Chapter3 - final - CHAPTER 3 Note to Instructors Unless...

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CHAPTER 3 Note to Instructors: Unless otherwise indicated in the text of a question, please assume that a question applies to audits of public and private companies. Questions that relate only to public- company matters will be noted by the phrase (Public) beside the question number. Multiple-Choice Questions 1. Auditing standards require that the audit report must be titled and that the title must: easy a. include the word “independent.” a b. indicate if the auditor is a CPA. c. indicate if the auditor is a proprietorship, partnership, or incorporated. d. not include any discriminatory language. 2. easy To emphasize the fact that the auditor is independent, the addressee of the audit report is usually not: a a. the company’s management. b. the stockholders of the client company. c. the board of directors of the client company. d. either b or c. 3. The purpose of the introductory paragraph in the standard unqualified report is: easy a. to identify the entity that was audited. d b. to identify the financial statements that were audited and the dates and time periods covered by the report. c. to communicate the responsibilities of management in preparing the financial statements and to clarify the respective roles of management and the auditor. d. all of the above. 4. The scope paragraph of the standard unqualified audit report states that the audit is designed to: easy a. discover all errors and/or irregularities. d b. discover material errors and/or irregularities. c. conform to generally accepted accounting principles. d. obtain reasonable assurance whether the statements are free of material misstatement. 5. easy Which of the following is not an essential condition for issuing the standard unqualified audit opinion? c a. All statements are included in the financial statements. b. The general standards have been followed in all respects. c. The financial statements are prepared in accordance with regulatory principles. d. Sufficient appropriate audit evidence has been accumulated. 6. The audit report date on a standard unqualified report indicates: easy a. the last day of the fiscal period. d b. the date on which the financial statements were filed with the Securities and Exchange Commission. c. the last date on which users may institute a lawsuit against either client or auditor. d. the last day of the auditor’s responsibility for the review of significant events that occurred subsequent to the date of the financial statements. 3-1
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7. easy d As a result of management’s refusal to permit the auditor to physically examine inventory, the auditor has not accumulated sufficient appropriate evidence to conclude whether financial statements are stated in accordance with GAAP. The auditor must depart from the unqualified audit report because: a. the financial statements have not been prepared in accordance with GAAP. b.
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Chapter3 - final - CHAPTER 3 Note to Instructors Unless...

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