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 qualified opinion is appropriate when the departure from GAAP is material but not pervasive; if pervasive, an adverse opinion would be required.

Question 2

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

Accepted Answer

Specified parties who agreed to the procedures

Answer

Agreed-upon procedures reports are restricted to the specified parties who participated in establishing the procedures and are responsible for their adequacy.

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

Under AU-C 560, if a material misstatement is discovered after report issuance, the auditor must notify management and those charged with governance and take appropriate steps to revise the financials.

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

Standard audit reports describe the nature of the audit (risk-based, testing, etc.) but do not list every specific audit procedure performed, as that level of detail is not required.

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

The phrase conveys reasonable (not absolute) assurance that the financial statements are free of material misstatement and conform to GAAP.

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Audit Reporting and Opinions 3