In which of the following situations would an auditor ordinarily issue an unqualified or unmodified financial statement audit opinion with no explanatory (or emphasis-of-matter or other-matter) paragraph? Multiple Choice O The auditor decides not to refer to the report of another auditor as a basis, in part, for the auditor's opinion. The auditor wishes to emphasize that the entity had significant related- party transactions. The auditor has substantial doubt about the entity's ability to continue as a going concern, but the circumstances are fully disclosed in the financial statements. The entity issues financial statements that present financial position and results of operations but omits the statement of cash flows.

In which of the following situations would an auditor ordinarily issue an unqualified or unmodified financial statement audit opinion with no explanatory (or emphasis-of-matter or other-matter) paragraph? Multiple Choice O The auditor decides not to refer to the report of another auditor as a basis, in part, for the auditor's opinion. The auditor wishes to emphasize that the entity had significant related- party transactions. The auditor has substantial doubt about the entity's ability to continue as a going concern, but the circumstances are fully disclosed in the financial statements. The entity issues financial statements that present financial position and results of operations but omits the statement of cash flows.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The scope of an audit is not restricted when an attorney letter limits the response toa. Matters to which the attorney has given substantive attention in the form of legalrepresentation.b. An evaluation of the likelihood of an unfavorable outcome of the matters disclosed bythe entity.c. The attorney’s opinion of the entity’s historical experience in recent similar litigation.d. The probable outcome of asserted claims and pending or threatened litigation
None
Modified wording is added in the audit report when * There is a substantial doubt about an entity's ability to continue as a going concern. An auditor wants to emphasize a certain matter Reference to the report on the audit of internal control for public companies. Auditor's opinion is based in part on the report of another auditor
The auditors determined that the entity is suffering financial difficulty and its going-concern status is seriously in doubt. Assuming that the entity adequately disclosed this matter in the financial statements, the auditors must choose between which of the following auditors’ report alternatives?a. Unmodified opinion with a reference to going-concern or disclaimer of opinion.b. Standard (unmodified) report or a disclaimer of opinion.c. Qualified opinion or adverse opinion.d. Standard (unmodified) report or adverse opinion.
What type of opinion is issued by the auditor if he or she is unable to determine the overall fairness of the financial statements?
s1: Client's representations, both written or oral, are not considered to be a persuasive type of evidence that the auditor obtains. s2: To substantiate the information provided by management about litigation, claims, and assessments, the auditor should ask the client to send letters of audit inquiries to its lawyers. a. BOTH STATEMENTS ARE TRUE b. BOTH STATEMENTS ARE FALSE c. ONLY S1 IS TRUE d. ONLY S2 IS TRUE
The auditors include an emphasis-of-matter paragraph in an otherwise unmodified report on the entity's financial statements to emphasize that the entity being reported on had significant transactions with related parties. The inclusifis considered a qualification of the opinion.on of this separate paragraph
The auditor shall never include in the same auditor’s report an unmodified opinion on a singleFS that forms part of those FS or ona specific element of those FS. True or False?
Question 4 Respond to each of the following independent situations involving auditor reports. For each scenario (1)identify the reporting issue involved; (2) explain the type of opinion that should be issued; (3) identify any requiredmodifications of the standard auditor'sreport. The auditor has a disagreem ent with a client overthe adequacy of the recorded bad debt expense and allowance for doubtful accounts. The auditor is convinced that the expense and allowance are understatedby amaterial (but not highly material) amount, but the client has refused to adjust the accounts. 1.4 The auditor has issued a report on a client's financial statem ents prepared on a regulatory basis of accounting. The auditor is also preparing to issue a separate report- on the same client's GAAP financial statements, which will be issued to the public. The auditor feels that the issuance of the report on the regulatory basis statements should be disclosed in the report on the GAAP statements. The auditor…
25. Which of the following would not be included in an accountant's review report on the financial statements of a nonpublic entity? Group of answer choices A statement that the review was made in accordance with generally accepted auditing standards. A statement that all information included in the financial statements is the representation of management. A statement describing the principal procedures performed. A statement describing the auditor's conclusions based on the results of the review.
A group auditor decides not to take responsibility for the component auditor's audit of a subsidiary. The effect on the audit report is a. An additional paragraph to disclaim an opinion on the group auditor's audit. b. An additional paragraph qualifying an opinion on the group auditor's audit. c. A detail, in terms of dollars and percentages, of the group auditor's work in the Opinion section of the audit report. d. A detail, in terms of dollars and percentages, of the group auditor's work in the Basis for Opinion section of the audit report.
if an auditor's report does not make a statement regarding the adequacy of informative disclosure in the financial statements with which he is associated, the reader can conclude that the A. Financial statements are presented fairly, in all material respects in comformity with generally accepted accounting principles provided all other requirements have been metB. Auditor has not followd generally accepted auditing standardsC. Auditor is expressing a qualified opinionD. Auditor is expressing an adverse opinion