Auditing and Assurance Training Audit Reporting and Opinions 2

Question 1

When an auditor concludes there is substantial doubt about an entity's ability to continue as a going concern, the auditor should:

Accepted Answer

Include a going concern paragraph and consider the effect on the opinion

Answer

Under AU-C 570, the auditor adds an explanatory paragraph regarding going concern doubt and evaluates whether any misstatements affect the opinion.

Question 2

A 'critical audit matter' (CAM) as defined by the PCAOB is best described as:

Accepted Answer

A matter arising from the audit that was communicated to the audit committee and involved especially challenging judgment

Answer

CAMs are matters arising from the current period audit that were communicated to the audit committee, involve especially challenging, subjective, or complex auditor judgment.

Question 3

Which type of assurance engagement provides a lower level of assurance than an audit?

Accepted Answer

Review engagement

Answer

A review engagement provides limited (negative) assurance, which is a lower level of assurance than the reasonable (positive) assurance provided by an audit.

Question 4

In a review engagement, the accountant's conclusion is expressed in what form?

Accepted Answer

Negative assurance: 'nothing came to our attention...'

Answer

A review report provides negative assurance, stating that nothing came to the accountant's attention indicating the statements are not fairly presented.

Question 5

When comparative financial statements are presented and the prior year was audited by a predecessor auditor, the current auditor should:

Accepted Answer

Refer to the predecessor auditor in the current period report

Answer

When prior period statements were audited by a predecessor auditor, the current auditor's report refers to the predecessor auditor to clearly indicate responsibility for each period.

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Audit Reporting and Opinions 2