Audit Exam 1 ch 3
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| In which of the following situations would an auditor ordinarily issue an unqualified or unmodified financial statement audit opinion with no explanatory (or emphasis-of-matter or other-matter) paragraph? | show 🗑
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| The client’s financial statements contain no material misstatements and the auditor concurs that this change is justified. If the change is disclosed in the notes to the financial statements, the auditor should issue a report with a(n): | show 🗑
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| An auditor includes a separate paragraph in an otherwise unqualified financial statement audit report to emphasize that the entity being reported upon had significant transactions with related parties. The inclusion of this separate paragraph: | show 🗑
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| Eagle had a computer failure and lost part of its financial data. auditor was unable to obtain sufficient audit evidence relating to Eagle’s inventory account. the inventory account is at least material, the auditor would most likely choose either: | show 🗑
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| Tech appropriately disclosed an uncertainty due to pending litigation. the auditor was unable to satisfy herself that all pending lit had been identified. The auditor’s decision to issue a qualified opinion on Tech’s fs would most likely result from: | show 🗑
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inability of the auditor to obtain sufficient appropriate evidence
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unmodified opinion.
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| show | indicate in the auditor’s report that the predecessor auditor expressed an unqualified opinion.
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| show | A departure from generally accepted accounting principles caused an adverse opinion on the prior year’s financial statements, and those prior year statements have been properly restated.
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| show | The auditor has no obligation to corroborate the “other information” but should read the “other information” to determine whether it is materially consistent with the financial statements.
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| When reporting on financial statements prepared on the basis of accounting used for income tax purposes, the auditor should include in the report a paragraph that: | show 🗑
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| When an auditor is asked to express an opinion on an entity’s rent and royalty revenues, he or she may: | show 🗑
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| Which of the following parties is responsible for the fairness of the representations made in financial statements? | show 🗑
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| show | reliance placed on the report of another auditor
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| If the auditor wishes to call attention to the matter and management does not make an accrual in the financial statements, the auditor should issue a(an): | show 🗑
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| If the auditor believes that there is minimal likelihood that resolution of an uncertainty will have a material effect on the financial statements, the auditor would issue a(n): | show 🗑
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| show | read the financial statements of the current period, compare prior-period financial statements with the current-year financial statements, and obtain letters of representation from the management of the entity and from the current-year, successor auditor.
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| show | is appropriate and would not negate the unqualified opinion.
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| When the entity fails to include information that is nec for the fp of fs in the body of the statem or in the related footnotes, it is the respon of the auditor to present the nature and impact of the faulty acct or misstate in the auditor's report and | show 🗑
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| When the auditor is unable to determine the amounts associated with the illegal acts of entity personnel because of an inability to obtain adequate evidence, the auditor should issue a(n): | show 🗑
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