B separate reports on financial statements and

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Unformatted text preview: should make reference to which standards? a. Accounting standards. b. U.S. generally accepted auditing standards. c. Standards issued by the PCAOB (U.S.). d. Any of the above standards. 14. easy a Examples of unqualified opinions which contain modified wording (without adding an explanatory paragraph) include: a. the use of other auditors. b. material uncertainties. c. substantial doubt about the audited company (or the entity) continuing as a going concern. d. lack of consistent application of GAAP. 15. GAAP requires that changes in accounting principles be to a: medium c a. b. c. d. 16. easy A CPA may wish to emphasize specific matters regarding the financial statements even though an unqualified opinion will be issued. Normally, such explanatory information is: more conservative principle. principle with equal authoritative support. preferable principle. principle detailed in a FASB pronouncement. 1-132 c a. b. c. d. included in the scope paragraph. included in the opinion paragraph. included in a separate paragraph in the report. included in the introductory paragraph. 17. challenging d An auditor who issues a qualified opinion because sufficient appropriate evidence was not obtained should describe the limitations in an explanatory paragraph. The auditor should also refer to the limitation in the: Scope paragraph a. Yes b. No c. No d. Yes Opinion paragraph No Yes Yes Yes Notes to the financial statements Yes Yes No No 18. medium b When the auditor evaluates the effect of a change in accounting principle, the materiality of the change should be evaluated based on: a. the prior years presented. b. the current year effect of the change. c. guidelines included in GAAS. d. the effect on total assets. 19. medium b Conditions requiring a departure from an unqualified audit report include all but which of the following? a. Management refused to allow the auditor to confirm significant accounts receivable for which there were no alternative procedures performed. b. Management decided not to allow the auditor to confirm significant accounts receivable, but the auditor obtained sufficient appropriate evidence by examining subsequent cash receipts. c. The audit partner’s dependent child received a gift of 100 shares of a client’s stock for her birthday from a grandparent. d. Management has determined that fixed assets should be reported in the balance sheet at their replacement values rather than historical costs. The auditors do not concur. 20. medium b The introductory paragraph of the standard audit report states that the financial statements are: a. the responsibility of the auditor. b. the responsibility of management. c. the joint responsibility of management and the auditor. d. none of the above. 21. medium d The introductory paragraph of the standard audit report states that the financial statements and the opinion expressed about those statements are: a. the responsibility of the auditor. b. the responsibility of management. c. the joint responsibility of management and the auditor. d. none of the above. 22. medium c The introductory paragraph of the standard audit report states that the auditor is: a. responsible for the financial statements and the opinion on them. b. responsible for the financial statements. c. responsible for the opinion on the financial statements. d. jointly responsible for the financial statements with management. 23. (Public) medium a PCAOB Auditing Standard No. 2 requires the audit of internal control over financial reporting to be integrated with: a. the audit of the financial statements. 1-133 b. c. d. the quarterly review of financial information. the review of annual financial statements. none of the above. 24. medium d The audit report indicates that (1) management is responsible for the content of the financial statements and (2) the auditor is responsible for evaluating the appropriateness of the accounting principles chosen by management. Which paragraph contains those statements? a. Both are in the introductory paragraph. b. Both are in the scope paragraph. c. Both are in the opinion paragraph. d. None of the above are true. 25. medium c If the balance sheet of a company is dated December 31, 2009, the audit report is dated February 8, 2010, and both are released on February 15, 2010, this indicates that the auditor has searched for subsequent events that occurred up to: a. December 31, 2009. b. January 1, 2010 c. February 8, 2010 d. February 15, 2010. 26. (Public) medium b A combined report on financial statements and internal control over financial reporting includes all but which of the following types of paragraphs? a. Inherent limitations paragraph. b. Description paragraph. c. Opinion paragraph. d. Each of the above paragraphs is included. 27. medium d Whenever an auditor issues a qualified opinion, the implication is that the auditor: a. does not know if the financial statements are presented fairly. b. does not believe the financial statements are presented fairly. c. believes...
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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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