is a matter of professional judgment. 
C) KAMs are a subset of matters communicated to those charged with corporate governance. 
D) The nature of a KAM will vary according to the client's industry.

Question 4

The auditor will issue an unqualified opinion on ICFR if the auditor has identified only one material weakness in ICFR.

Accepted Answer

A) True 
 B)False

Question 5

A justified departure from GAAP will result in the issuance of an adverse opinion.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is true regarding audit reporting?

Accepted Answer

A) The auditor should provide an opinion based on the audit evidence obtained. 
B) Auditing standards require auditors to provide positive assurance. 
C) The auditor's opinion should state whether the financial statements are presented fairly. 
D) All of the above statements are true. 
A) The auditor should provide an opinion based on the audit evidence obtained. 
B) Auditing standards require auditors to provide positive assurance. 
C) The auditor's opinion should state whether the financial statements are presented fairly. 
D) All of the above statements are true.

Question 7

Disclaimers Discuss what a disclaimer is and when it is issued.

Accepted Answer

A disclaimer may be issued for a pervasi

Question 8

On January 2,20Y9,the Zoom Detail Shoppe received notice from its primary supplier that all wholesale prices were being increased by 10%,effective immediately.Based on this notice,Zoom revalued its December 31, 20Y8,inventory to reflect the higher costs.The inventory is a large proportion of the total assets.The effect of the revaluation was material to current assets,but not to total assets or net income.The increase is adequately disclosed in the footnotes. REQUIRED: Which type of audit report would you suggest be issued this year and why?

Accepted Answer

This is a failure to follow GAAP and a q

Question 9

If the auditor concludes that the financial statements taken as a whole are not fairly presented,the auditor should issue an adverse opinion.

Accepted Answer

A) True 
 B)False

Question 10

In which one of the following instances would an auditor most likely issue an unqualified opinion without explanatory language?

Accepted Answer

A) Management's disclosures are missing or inadequate. 
B) There is substantial doubt about the entity's ability to continue as a going concern. 
C) There is a significant limitation on the scope of the engagement. 
D) There is an immaterial deviation from GAAP related to capitalizing repairs. 
A) Management's disclosures are missing or inadequate. 
B) There is substantial doubt about the entity's ability to continue as a going concern. 
C) There is a significant limitation on the scope of the engagement. 
D) There is an immaterial deviation from GAAP related to capitalizing repairs.

Question 11

Scope limitations resulting in disclaimers under U.S.auditing standards affect the standard audit report through which of the following?

Accepted Answer

A) Modifying the introductory paragraph 
B) Eliminating the scope paragraph. 
C) Adding an explanatory paragraph before the disclaimer paragraph. 
D) Both B and C. 
E) All of the above. 
A) Modifying the introductory paragraph 
B) Eliminating the scope paragraph. 
C) Adding an explanatory paragraph before the disclaimer paragraph. 
D) Both B and C. 
E) All of the above.

Question 12

How would the auditor categorize a situation when the financial statements do not contain a note the auditor believes is necessary for fair presentation?

Accepted Answer

A) A scope limitation. 
B) An uncertainty. 
C) A departure from GAAP. 
D) An act discreditable. 
A) A scope limitation. 
B) An uncertainty. 
C) A departure from GAAP. 
D) An act discreditable.

Question 13

An auditor is not required to inform the reader of an audit report when there has been a change in accounting principles that materially affects the financial statements.

Accepted Answer

A) True 
 B)False

Question 14

Uncertainties,such as doubt about the going concern of a client,may result in an adverse opinion.

Accepted Answer

A) True 
 B)False

Question 15

Disclaimers of opinion can only be issued by auditors based on which of the following?

Accepted Answer

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

Question 16

Subsequent to the date of the financial statements,as part of post-balance sheet date audit procedures,a CPA learned that a recent fire caused significant damage to one of the client's two manufacturing facilities.However,the loss will not be reimbursed by insurance.Newspapers in the area describe the event in detail and the event is widely known.The financial statements and related notes as prepared by the client did not disclose the fire loss. REQUIRED: Which type of audit report would you suggest be issued this year and why?

Accepted Answer

Disclosure of this information is requir

Question 17

Under international auditing standards,when the audit client has engaged other audit firms to audit remote locations around the country,the principal auditor must mention the other audit firms in the audit report.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an instance where the auditor would add a paragraph in a report expressing an unqualified opinion?

Accepted Answer

A) There is serious doubt that the client can continue as a going concern. 
B) Management's disclosures are not adequate. 
C) There are significant uncertainties that are not properly disclosed in the footnotes. 
D) There is a material dollar misstatement in the financial statements. 
A) There is serious doubt that the client can continue as a going concern. 
B) Management's disclosures are not adequate. 
C) There are significant uncertainties that are not properly disclosed in the footnotes. 
D) There is a material dollar misstatement in the financial statements.

Question 19

Unqualified audit reports For each of the following situations,define the type of problem encountered and provide an explanation as to the type of report which was issued. 
$\begin{array}{ll}
 \underline { \text { Situation } } &  \underline { \text {Report Issued  } }  \
 \text {The auditor is unable to confirm three   } &\text { Unqualified/Unmodified } \
 \text {customer accounts receivable.  } & \
 \text { The client forgot to accrue a contingent liability.  } &\text { Unqualified/Unmodified } \
 \text {  The auditor believes there is substantial doubt} &  \
 \text {  regarding the client's ability to continue as a  } &\text { Unqualified with Explanatory Paragraph } \
 \text { going concern. } & \
 \text {The client properly adopts a new accounting  } &\text {  Unqualified with Explanatory Paragraph} \
 \text {  principle promulgated by the FASB. } &  \
\end{array}$

Accepted Answer

None

Question 20

When circumstances preclude an auditor from performing certain procedures and the auditor can be satisfied using other alternative procedures,a disclaimer of opinion will be issued.

Accepted Answer

A) True 
 B)False

There is substantial doubt about the client's ability to continue as a going concern.

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

Which of the following statements regarding key audit matters (KAMs)is not correct?

The auditor will issue an unqualified opinion on ICFR if the auditor has identified only one material weakness in ICFR.

A justified departure from GAAP will result in the issuance of an adverse opinion.

Which of the following statements is true regarding audit reporting?

Disclaimers Discuss what a disclaimer is and when it is issued.

If the auditor concludes that the financial statements taken as a whole are not fairly presented,the auditor should issue an adverse opinion.

In which one of the following instances would an auditor most likely issue an unqualified opinion without explanatory language?

Scope limitations resulting in disclaimers under U.S.auditing standards affect the standard audit report through which of the following?

How would the auditor categorize a situation when the financial statements do not contain a note the auditor believes is necessary for fair presentation?

An auditor is not required to inform the reader of an audit report when there has been a change in accounting principles that materially affects the financial statements.

Uncertainties,such as doubt about the going concern of a client,may result in an adverse opinion.

Disclaimers of opinion can only be issued by auditors based on which of the following?

Under international auditing standards,when the audit client has engaged other audit firms to audit remote locations around the country,the principal auditor must mention the other audit firms in the audit report.

Which of the following is an instance where the auditor would add a paragraph in a report expressing an unqualified opinion?

When circumstances preclude an auditor from performing certain procedures and the auditor can be satisfied using other alternative procedures,a disclaimer of opinion will be issued.

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

There is substantial doubt about the client's ability to continue as a going concern.

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

Which of the following statements regarding key audit matters (KAMs)is not correct?

The auditor will issue an unqualified opinion on ICFR if the auditor has identified only one material weakness in ICFR.

A justified departure from GAAP will result in the issuance of an adverse opinion.

Which of the following statements is true regarding audit reporting?

Disclaimers Discuss what a disclaimer is and when it is issued.

If the auditor concludes that the financial statements taken as a whole are not fairly presented,the auditor should issue an adverse opinion.

In which one of the following instances would an auditor most likely issue an unqualified opinion without explanatory language?

Scope limitations resulting in disclaimers under U.S.auditing standards affect the standard audit report through which of the following?

How would the auditor categorize a situation when the financial statements do not contain a note the auditor believes is necessary for fair presentation?

An auditor is not required to inform the reader of an audit report when there has been a change in accounting principles that materially affects the financial statements.

Uncertainties,such as doubt about the going concern of a client,may result in an adverse opinion.

Disclaimers of opinion can only be issued by auditors based on which of the following?

Under international auditing standards,when the audit client has engaged other audit firms to audit remote locations around the country,the principal auditor must mention the other audit firms in the audit report.

Which of the following is an instance where the auditor would add a paragraph in a report expressing an unqualified opinion?

When circumstances preclude an auditor from performing certain procedures and the auditor can be satisfied using other alternative procedures,a disclaimer of opinion will be issued.

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