Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 17, Problem 26OQ
To determine
Identify the type of opinion possible for the given scenarios.
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Identify the three alternative opinions that may be appropriatewhen the client’s financial statements are not in accordance with GAAP. Under whatcircumstance is each appropriate?
A misstatement in the financial statements can be considered material if knowledge of themisstatement will affect a decision of
A.
an accountant.
B.
the PCAOB.
C.
the SEC.
D.
a reasonable user of the financial statements
Describe a situation that would require an auditor to give an unmodified opinion without a standard report. Describe a situation that would cause an auditor to modify their opinion.
Analyze possible actions an auditor might take if a client’s financial statements depart from GAAP. Do you think the demand for assurance services will increase or decrease in the future? Explain.
Chapter 17 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 17 - Prob. 1RQCh. 17 - What is the function of notes to financial...Ch. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQ
Ch. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. 14RQCh. 17 - Prob. 15RQCh. 17 - Prob. 16RQCh. 17 - Prob. 17RQCh. 17 - Prob. 18RQCh. 17 - Prob. 19RQCh. 17 - Prob. 20RQCh. 17 - Prob. 21QRACh. 17 - Prob. 22QRACh. 17 - Prob. 23QRACh. 17 - Prob. 24QRACh. 17 - Prob. 25AOQCh. 17 - Prob. 25BOQCh. 17 - Prob. 25COQCh. 17 - Prob. 25DOQCh. 17 - Prob. 25EOQCh. 17 - Prob. 25FOQCh. 17 - Prob. 25GOQCh. 17 - Prob. 25HOQCh. 17 - Prob. 25IOQCh. 17 - Prob. 25JOQCh. 17 - Prob. 25KOQCh. 17 - Prob. 25LOQCh. 17 - Prob. 26OQCh. 17 - Prob. 27OQCh. 17 - Prob. 28OQCh. 17 - Prob. 29OQCh. 17 - Prob. 30OQCh. 17 - Prob. 31OQCh. 17 - Prob. 32OQCh. 17 - Prob. 33PCh. 17 - Prob. 34PCh. 17 - Sturdy Corporation (a nonpublic company) owns and...Ch. 17 - Prob. 36PCh. 17 - Prob. 37PCh. 17 - Prob. 38ITCCh. 17 - Prob. 39ITCCh. 17 - Prob. 40RDC
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Similar questions
- Something is deemed to be 'material' if its omission, non-disclosure or misstatement is likely to affect economic decisions or other evaluations made by users entitled to rely on the financial statements. Select one alternative: True Falsearrow_forwardInformation is considered material if: it would have a bearing on decisions of those who use the financial statements. there is a substantial likelihood that a reasonable investor would not be concerned about the information. an item is so insignificant that users would likely ignore it. the FASB explicitly rules the transaction or item to be material.arrow_forwardEvidence that will be needed by a practitioner which will assist in forming an opinion with regards to any material misstatements that are presented in financial statements is known as a report in which assurance is written. Select one: O True Falsearrow_forward
- What possible actions would an auditor might take if a client’s financial statements depart from GAAP. Would the demand for assurance services increase or decrease in the future?arrow_forwardWhich item regarding an Emphasis of Matter paragraph is true? a. The auditor will use the E of M to restrict distribution of the audit report. b. The auditor will use the E of M when the client has corrected an error in the previous financial statements. c. An E of M will be used when a material error exists in the current financial statements. d. The E of M paragraph is usually located immediately before the opinion paragraph. e. The E of M paragraph would be used to discuss a client's change in the method to estimate bad debts.arrow_forwardWhen a client’s financial statements contain a material departure from an FASB Statementon Accounting Standards and the public accounting firm believes the departure is necessaryto ensure that the statements are not misleading,a. The public accounting firm must qualify the auditors’ report for a departure from GAAP.b. The public accounting firm can explain why the departure is necessary and then give anunmodified opinion paragraph in the auditors’ report.c. The public accounting firm must give an adverse auditors’ report.d. The public accounting firm can give the standard unmodified auditors’ report with anunmodified opinion paragrapharrow_forward
- Materiality arises when a misstatement in the financial statements could affect a decision of areasonable user of the statements.Explain the levels of materiality used for determining the type of opinion.arrow_forwardWould it be possible to be objective when auditing a friend's financial statements? If you think, so, tell us why. If not, then describe the impediments you might encounter.arrow_forwardWhich of the following situations violates the concept of reliability? Relevance is the capacity of information to make difference in decision by helping users from predictions about outcome of past, present and future events, or confirm/correct prior expectations The quality of reliability assures readers that the financial information is free from bias and faithfully represents what it purports to show, including adequate disclosure of significant information Under the IASB Framework for the Preparation and presentation of financial statements, conservatism is not a concept that is recognized as a qualitative objective I and II only II and III only I and III only I, II and IIIarrow_forward
- Which of the following is the best description of reliability in relation to information in financial statements? Comprehensibility to users Influence on the economic decisions Freedom from material error and bias Inclusion of degree of caution of usersarrow_forwardInformation is immaterial if omitting it or misstating it could influence decisions that users make on the basis of the financial information of a specific reporting entity. True Falsearrow_forwardThe performance of an attestation engagement on prospective financial information does not require which of the following?a. If the basis of the prospective financial information is different from the financial statements, a reconciliation of the two must be provided.b. Management must disclose all significant assumptions used in generating the prospective financial information.c. Management must disclose significant accounting policies and procedures used in generating the prospective financial information.d. Management must disclose the probability of obtaining the results included in the prospective financial information.arrow_forward
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