When the financial statements are fairly stated but the auditor concludes there is substantial doubt whether the client can continue in existence, the auditor should issue a(n)(1) adverse opinion.(2) qualified opinion only.(3) unqualified opinion.(4) unqualified opinion with explanatory paragraph.

Question 24 Which of the following is true regarding  the auditor's responsibility related to reporting?      Sufficient appropriate evidence should be obtained to afford a reasonable basis for the opinion regarding financial statements under audit.     The audit opinion relates only to the client's financial statements, and does not relate to required footnotes.     If the auditor has reservations about the fairness of presentation of the financial statements, the auditor does not need to provide the reason for this reservation.     All of the statements provided are true.

Which of the following best describes the reason why an independent auditorreports on financial statements?(1) A misappropriation of assets may exist, and it is more likely to be detected byindependent auditors.(2) Different interests may exist between the company preparing the statementsand the persons using the statements.(3) A misstatement of account balances may exist and is generally corrected as theresult of the independent auditor’s work.(4) Poorly designed internal controls may be in existence

2. Consider the following statements: I. Inconsistent application of accounting principles (i.e. a change in accounting principle, which the auditor agrees is acceptable) would result in a unqualified audit opinion. II. For a change in accounting principles that management does NOT justify to the auditor, the auditor will likely issue a Disclaimer of an audit opinion. a. Tis true; Il is true b. Iis true; Il is false c. I is false; Il is true d. I is false; II is false

S1: When an Other Matter paragraph is included to draw users' attention to a matter relevant to their understanding of the audit of the financial statements, the paragraph is included immediately after the Opinion paragraph and any Emphasis of Matter paragraph. S2: The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements  S1 is True, S2 is False S1 is False, S2 is True Both statements are True Both statements are False

Disclaimer of opinion rendered by an independent auditor of financial statements stating that the financial statements have been presented fairly in accordance with GAAP. True False

Scope Limitations. Situations in which auditors are unable to obtain sufficient appropriateevidence necessary to support their opinion on the entity’s financial statements are referredto as scope limitations.Required:a. Distinguish between client-imposed scope limitations and circumstance-imposed scopelimitations. Which of these is generally of more concern to auditors?b. Why do scope limitations impact the auditors’ ability to express an opinion on the entity’sfinancial statements?c. Assume that a circumstance-imposed scope limitation prevented auditors from performing procedures they considered to be necessary. How would each of the following factors independently influence the opinion expressed on the entity’s financial statements?1. The account balances affected by the scope limitation are not material to the entity’sfinancial position, results of operations, or cash flows.2. The account balances affected by the scope limitation are material to the entity’sfinancial position,…

11. Which of the following is an example of an assurance engagement providing limited assurance? A. An engagement to express an opinion whether the financial statements are prepared in all material respects, in accordance with an identified financial reporting framework В. B. An engagement, to state whether, on the basis of procedures which do not provide all the evidence that would be required in an audit, anything has come to the practitioner's attention that causes the practitioner to believe that the financial statements are not prepared in all material respects, in accordance with an identified financial reporting framework. C. An engagement to carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings. D. An engagement to use accounting expertise as opposed to auditing expertise to collect, classify and summarize financial information. С.

An auditor has concluded that substantial doubt exists and that the client will not be able to meet its obligations as they become due for a reasonable period of time. Financial statement and footnote disclosures are adequate, detailing the conditions, events, and management's plans to alleviate the doubt. However, the CPA believes that substantial doubt remains. The CPA must add a Going Concern section to the audit report, discussing the Substantial Doubt. How should the audit opinion be modified? a. No modification. b. A qualified opinion. c. An adverse opinion. d. A disclaimer of opinion.

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