8. In which of the following situations would an auditor originally choose between expressing a qualified opinion or an adverse opinion? a. The auditor did not observe the entity's physical inventory and is unable to become satisfied about its balance by other auditing procedure b. Conditions that cause the auditor to have substantial doubt about the entity's ability to continue as a going concern are inadequately disclosed. c. Both a and b.

8. In which of the following situations would an auditor originally choose between expressing a qualified opinion or an adverse opinion? a. The auditor did not observe the entity's physical inventory and is unable to become satisfied about its balance by other auditing procedure b. Conditions that cause the auditor to have substantial doubt about the entity's ability to continue as a going concern are inadequately disclosed. c. Both a and b.

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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Similar questions

For which of the following events would an auditor issue a report that does not make any reference to consistency Select one: a. Management’s lack of reasonable justification for a change in accounting principle b. A change in the useful life used to calculate the provision for depreciation expense c. A change in the method of accounting for inventories d. A change from an accounting principle that is not generally accepted to one that is generally accepted
Which 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.
What is the appropriate nature of opinion when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive? a. Unmodified opinion. b. Disclaimer of opinion. c. Qualified opinion. d. Adverse opinion.
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.
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.
The Auditor prepares a disclaimer of opinion: a. When he cannot find any misstatement in the report. b. When the financial statements are not following GAAP. c. When he finds some discrepancy in the treatment of some items. d. When he is not able to obtain sufficient appropriate audit evidences about an issue.
19. An auditor conducting an audit in accordance with ______________is responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error. a. ISAs b. None of the options c. IFRS d. IAS
If the auditor concludes that management’s use of the going concern basis of accounting is appropriate in the circumstances but a material uncertainty exists, the auditor shall: i) Determine whether financial statements disclose clearly that there is a material uncertainty ii) Determine whether the financial statements adequately disclose the principal conditions that may cast significant doubt on the entity’s ability to continue as a going concern. iii) Determine whether the financial statements adequately disclose management’s plans to deal with these events or conditions. A. i) and ii) B. i) and iii) C. Only i) D. i) , ii) and iii)
An unqualified opinion: a) is given when there is a conflict of interest.b) is one made without reservation.c) © is made when auditors are not fully qualified to audit the financial statements.d- is one made with reservation
What happens when the auditor cannot issue the standard unqualified/unmodified audit report?
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.
2) During the audit of a client you come to the conclusion that there is minimal likelihood that resolution of an uncertainty will have a material effect on the financial report. Accordingly, assuming nothing else has come to your attention, you should issue: a. A qualified opinion. b. An unmodified opinion. c. An adverse opinion. d. A disclaimer of opinion.