Exam 3: Audit Reports

Indicate which changes would require an explanatory paragraph in the audit report.

In which situation would the auditor be choosing between "except for" qualified opinion and an adverse opinion?

The standard audit report refers to GAAS and GAAP in which paragraphs?

The audit report date on a standard unqualified report indicates:

In most audits, the auditor issues a(n):

When comparing misstatements with a measurement base, the auditor must consider the pervasiveness of the misstatement. Of the following examples, the most pervasive misstatement is a(n):

More than one modification should be included in the audit report when:

After the auditor determines whether any conditions exist which require a departure from a standard unqualified report, the next step in the decision process for audit reports is to:

Examples of unqualified opinions which contain modified wording (without adding an explanatory paragraph) include:

Section 404(b) of the Sarbanes Oxley Act requires that the auditor of an issuer attest to management's report on the efficiency of internal controls over financial reporting.

Whenever an auditor issues an audit report for a public company, the auditor can choose to issue a report in which of the following forms? I. A combined report on financial statements and internal control over financial reporting. II. Separate reports on financial statements and internal control over financial reporting.

The introductory paragraph of the standard audit report states that the auditor is:

A qualified report is issued when all auditing conditions have been met, no significant misstatements have been discovered, and it is the auditor's opinion that the financial statements are fairly stated in accordance with GAAP.

The scope paragraph of the standard unqualified audit report states that the audit is designed to:

The financial statements most commonly audited by external auditors are the balance sheet, the income statement, and the statement of changes in retained earnings.

Misstatements must be compared with some measurement base before a decision can be made about materiality. A commonly accepted measurement base includes:

Under AICPA auditing standards, the primary auditor issuing the opinion on the financial statements is called the:

Which of the following is not explicitly stated in the standard unqualified audit report?

Presented below is an independent auditor's report for a private company prepared by the firm of Harrington and Perry, LLP. Auditor's Report To the president and management of EPM, Inc. We have examined the accompanying balance sheets and statements of income, retained earnings, and cash flows of EPM, Inc., as of December 31, 2012 and 2011. We performed our examination in accordance with auditing standards generally accepted in the United States of America and examined, on a test basis, evidence supporting the accounting principles used and estimates made by management. In our opinion, the financial statements referred to above accurately present the financial position of EPM, Inc., in conformity with generally accepted accounting principles. Harrington and Perry, LLP December 31, 2012 Other information: EPM, Inc., is a for-profit corporation and publishes comparative financial statements for distribution to shareholders, potential investors, and the general public. The client has a calendar year-end. For the most recent audit, the auditor completed all significant fieldwork on March 5, 2013 and issued the audit report on March 16, 2013. During 2012, EPM changed its method of depreciating long-term assets and properly reflected the effect of the change in the current year's financial statements, restated the prior year's financial statements, and properly discussed the change in a footnote (Note 4) to those statements. The auditors are satisfied that the change was preferable. Required: Consider all the facts given and rewrite the complete auditor's report, including report title, address, body of report, name of firm, and audit report date.