An auditor reads management's commentary included in a county's comprehensive annual financial report and identifies a material inconsistency with the financial statements. The auditor determines that the financial statements do not require revision. Which of the following actions should the auditor take? Group of answer choices a. Request that the entity revise management's commentary. b. Include an emphasis-of-matter paragraph in the auditor's report. c. Consider withdrawing from the engagement. d. Request a client representation letter acknowledging the inconsistency.

An auditor reads management's commentary included in a county's comprehensive annual financial report and identifies a material inconsistency with the financial statements. The auditor determines that the financial statements do not require revision. Which of the following actions should the auditor take? Group of answer choices a. Request that the entity revise management's commentary. b. Include an emphasis-of-matter paragraph in the auditor's report. c. Consider withdrawing from the engagement. d. Request a client representation letter acknowledging the inconsistency.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter17: Other Services Provided By Audit Firms

Section: Chapter Questions

Problem 20MCQ

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After the audit report release date, auditors determine that an important auditing procedure was omitted. Which of the following initial courses of action is most appropriate?a. Perform the omitted procedure or an alternative procedure.b. Notify the board of directors and regulatory agencies that are currently relying on auditor’s reports.c. Determine whether the omitted procedure is important in supporting the auditor’s opinion on the entity’s financial statements.d. Engage another public accounting firm to conduct a quality assurance review.
Select the necessary words from the list of possibilities to complete the following statements: adverse, basis for modification paragraph(or basis for qualified opinion paragraph, CPA firm, disclaimer of opinion, expressing an opinion, management, unmodified, unqualified, update Statements Answer 1. If the auditors have examined the prior year's financial statements presented for comparative purposes, they should __________ their opinion for any new information. 5. All nonpublic company audit reports that are qualified should contain a(n) __________ explaining the details of the qualification.
Question: Before issuing a report on the compilation of financial statements of a non- public entity, the accountant should: a. Apply analytical procedures to selected financial data to discover any material misstatements. b. Corroborate at least a sample of the assertions management has embodied financial in the statements. c. Inquire of the client's personnel whether the financial statements omit substantially all disclosures. d. Read the financial statements to consider whether the financial statements are free from obvious material errors.
21)An audit engagement letter A.May not be prepared each period for a recurring audit engagement B.Is prepared for the benefit of the audit, audit client and general public C.Shall include specific audit procedures to be performed by the auditor D.Is usually sent by auditor to the client upon the commencement of the audit 22)The engagement letter A.Can affect legal responsibility to the client B.Can be used to alter the auditor’s responsibilities under the standards on auditing C.Is used only if it is an engagement, but has no effect for review or compilation services D.Affects the CPA firm’s responsibility to external users of audited financial statements 23)Which of the following is notinvolved during pre-planning phase? A.Obtaining information about client’s legal obligation B.Obtaining an engagement letter C.Selecting staff for engagement D.Deciding whether to accept or continue an audit engagement 24)Which of the following matters is least likely to be discussed in an…
The accountant's report that expresses an opinion on an entity's internal controls would not include a A. specific date that the report covers rather than a period of time. B. brief explanation of the broad objectives and inherent limitations of internal control. C. description of the scope of the engagement. D. statement that the entitiy's internal controls are consistent with that of the prior year after giving effect to subsequent changes.
When comparative financial statements are presented but the predecessor auditor's report is not presented, the current auditor should do which of the following in the audit report? a. Disclaim an opinion on the prior year's financial statements. b. Identify the predecessor auditor who audited the financial statements of the prior year. c. Indicate the type of opinion expressed by the predecessor auditor. d. Make no comment with respect to the predecessor audit. e. Include a KAM paragraph that indicates the refusal by the predecessor auditor to re-issue the prior-year opinion.
Explain Answer
Before issuing a report on the compilation of financial statements of a non-public entity, the accountant should: a. Apply analytical procedures to selected financial data to discover any material misstatements. b. Corroborate at least a sample of the assertions management has embodied in the financial statements. c. Inquire of the client's personnel whether the financial statements omit substantially all disclosures. d. Read the financial statements to consider whether the financial statements are free from obvious material errors.
When accountants agree to perform a compilation or review of unaudited financial statements, the best way to avoid clients’ misunderstanding the nature of the work is to describeit completely ina. An engagement letter.b. The auditors’ opinion.c. A report to the clients’ board of directors at the close of the engagement.d. A management letter to the board of directors’ audit committee.
AUDITING Answer the following questions and explain the correct answers per item. Also explain why the other choices are incorrect 1. An accountant agrees to the client's request to change an engagement from a review to a compilation of financial statements. The compilation report should include: A. No reference to the original engagement. B. Reference to a departure from PSAs. C. Scope limitations that may have resulted in the change of engagement. D. Information about review procedures already performed. 2. The Philippine Framework for Assurance Engagements identifies two types of assurance engagements a practitioner is permitted to perform: a reasonable assurance engagement and a limited assurance engagement. Which of the following is the objective of a limited assurance engagement? A. A reduction in assurance engagement risk to a very low level in the circumstances of the engagement as a basis for a disclaimer of the practitioner's conclusion. B. A reduction in assurance engagement…
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C) In audits of state and local government units which of the following sections are not required in the auditor's report for a GAAS audit? Group of answer choices 1: Responsibilities of Management for the Financial Statements. 2: Auditor’s Responsibilities for the Audit of the Financial Statements. 3: Report on Waste and Abuse. 4: Basis for Opinion.