Auditing and Assurance Training Audit Reporting and Opinions 3

Question 1

Which of the following would most likely cause an auditor to issue a qualified opinion rather than an adverse opinion?

Accepted Answer

A material but not pervasive departure from GAAP

Answer

A material and pervasive departure from GAAP

Answer

An inability to obtain sufficient evidence on a major account

Answer

The auditor's independence was impaired

Question 2

In an agreed-upon procedures engagement, the report is restricted to:

Accepted Answer

Specified parties who agreed to the procedures

Answer

Management only

Answer

The general public and all stakeholders

Answer

Regulatory authorities only

Question 3

If an auditor discovers a material misstatement after the audit report has been issued and the financial statements have been released, the auditor should:

Accepted Answer

Notify the client that the financial statements need revision

Answer

Take no action if the fiscal year is closed

Answer

Immediately notify the SEC regardless of management's response

Answer

Issue a new audit opinion dated as of the discovery date

Question 4

Which element is NOT typically included in a standard unmodified audit report under AICPA standards?

Accepted Answer

A description of every audit procedure performed

Answer

Opinion paragraph

Answer

Auditor's signature and city

Answer

Basis for Opinion section

Question 5

The phrase 'present fairly, in all material respects, in conformity with generally accepted accounting principles' in an unmodified opinion refers to:

Accepted Answer

Reasonable assurance that statements are free of material misstatement

Answer

Absolute accuracy of all financial statement amounts

Answer

A guarantee that no fraud has occurred

Answer

Compliance with tax reporting requirements

Question 6

Which of the following is a 'modification' to the auditor's opinion?

Accepted Answer

Qualified, adverse, or disclaimer of opinion

Answer

Emphasis-of-matter paragraph

Answer

Going concern explanatory paragraph

Answer

Other-matter paragraph

Question 7

When an auditor is engaged to perform an examination of prospective financial information, the level of assurance provided is:

Accepted Answer

Reasonable (positive) assurance

Answer

No assurance

Answer

Negative (limited) assurance

Answer

Absolute assurance