Exam 4: Reports on Audited Financial Statements

In which of the following circumstances is an auditor most likely to express an adverse opinion?

A disclaimer of opinion generally indicates ________.

What are the three ways that accountants become associated with financial information issued by an enterprise?

An audit report included an additional paragraph disclosing a difference of opinion between the auditor and the client. The auditor believed that an adjustment should be made to the financial statements. What should the opinion paragraph of the audit report express?

An accountant becomes associated with financial statements when he or she signs them as the Chief Financial Officer.

A holding company has decided to carry its wholly owned subsidiary companies on the balance sheet using the equity method. The type of audit report required is ________.

Both the auditor and the client work to avoid a report reservation.

Which level of assurance is provided by a public accountant as a result of an audit?

Restrictions imposed by a client prohibited the observation of physical inventories that account for 35% of total assets. Alternative audit procedures for inventory were not feasible, although the auditor was able to obtain satisfactory evidence for all other items in the financial statements. The auditor should express ________.

When an auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time, the auditor's responsibility is to ________.

When there is material uncertainty that an auditee's ability to continue as a going concern is doubtful, and the issue has been fully disclosed in the notes to the financial statements, the auditor should issue a qualified report with a paragraph drawing attention to the going concern issue.

Which of the following auditing procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?

Green, CPA, was engaged to audit the financial statements of Essex Corporation after its fiscal year had ended. The timing of Green's appointment as auditor and the start of field work made confirmation of accounts receivable by direct communication with the debtors impracticable. Green applied other procedures and was satisfied as to the reasonableness of the account balances. Green's auditor's report most likely contained a(n) ________.

By its silence, a clean opinion implies that the financial statement disclosures are reasonably adequate.

When an adverse opinion is given, all the substantive reasons for the opinion must be disclosed in the report in basis of modification explanatory paragraphs.

In which of the following circumstances is a public accountant (PA) considered associated with a company's financial information?

In which of the following situations would an auditor ordinarily choose between expressing an "except for" qualified opinion or an adverse opinion?

In each of the circumstances listed below, match the situation to the type of opinion that should be given and write the identifying letter in the space provided. A. Unqualified B. Qualified C. Adverse D. Disclaimer ____ 1. Departure from GAAP of lesser materiality ____ 2. Scope limitation of significant materiality ____ 3. No GAAP departure and no scope limitation ____ 4. Scope limitation of lesser materiality ____ 5. Departure from GAAP of significant materiality

What are the public accountant's responsibilities when he or she is associated with the financial information of a company?

When a client will not permit inquiry of outside legal counsel, the audit report will ordinarily contain a(n) ________.