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 19, Problem 29GOQ
To determine
Identify the feature of the proper compilation report on financial statements that omit note disclosures.
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Misstatements in the financial statements can result from errors or fraud and may consist of any of the following:
An inaccuracy in gathering or processing data from which financial statements are prepared.
A difference between the amount, classification, or presentation of a reported financial statement element, account, or item and the way that it should have been reflected under GAAP.
The omission of a financial statement element, account, or item.
A financial statement disclosure that is not presented in conformity with GAAP.
The omission of information required to be disclosed in conformity with GAAP.
An incorrect accounting estimate due to oversight, misrepresentation of facts, or fraud.
Management’s judgments concerning an accounting estimate or the selection or application of accounting policies that the auditor may consider unreasonable or inappropriate.
What steps would you take if you discover 1 of the above issues in a routine audit?
Would you take…
When financial statements are affected by a material departure from generally accepted accounting principles, the auditors should:
Withdraw from the engagement.
Issue an unmodified opinion with a basis for modification paragraph.
Issue an "except for" qualification or a disclaimer of opinion.
Issue an "except for" qualification or an adverse opinion.
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.
Chapter 19 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 19 - Prob. 1RQCh. 19 - Prob. 2RQCh. 19 - Prob. 3RQCh. 19 - Prob. 4RQCh. 19 - Prob. 5RQCh. 19 - Prob. 6RQCh. 19 - Prob. 7RQCh. 19 - Prob. 8RQCh. 19 - Prob. 9RQCh. 19 - Prob. 10RQ
Ch. 19 - Prob. 11RQCh. 19 - Prob. 12RQCh. 19 - Prob. 13RQCh. 19 - What are the types of procedures performed during...Ch. 19 - Prob. 15RQCh. 19 - Prob. 16RQCh. 19 - Prob. 17RQCh. 19 - What procedures are required when a CPA performs a...Ch. 19 - Prob. 19RQCh. 19 - What should the accountants do if they discover...Ch. 19 - Prob. 21RQCh. 19 - Prob. 22RQCh. 19 - Prob. 23QRACh. 19 - Prob. 24QRACh. 19 - Prob. 25QRACh. 19 - Prob. 26QRACh. 19 - In connection with a public offering of...Ch. 19 - Prob. 28QRACh. 19 - Prob. 29AOQCh. 19 - Prob. 29BOQCh. 19 - Prob. 29COQCh. 19 - Prob. 29DOQCh. 19 - Prob. 29EOQCh. 19 - Prob. 29FOQCh. 19 - Prob. 29GOQCh. 19 - Prob. 29HOQCh. 19 - Prob. 29IOQCh. 19 - Prob. 29JOQCh. 19 - Prob. 29KOQCh. 19 - Prob. 29LOQCh. 19 - Prob. 30OQCh. 19 - Prob. 31OQCh. 19 - Prob. 32OQCh. 19 - Prob. 33OQCh. 19 - Prob. 34OQCh. 19 - Jiffy Clerical Services is a company that...Ch. 19 - Prob. 36PCh. 19 - Prob. 37AITCCh. 19 - Prob. 37BITCCh. 19 - Prob. 37CITCCh. 19 - Prob. 37DITCCh. 19 - Prob. 38RDC
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Similar questions
- Which report would not be appropriate for a public accounting firm to provide on financial reporting controls?a. Unqualified—no material weaknesses found.b. Disclaimer of opinion—unable to perform all necessary procedures.c. Disclaimer of opinion—significant deficiencies exist.d. Adverse—material weaknesses exist.arrow_forwardHow can a misstatement in one financial statement, whether intentional or not, affect a presentation in another financial statement?arrow_forwardWhen an event impacts a financial statement element, it should be recognized in the accounting records even if reliability of the amount is questionable. True Falsearrow_forward
- Question 1 When an auditor issues an adverse opinion, which of the following should be included in the opinion paragraph? The reasons the financial statements are misleading A reference to a separate paragraph that describes the reason for the adverse opinion including a quantification of the impact on the financial statements. A statement that indicates the financial statements are fairly presented except for a reason that is described in the separate paragraph. The financial statement affects of the departure from GAAP.arrow_forward8. Significant accounting policies may not be a. Selected on the basis of judgment. b. Selected from existing acceptable alternatives. c. Unusual ór innovative in application. d. Omitted from financial statement disclosure.arrow_forwardAuditors commonly allocate materiality to balance sheet accounts rather than income statement accounts because most income statement misstatements have a effect on the balance sheet. Select one: a. equal b. undetermined C. increased d. reduced O O Oarrow_forward
- Information 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_forwardIn the auditor’s judgment which misstatements below are NOT one the pervasive effects on the financial statements: A. Misstatements widespread to several accounts of the financial statements B. Misstatements that represent a substantial proportion of the financial statements C. Misstatements related to legal regulations D. Misstatements effecting understanding of users of the financial statements, related to fundamental disclosuresarrow_forwardNegative Assurance in Review Reports. One portion of the report on a review services engagement is the following: “Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformitywith generally accepted accounting principles [or another framework for financial reporting].”Required:a. Is this paragraph a “negative assurance” given by the accountants?b. Why is negative assurance generally prohibited in audit reports?c. What justification is there for permitting negative assurance in a review services report on unaudited financial statements and on interim financial information?arrow_forward
- 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 statementsarrow_forwardWhich of the following statements is invalid relating to confirmation of accounts receivable? a. A negative form of confirmation is preferable to use when individual account balances of customers are relatively smallb. A positive confirmation provides more reliable evidence than the negative confirmation because the auditor can perform follow-up procedures if no response is received from the debtorc. An auditor must consider using the negative form of confirmation when there is reason to believe that there may be a substantial number of accounts in dispute or with inaccuracies or irregularitiesd. In negative confirmation, failure to reply must be regarded as a correct response, even though the debtor may have ignored the confirmation requeste. None of the abovearrow_forwardwhich of the following regarding errors is not correct Select one: a. unintentional misstatement of the financial statements, b. mistake in recording the date of a sale invoice is error c. it is easier for the auditor to detect because it is not intentional d. Fraudulent Financial Reporting is kind of errorarrow_forward
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