Chapter 16 Auditors Reports - Chapter 16 Auditors Reports...

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Chapter 16: Auditors' Reports Chapter 16: Auditors' Reports Student: ___________________________________________________________________________ 1. Review reports issued by auditors give positive assurance as to the fair presentation of financial statements. True False 2. Negative assurance implies that nothing has come to the reviewer's attention that requires change. True False 3. The audit report delineates the responsibility of client management and that of the audit firm. True False 4. Andrews Corporation adopted an accounting principle that is a material departure from GAAP. The auditor determined that the financial statements are fairly presented, except for this specifically identifiable GAAP departure, and therefore would issue a disclaimer of opinion. True False 5. Uncertainties, such as doubt about the going concern of a client, may result in an adverse opinion. True False 6. A justified departure from GAAP will result in the issuance of an adverse opinion. True False 7. When financial statements contain generally accepted accounting principles in the current year that are different from the generally accepted accounting principles used in the preceding year, the auditor will typically make mention of it in the opinion. True False
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8. A client that has a departure from generally accepted accounting standards that is immaterial will receive a qualified or adverse opinion. True False 9. The failure of a client to include a statement of cash flow will result in the issuance of a disclaimer of opinion by the auditor. True False 10. When the auditor is unable to obtain sufficient, competent evidence concerning the beginning inventory, which is material, the report is modified by adding an explanatory paragraph prior to the opinion paragraph and the auditor would issue an adverse opinion. True False 11. The term "except for" is used in the opinion paragraph of an audit report that will be qualified for a GAAP violation. True False 12. When the auditor concludes that there are no material weaknesses, that is, that internal controls are effective, the auditor would typically issue an unqualified opinion on internal controls. True False 13. After the balance sheet date but prior to the last day of fieldwork the client decides to acquire PaperWeight Company to obtain a significant increase in revenues. The auditor would probably give a report that includes the statement: "except for the acquisition of PaperWeight Company...". True False 14. The client will not allow Olivia and Company, CPAs to read the minutes of the board of director's meetings that occurred during the year under audit. Such a limitation will usually result in the auditor issuing a disclaimer/scope limitation. True False 15. When the audit client has engaged other audit firms to audit remote locations around the country, the principal auditor must mention the other auditors in his or her report.
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