The auditor’s report would be deficient if the explanatory paragraph states that the entity a

01 Jun The auditor’s report would be deficient if the explanatory paragraph states that the entity a

Is a component of a larger business enterprise. Has changed form the completed contract method to the percentage of completion method to account for long-term construction contracts. Has had a significant subsequent event. Has accounting reclassifications that enhance the comparability between years. In which of the following circumstances would an adverse opinion be appropriate? An uncertainty prevents the issuance of an unqualified report c. The statements are not in conformity with authoritative statements regarding accounting for pension plans d. A client-imposed scope limitation prevents the auditor from complying with generally accepted auditing standards 22. An auditor is confronted with an exception sufficiently material to warrant departing from the standard wording of an unqualified report.

If the exception relates to a departure from the generally accepted accounting principles, the auditor must decide between a(n) a. An auditor had expressed a qualified opinion on the financial statements of a prior period because the client’s financial statements departed from generally accepted accounting principles. The prior period statements are restated in the current period to conform with generally accepted accounting principles. The auditor’s updated report on the prior period statements should a.

The auditor is not independent with respect to the enterprise being audited b

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A successor auditor should refer to a predecessor auditor’s report in the a. Opening paragraph c. Opinion paragraph b. Scope paragraph d. Opening and opinion paragraph 25. Because of inadequate records the auditor is uncertain as to whether property and equipment is stated at cost. The auditor should issue a (n): a. Qualified opinion c. Unqualified opinion d. Standard opinion 26. The auditor’s report contains a paragraph explaining that the entity changed from the straightline to the declining balance method of depreciation. The auditor expressed an: a. Adverse opinion c. Qualified opinion b. Unqualified opinion d. Disclaimer of opinion 27. The following circumstances result in a modified, but unqualified report, except: a. Inconsistent application of accounting principles. Emphasis of a related party transaction that is disclosed in a footnote.

Lack of disclosure of a restriction on payment of dividends. Other auditors perform work for which the principal auditor does not assume responsibility. Under which of the following sets of circumstances might an auditor disclaim an opinion? The financial statements contain a departure from GAAP, the effect of which is material. The principal auditor decides 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 the application of accounting principles. There were significant limitations on the scope of the audit. Which of the following description is not included in the scope paragraph of the auditor’s report? Examining, on a test basis, evidence to support the financial statement amounts and disclosures.

Adverse opinion b

Determining the accounting principles used in the preparation of the financial statements. Assessing the significant estimates made by management in the preparation of the financial statement. Evaluating the overall financial statement presentation. Which of the following statements is best described in the scope paragraph of the independent auditor’s report? The audit was planned and performed to obtain reliable assurance about whether the financial statements are free of material misstatements. The audit was conducted in accordance with financial reporting framework. The auditor makes the significant estimates in the preparation of the financial statements. A statement by the auditor that the audit provides a reasonable basis for the opinion. When there is an assessed substantial doubt about the ability of the entity to continue as a going concern and such information is adequately disclosed in the notes to financial statements, the auditor should express a(n): a.