D meet the criteria of a complete audit but with

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Unformatted text preview: rk of the other auditor. 65. challenging c 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. 1-139 66. challenging a Brown Co.’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(n): a. unqualified opinion. b. disclaimer. c. “except for” qualified opinion. d. adverse opinion. 67. challenging c 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. 68. challenging a 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. 69. Medium a Indicate which changes would require an explanatory paragraph in the audit report. Correction of an error by changing from an accounting principle that is not generally acceptable to one that is generally acceptable a. Yes b. No c. Yes d. No 70. Medium b Change from LIFO to FIFO Yes No No Yes Indicate which changes would require an explanatory paragraph in the audit report. Change in the estimated life of an asset a. Yes b. No c. Yes d. No 1-140 Variation in the format of the financial statements Yes No No Yes 71. Medium a Indicate which changes would require an explanatory paragraph in the audit report. The CPA concludes there is substantial doubt about the entity’s ability to continue as a going concern a. Yes b. No c. Yes d. No 72. Challenging c Indicate which changes would require an explanatory paragraph in the audit report. A departure from GAAP which, due to unusual circumstances, does not require a qualified or adverse opinion. a. Yes b. No c. Yes d. No 73. Easy a Change from FIFO to LIFO Yes No No Yes Indicate which changes would require an explanatory paragraph in the audit report. The existence of related party transactions a. Yes b. No c. Yes d. No 75. Medium c The CPA makes reference to the work of another auditor to indicate shared responsibility in an unqualified opinion. Yes No No Yes Indicate which changes would require an explanatory paragraph in the audit report. Change from LIFO to FIFO a. Yes b. No c. Yes d. No 74. Challenging b Change from FIFO to LIFO Yes No No Yes Important events occurring subsequent to the balance sheet date Yes No No Yes Which auditor report would require only one paragraph? Disclaimer due to lack of independence a. Yes b. No c. Yes d. No 1-141 Adverse opinion due to departure from GAAP Yes No No Yes 76. Medium b Which auditor report would require only one paragraph? Disclaimer due to scope restriction a. Yes b. No c. Yes d. No 77. Challenging d Which auditor report must have at least four paragraphs? Unqualified opinion indicating shared responsibility with another auditor a. Yes b. No c. Yes d. No 78. Challenging c Disclaimer due to a scope restriction Yes No No Yes Which auditor report must have at least four paragraphs? Qualified opinion due to departure from GAAP a. Yes b. No c. Yes d. No 80. Medium d Unqualified opinion expressing substantial doubt that the company is a going concern Yes No No Yes Which auditor report must have at least four paragraphs? Qualified opinion due to scope restriction a. Yes b. No c. Yes d. No 79. Medium a Qualified opinion due to scope restriction Yes No No Yes Adverse opinion due to departure from GAAP Yes No No Yes Which auditor report must have at least four paragraphs? Disclaimer due to lack of independence a. Yes b. No c. Yes d. No 1-142 Report required due to omission of the Statement of Cas...
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