Exam 4: Reports on Audited Financial Statements

Under which of the following circumstances would a disclaimer of opinion not be appropriate?

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

Why must a CPA issue a report when associated with financial information?

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

A scope limitation imposed by a client affecting the audit in a material,but not pervasive way,would result in a disclaimer of opinion.

An auditor who is reporting on financial statements that contain a material departure from generally accepted accounting principles should include a separate explanatory paragraph and ________.

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)________.

Auditing standards require that an appropriate communication be issued in all cases where an accountant's name is associated with financial information.

If financial statements contain a very material departure from GAAP such that the financial statements are virtually useless,the auditor can render a(an)________.

An independent auditor must consider whether the auditee has the ability to continue as a going concern.If a substantial doubt exists but disclosure is adequate and no other basis exists for modifying the report,the auditor should ________.

Which level of assurance results in a public accountant (PA)expressing a conclusion in the negative form "nothing has come to my attention"?

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

The words "except for" should be used in the opinion paragraph only if there is a reservation resulting in a disclaimer of opinion or a scope qualification.

Without the public accountant's knowledge or consent,the enterprise indicates that the public accountant (PA)was involved with information issued by the enterprise.Which of the following statements is true?

CPA has been engaged to audit the financial statements of Marchano Ltd. ,a manufacturer of toys.Several individuals are suing the company because of a toy that injured children.The company has not disclosed the lawsuit in its financial statements.What type of audit report should be issued?

In which of the following circumstances may the auditor issue the standard unqualified,unmodified audit report?

A clean opinion does not imply that the financial statement disclosures are reasonably adequate.

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 ________.

Upon completing the audit of ABC Company Ltd. ,the auditor has concluded that the financial statements are fairly presented and there is material uncertainty as to the ability of the company to continue as a going concern.Consequently,what type of audit opinion should be issued?

An auditor was unable to physically count the inventory at year-end due to a flood arising from a hurricane.The inventory represents over 80% of the current assets and 60% of the total assets on the balance sheet.In addition,while completing other audit procedures,the auditor determines that a material investment reported using the cost method should instead be reported using the equity method.How should the audit report by these two circumstances?