AUDITING - CHAPTER 3 - AUDITING CHAPTER 3 1. When an...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
AUDITING - CHAPTER 3 1. When an auditor encounters a situation involving more than one of the conditions requiring a departure from a standard unqualified report, the auditor should modify his or her opinion for each condition unless one has the effect of neutralizing the others. In which of the following situations would the auditor not include more than one modification in the report? a.There is a material scope limitation, and the auditor is not independent. b. There is a material GAAP violation, and the auditor is not independent. c.There is a material scope limitation, and there is substantial doubt about the company's ability to continue as a going concern. d. There is a substantial doubt about the company's ability to continue as a going concern, and information about the causes of the uncertainties is not adequately disclosed in a footnote. 2. Which of the following requires recognition in the auditor's opinion as to consistency? a.The correction of an error in the prior year's financial statements resulting from a mathematical mistake in capitalizing interest. b. A change in the estimate of provisions for warranty costs. c.The change from the cost method to the equity method of accounting for investments in common stock. d. A change in depreciation method which has no effect on current year's financial statements but is certain to affect future years. 3. Grant Company's financial statements adequately disclose uncertainties that concern future events, the outcome of which are not reasonably estimable. The auditor's report should include a(an) a.unqualified opinion. b. "subject to" qualified opinion. c."except for" qualified opinion. d. adverse opinion. 4. Which of the following statements is not true? a.A one-paragraph report is generally used when the auditor is not independent. b. A three-paragraph report ordinarily indicates there are no exceptions in the audit. c.More than three paragraphs in the report indicates there must be some type of qualification in the audit. d. An unqualified opinion with an explanation or modified wording would require more than three paragraphs. 5 . Which of the following is not one of the principal CPA firm's alternatives when issuing a report if a different CPA firm performed part of the audit? a.Issue a joint report signed by both CPA firms. b. Make no reference to the other CPA firm in the audit report, and issue the standard unqualified opinion. c.Make reference to the other auditor in the report by using modified wording. (A shared opinion or report.) d. A qualified opinion or disclaimer, depending on materiality, is required if the principal auditor is not willing to assume any responsibility for the work of the other auditor. 6.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/22/2010 for the course CCA 401 taught by Professor Mohammad during the Spring '10 term at Abraham Baldwin Agricultural College.

Page1 / 12

AUDITING - CHAPTER 3 - AUDITING CHAPTER 3 1. When an...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online