Exam 4: Reports on Audited Financial Statements

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

An auditor decided to issue a qualified opinion on an entity's financial statements because a major inadequacy in its computerized accounting records prevented the auditor from applying necessary procedures.The opinion paragraph of the auditor's report should state that the qualification pertains to ________.

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

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 ________.

An auditor will issue an adverse opinion when ________.

Limited (moderate or negative)assurance is typical in the review report of audited financial statements.

For which of the following situations would the auditor issue an unqualified audit opinion with an emphasis of matter paragraph?

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

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

Management has decided that the life of a piece of heavy equipment should be decreased from 15 years to 10 years,thus increasing the annual amortization.The auditor agrees that this amortization period is more reflective of the nature of the asset.The type of audit report that should be issued is ________.

Under which of the following circumstances does an accountant not become associated with a financial report?

You are auditing the financial statements of a public traded company that sells a product that is subject to high degree of market volatility.As a result,there is significant uncertainty as to the proper valuation of the inventory at year-end,which could result in highly material fluctuations in its carrying value.Management's estimates as to the selling price,while deemed appropriate,are difficult to verify and make inventory valuation a high risk area of the audit. How does the above matter would impact on your reporting requirements for this audit engagement?