Auditors should disclose thesubstantive reasons for expressing amodified opinion on the entity'sfinancial statements in an additionalparagraph: *Before the auditor's responsibilitysectionO Before the opinion paragraphAfter the opinion paragraphWithin the footnotes of the financialstatements

The financial statements are the reports that have been prepared by the management of the…

Answered: Auditors should disclose the…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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The following questions concern audit reports other thanunqualified audit reports with standard wording. Choose the best response.a. The annual audit of Midwestern Manufacturing revealed that sales were accidentallybeing recorded as revenue when the goods were ordered, instead of when they wereshipped. Assuming the amount in question is material and the client is unwilling tocorrect the error, the CPA should issue:(1) an unqualified opinion or adverse opinion.(2) a qualified “except for” opinion or disclaimer of opinion.(3) a qualified “except for” opinion or adverse opinion.(4) an unqualified opinion with an explanatory paragraph
3. In preparing for an integrated report, and the cost outweigh the benefit, can still integrated reporting be opt? Explain.
Identify the types of auditreports that can be issued whenan unqualified opinion is notjustified
Which of the statements below, regarding the tax reporting requirements applicable to Commodity Credit Corporation (CCC) loans, is NOT correct? (A) A farmer can elect each year whether or not to report loan proceeds when received. (B) A farmer can request income tax withholding from CCC loan payments received. (C) A CCC loan amount is normally taxable in the year the pledged commodity is sold. (D) A farmer can elect to report the loan amount in the year the proceeds are received.
Assume Mercy Hospital uses accrual accounting. Which of the following statements is(are) most correct? A. Supplies expense is recognized when medical supplies are delivered to the hospital by the vendor. B. Patient service revenue is recognized when payment is received by the hospital from a patient’s third-party payer. C. Salaries expense is recognized when payroll checks are written. D. Patient service revenue is recognized when healthcare services are provided.
Regarding an ARM, which of the following statements is accurate in describing the index type? A) The applicant decides which Index type the ARM will use when they apply for a loan, and the index type generally will not change after loan closing. B) The lender decides which index type the ARM will use when an applicant applies for a loan, and the index type generally will change after loan closing. C) The lender decides which index type the ARM will use when an applicant applies for a loan, and the index type generally will not change after loan closing. D) The title company decides which index type the ARM will use when an applicant closes the loan, and the index type generally will change after loan closing
14) Why would competitors want to see another company's financial statements? Select an answer: to help determine the strengths and weaknesses of the company's finances to determine whether the company is eligible for a loan to decide whether or not to make an investment in the company's stock to provide background information on a competitor's market
3. Following COSO Framework, the board's responsibilities for effective reporting of risks should include which of the following? a. Inserting specific engagements relating to risk management into the annual audit plan b. Assuring success in management of key risks c. Selecting the specific techniques regarding event identification to be considered in the risk management process d. Regularly reviewing the key risks against risk appetite
25. The primary focus of the Statement of Activities of a not-for-profit organization is on determining the net increase/decrease in which of the following? a) Unrestricted Net Assets. b) Temporarily Restricted Net Assets. c) Permanent Net Assets. d) Net Assets of the entity taken as a whole. 26. Under the GASB Statement No. 34 reporting model for governmental entities, which of the following is required? a) Only one set of financial statements, prepared on the full accrual basis of accounting. b) Only one set of financial statements, prepared on the modified accrual basis of accounting. c) Two sets of financial statements, one that views the government as a collection of separate funds and reports using the current financial resources measurement focus and modified accrual basis of accounting for governmental funds and one that views the government as a whole by combining all governmental activities in one column and all business-type activities in another column using the full…
TRUE OR FALSE 1. Tracing helps address completeness issues while vouching address existence issues. 2. Observation is limited to the point in time at which the observation took place. 3. The cost or difficulty involved in obtaining evidence is not itself a valid basis for omitting an audit procedure. 4. Minutes of meetings of board of directors are considered corroborating information. 5. If lower detection risk is determined, the auditor may expand the extent of substantive procedures to ensure the reliability of the audit evidence.
The auditor’s tests of controls revealed that required approvals of cash disbursementswere absent for a large number of sample transactions examined. Which of thefollowing is least likely to be the appropriate auditor response?(1) The auditor will communicate the deficiency to those charged with governance.(2) The auditor will increase the planned detection risk.(3) The auditor will not select more sample items to audit.(4) The auditor will perform more extensive substantive tests surrounding cash disbursements.
{Auditing} 40. In June 2005, IESBA issued a revised Code of Ethics for Professional Accountants. What does the term IESBA stands for? a. Integrity and Ethics Standards Board for Accountants b. Institutional Ethics Standards Board for Auditor c. Internal Ethics Standards Board for Auditor d. International Ethics Standards Board for Accountants

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Auditors should disclose the substantive reasons for expressing a modified opinion on the entity's financial statements in an additional paragraph: Before the auditor's responsibility section Before the opinion paragraph O After the opinion paragraph Within the footnotes of the financial statements