In such cases the auditor will likely issue a a

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Unformatted text preview: iately after the address, as the first paragraph. 1-137 53. challenging c For the report containing a disclaimer for lack of independence, the disclaimer is in the: a. third or opinion paragraph. b. second or scope paragraph. c. first and only paragraph. d. fourth or explanatory paragraph. 54. challenging a Which of the following is not a primary category of attestation report? a. Compilation report. b. Review report. c. Audit report. d. Special audit report based on a basis of accounting other than GAAP. 55. challenging b Most auditors believe that financial statements are “presented fairly” when the statements are in accordance with GAAP, and that it is also necessary to: a. determine that they are not in violation of FASB statements. b. examine the substance of transactions and balances for possible misinformation. c. review the statements using the accounting principles promulgated by the SEC. d. assure investors that net income reported this year will be exceeded in the future. 56. challenging d In which of the following situations would the auditor most likely issue an unqualified report? a. The client valued ending inventory by using the replacement cost method. b. The client valued ending inventory by using the Next-In-First-Out (NIFO) method. c. The client valued ending inventory at selling price rather than historical cost. d. The client valued ending inventory by using the First-In-First-Out (FIFO) method, but showed the replacement cost of inventory in the Notes to the Financial Statements. 57. challenging d Which of the following statements is true? a. The auditor is required to issue a disclaimer of opinion in the event of a material uncertainty. b. The auditor is required to issue a disclaimer of opinion in the event of a going concern problem. c. The auditor is required to issue a disclaimer of opinion for a material uncertainty and for a going concern problem. d. The auditor has the option, but is not required, to issue a disclaimer of opinion for a material uncertainty or for a going concern problem. 58. medium a The most common case in which conditions beyond the client’s and auditor’s control cause a scope restriction is an engagement: a. agreed upon after the client’s balance sheet date. b. where the client won’t allow the auditor to confirm receivables for fear of offending its customers. c. where the auditor doesn’t have enough staff to satisfactorily audit all of the client’s foreign subsidiaries. d. where the client is going through Chapter 11 bankruptcy. 59. challenging d When the auditor cannot perform procedures and the amounts are so material that a disclaimer of opinion rather than a qualified opinion is required, the: a. opinion paragraph will state “does not present fairly.” b. opinion paragraph will state “presents fairly.” c. scope paragraph will be unchanged from the standard unqualified opinion. d. scope paragraph will be deleted. 60. challenging b When misstatements are so material that an adverse opinion is issued, a scope paragraph would be: a. qualified. b. unchanged. 1-138 c. d. deleted. expanded to identify the additional procedures which the auditor performed. 61. challenging d When the client fails to make adequate disclosure in the body of the statements or in the related footnotes, it is the responsibility of the auditor to: a. inform the reader that disclosure is not adequate, and to issue an adverse opinion. b. inform the reader that disclosure is not adequate, and to issue a qualified opinion. c. present the information in the audit report and issue an unqualified or qualified opinion. d. present the information in the audit report and to issue a qualified or an adverse opinion. 62. challenging c The “unqualified report with explanatory paragraph” and the “unqualified report with modified wording”: a. arise as a result of an incomplete audit. b. arise when the financial statements are not “presented fairly.” c. meet the criteria of a complete audit with satisfactory results. d. meet the criteria of a complete audit but with unsatisfactory results. 63. medium c Which of the following will not cause the auditor to issue a standard unqualified report with an explanatory paragraph or modified wording? a. Emphasis of a matter. b. Reports involving other auditors. c. Auditor disagrees with client’s departure from GAAP. d. Lack of consistent application of GAAP. 64. challenging a 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 wo...
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This note was uploaded on 02/04/2014 for the course ACCOUNTING 211 taught by Professor Alikapur during the Fall '13 term at American University of Sharjah.

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