A statement that he auditor believes that his or her audit provides a reasonable basis for expressing negative assurance.
A statement that the auditor's responsibility is to express an opinion on the financial statements
C) A statement that the financial statements in the report are the responsibility of management.
D) A title with the word "independent."
Preparing prospective financial information to verify whether management's plans can be effectively implemented
Projecting conditions and events from one year prior to this year's date (9/30/X0) to 9/30/X1.
Issuing an adverse or negative assurance opinion, depending upon materiality, due to the possible effects on the financial statements
Considering the adequacy of disclosure about the entity's possible inability to continue as a going concern
A) Yes No Yes
B) No Yes Yes
C) No No Yes
D) No No No
A) Yes Yes Yes
B) Yes No Yes
C) No Yes Yes
D) No Yes No
When an auditor issues an unqualified report, but adds an emphasis of a matter paragraph to the report, which, if any, paragraphs to the report are modified? Introductory Scope Opinion
B) No Yes Yes
C) No No Yes
D) No No No
A) After the opinion paragraph.
B) Prior to the opinion paragraph.
C) Either before or after the opinion paragraph.
D) An audit report modified for a scope limitation does not include an explanatory paragraph
A) Increase current dividend distributions.
B) Reduce existing lines of credit.
C) Increase ownership equity.
D) Purchase assets formerly leased.
Issue an unqualified opinion, but disclose elsewhere in the report this departure from a customary procedure.
Issue an unqualified opinion with no reference to this omission but be prepared to defend the action
Issue a qualified opinion or a disclaimer, depending on the materiality of the receivables
D) Issue an adverse opinion.
) Provide the information in the audit report, if practicable, and qualify the opinion because of a limitation on the scope of the audit.
Provide the information in the audit report, if practicable, and qualify the opinion because of a departure from GAAP.
Issue a disclaimer of opinion because the client has interfered with the auditor's function of assessing the adequacy of disclosure.
Issue an unqualified opinion, but inform the reader by including the omitted information in the audit report
A) Such assumption of responsibility violates the profession's standards.
In such circumstances, when appropriate requirements have been met, Firm A should issue a standard unqualified opinion on the financial statements
In such circumstances, when appropriate requirements have been met, Firm A should issue an unqualified opinion on the financial statements but should make appropriate reference to Firm B in the audit report.
CPA firm A should normally qualify its audit report on the basis of the scope limitation involved when another CPA firm is involved
Perform analytical procedures aimed particularly at assessing whether bankruptcy is probable.
B) Issue a report with a "going concern" modification when failure is at least reasonably probable.
Based on audit procedures performed, assess whether there is substantial doubt about the entity's ability to continue as a going concern.
Determine that related uncertainties are properly disclosed and make no mention in the audit report
Express an adverse opinion with an explanatory paragraph disclosing the reason (the accounting change) for the opinion
Express an unqualified opinion with an explanatory paragraph and disclose the accounting change from 20X3 and its effect on the financial statements
C) Disclaim an opinion and explain all of the reasons therefore.
Express an adverse opinion regarding the 20X4 financial statements, without an explanatory paragraph disclosing the reason therefore since it will be included in the notes to the statements.
A) Issue an unqualified report with an explanatory paragraph.
B) Withdraw from the engagement.
C) Issue an "except for" qualification or an adverse opinion.
D) Issue an "except for" qualification or a disclaimer of opinion.
A) A change in the estimated useful lives of a class of fixed assets.
B) A write-off of a patent because future benefits do not appear to exist.
A change from the straight line method of depreciation to an accelerated method for a class of fixed assets.
A change in calculating bad debt expense from one percent to two percent of credit sales
A) Introductory paragraph.
B) Scope paragraph.
C) Opinion paragraph.
D) Explanatory paragraph.
A) Qualified opinion.
B) Disclaimer of opinion.
C) Adverse opinion.
D) Standard unqualified opinion.
A decision by the auditor to emphasize that the client is a part of a larger organization
B) Reliance placed upon a specialist to evaluate the diamonds.
C) A change from FIFO to specific identification accounting for inventory.
D) A question as to whether the client will be able to remain a going concern.
A) They always precede the opinion paragraph.
B) They always follow the opinion paragraph.
C) Sometimes they precede and sometimes they follow the opinion paragraph.
D) They always precede the scope paragraph.
A) Standard unqualified.
B) Unqualified with explanatory language as to consistency.
C) Qualified for consistency.
A) The shareholders of the corporation whose financial statements were examined.
B) A third party who requested that a copy of the audit report be sent to her.
C) The president of the corporation whose financial statements were examined.
D) The chief financial officer.
A) Used in an adverse opinion.
B) No longer considered appropriate.
C) Used in a qualified opinion
D) Used for an unqualified opinion when an explanatory paragraph is added.
A) The financial statements are the responsibility of the company's management.
The audit was conducted in accordance with accounting principles generally accepted in the United States of America
C) The auditors believe that the audit provides a reasonable basis for their opinion.
D) An audit includes assessing the accounting principles used.
A) The nonpublic company report includes the word “Registered” in the title.
B) The nonpublic company report refers to standards of the PCAOB.
The nonpublic company report has an additional paragraph referring to the client's fraud prevention procedures
The nonpublic company report must include the city and state in which the report has been issued
A) The auditors may still issue an unqualified opinion.
The auditors should issue an "except for" qualification for the departure from generally accepted accounting principles.
The auditors should issue an opinion "subject to" the information that would have been contained in the statement of cash flows.
The auditors should refuse to issue an opinion on only the two financial statements.
A) Circumstances have significantly limited the scope of the auditors' procedures.
The principal auditors for the engagement are relying on the work of other auditors.
The financial statements depart from a standard established by the FASB because the auditors have concluded that application of the standard would result in materially misleading financial statements.
The auditors have decided to emphasize the fact that the company has engaged in material amounts of related party transactions
A) The report is qualified because the financial statements contain a material departure from generally accepted accounting principles
The report includes an emphasis of a matter
C) The audit report indicates a division of responsibility between two CPA firms.
D) The report is qualified because the scope of the auditors' work was restricted.
Express a qualified opinion on the comparative financial statements audited by the predecessor auditors.
) Reproduce the predecessor auditors' report and include it with the new set of financial statements
Have the client omit the comparative financial statements
D) Refer to the report of the predecessor auditors.
A) A disclaimer of opinion.
B) An adverse opinion.
C) An "except for" qualification of the report.
D) An unqualified report with explanatory language.
A) Form 8-K.
B) Form S-1.
C) Form 10-Q.
D) Form 10-K.
A) Are not required to investigate the professional reputation of the other auditors.
B) Are issuing an inappropriate report.
C) Are assuming full responsibility for the work of the other auditors.
D) Are issuing a qualified opinion.
A) Delete the date of the report.
B) Dual-date the report.
C) Use the reissue date.
D) Use the date of the previous report.
A) A note to the financial statements which discusses the basis for the opinion.
B) The scope paragraph which discusses the basis for the opinion rendered.
C) A separate paragraph which discusses the basis for the opinion rendered.
D) The consistency in the application of generally accepted accounting principles.
The financial statements contain a departure from generally accepted accounting principles, the effect of which is material.
The principal auditors decide to make reference to the report of another auditor who audited a subsidiary.
There has been a material change between periods in the method of application of accounting principles
D) There are significant scope limitations on the audit.
A) Qualified opinion and an explanatory paragraph with a reference to note "B".
B) Unqualified opinion and an explanatory paragraph.
C) Adverse opinion and an explanatory paragraph.
D) "Except for" opinion and an explanatory paragraph.
A) Is appropriate and would not negate the unqualified opinion.
B) Is considered a qualification of the report.
C) Adverse opinion and an explanatory paragraph.
Necessitates a revision of the opinion paragraph to include the phrase "with the foregoing explanation."
A) Change in accounting principle.
B) Limitation in the scope of the audit.
It applies equally to a complete set of financial statements and to each individual financial statement
B) It applies only to a complete set of financial statements.
C) It applies equally to each item in each financial statement.
D) It applies equally to each material item in each financial statement.