That the financial statements of the prior period were audited by another auditor

The type of report issued by the predecessor auditor and, if the report was modified, the reasons therefore. The date of that report. All of the above. In relation to comparatives as corresponding figures, which of the following is incorrect? When the prior period financial statements are not audited, the incoming auditor should state in the auditor’s report that the corresponding figures are unaudited. The incoming auditor must refer to the predecessor auditor’s report on the corresponding figures in the incoming auditor’s report for the current period.

An auditor is unable to determine the amounts associated with illegal acts committed by a client

When the financial statements of the prior period were audited by another auditor, the incoming auditor’s report should state that the prior period was audited by another auditor. In situations were the incoming auditor identified that the corresponding figures are materially misstated, the auditor should request management to revise the corresponding figures or if management refuses to do so, appropriately modify the report. When the financial statements of the prior period were not audited, the incoming auditor should: a. Insist that an audit of prior year’s financial statements must be made. Not allow the inclusion of the corresponding figures in the financial statements of the current period. Disclaim his opinion and treat the unaudited corresponding figures as basis of scope limitation. Obtain sufficient appropriate audit evidence that the corresponding figures meet the requirements of the relevant financial reporting framework.

10. The management of a client company believes that the statement of cash flow is not a useful document and refuses to include one in the annual report to stockholders. As a result, the auditor’s opinion should be a. qualified due to inadequate disclosure c. adverse b. qualified due to a scope limitation d. unqualified 11. An auditor’s opinion reads as follows: “In our opinion, except for the above-mentioned limitation on the scope of our audit…” This is an example of a(n) a. review opinion c. qualified opinion b. emphasis on a matter d. unacceptable reporting practice 12. Eagle Company’s financial statements contain a departure from generally accepted accounting principles because, due to unusual circumstances, the statements would otherwise be misleading. The auditor should express an opinion that is a. Qualified and describe the departure in a separate paragraph. b. Unqualified but not mention the departure in the auditor’s report. c. Qualified or adverse, depending on materiality, and describe the departure in a separate paragraph. d. Unqualified and describe the departure in a separate paragraph. 13. The auditor would most likely issue a. Either a qualified opinion or a disclaimer of opinion. b. An adverse opinion. c. Either a qualified opinion or an adverse opinion. d. A disclaimer of opinion. 14. The objective of the consistency standard is to provide assurance that a. There are no variations in the format and presentation of financial statements. b. Substantially different transactions and events are not accounted for on an identical basis. c. The auditor is consulted before material changes are made in the application of accounting principles. d. The comparability of financial statements between periods is not materially affected by changes in accounting principles without disclosure. 15. If management fails to provide adequate justification for a change from one generally accepted accounting principle to another, the auditor should a. Add an explanatory paragraph and express a qualified or an adverse opinion for lack of conformity with generally accepted accounting principles. b. Disclaim an opinion because of uncertainty. c. Disclose the matter in a separate explanatory paragraph(s) but not modify the opinion paragraph. d. Neither modify the opinion nor disclose the matter because both principles are generally accepted. 16. When an auditor qualifies an opinion because of inadequate disclosure, the auditor should describe the nature of the omission in a separate explanatory paragraph and modify the Introductory paragraph Scope paragraph Opinion paragraph a. Yes No No b. Yes Yes No c. No Yes Yes d. No No Yes 17. An auditor may not express a qualified opinion when a. A scope limitation prevents the auditor from completing an important audit procedure. b. The auditor’s report refers to the work of a specialist. c. An accounting principles at variance with generally accepted accounting principles is used.

In case the prior period financial statements were audited by another auditor and the incoming auditor decides to refer to another auditor, the incoming auditor’s report should indicate: a

A standard reporting requirement. Emphasis of matter about the going concern problems of the entity. Inadequate disclosure qualification. An inappropriate reporting.

The final resolution of a lawsuit explained in a separate paragraph of the auditor’s report 8. An auditor would issue an adverse opinion if a. The audit was begun by other independent auditors who withdrew from the engagement. The statements taken as a whole do not fairly present the financial condition and results of operations of the company. A qualified opinion cannot be given because the auditor lacks independence. The restriction on the scope of the audit was significant. An audit report contains the following paragraph: «Because of the inadequacies in the company’s accounting records during the year ended , it was not practicable to extend our auditing procedures to the extent necessary to enable us to obtain certain evidential matter as it relates to classification of certain items in the consolidated statements of operations.

It applies only to a complete set of financial statements. It applies equally to each item in each financial statement. It applies equally to each material item in each financial statement. If an accounting change has no material effect on the financial statements in the current year but the change is reasonably certain to have a material effect in later years, the change should be a. Treated as a consistency modification in the auditor’s report for the current year. Disclosed in the notes to the financial statements of the current year. Disclosed in the notes to the financial statements and referred to in the auditor’s report for the current year. Treated as a subsequent event. An auditor’s standard report expressed an unqualified opinion and includes an explanatory paragraph that emphasizes a matter included in the notes to the financial statements.

Standard unqualified opinion. Qualified opinion b. Unqualified opinion with explanatory paragraph. Adverse opinion 32. If adequate disclosure is not made by the entity regarding substantial doubt about its ability to continue as a going concern, the auditor should include in his report specific reference to the substantial doubt as to ability of the company to continue as a going concern and should express: a. Unqualified opinion with explanatory paragraph b. A subject to qualified opinion or adverse opinion. Either an “except for” qualified opinion or an adverse opinion. A disclaimer of opinion. Which of the following factors, by itself, would not cause uncertainty about the ability of a company to continue as a going concern? A significant net loss. Inability to pay its obligations as they come due.