Question 4Respond to each of the following independent situations involving auditor reports. For each·scenario (1)identify the reporting issue involved; (2) explain the type of opinion that should be-issued; (3)identify any requiredmodifications of the standard auditor'sreport.bThe audit client has engaged in a significant number of related party transactions duringthe year. The auditor-believes that disclosure of these transactions is essentialto:comply with GAAP, and that the transactions have a highly material and pervasiveeffect on the financial statem ents. However, the client has refusedto make the required-financial statement disclosures.4.4A client refusesto allowthe auditors to confirm the accounts receivable. The potential·effects of relatedmisstatements on the financial statements are highly material and-pervasive. The auditors are unable to satisfy themselvesregarding the receivable and-sales balances by using alternative auditing procedures.5.The auditor has completed the engagement and detected no material errors or fraudinthe financial statements. However, the auditor wishes to communicate to the financial·statement users what she considers to be the most significant issues that arose during:the audit.6.4飞tttt ↑

Audit reports are issued by auditors to express his opinion regarding the truthiness and fairness of…

Answered: situations involving auditor reports-

Business

Accounting

situations involving auditor reports-

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

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

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

Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process

Section: Chapter Questions

Problem 3RQSC

See similar textbooks

Similar questions

The preparation of audit documentation is an integral part of an auditor’s examination of financial statements. On a recurring engagement, auditors review the audit plans and audit documentation from the prior audit while planning the current audit to determine their usefulness for the current-year work.Required:a. (1) What are the purposes or functions of audit documentation? (2) What records may be included in audit documentation?b. What factors affect the auditors’ judgment of the type and content of the audit documentation for a particular engagement?c. What should be included in audit documentation to support auditors’ compliance with generally accepted auditing standards?d. How can auditors make the most effective use of the prior-year audit plans in a recurring audit?
Question 4 Respond to each of the following independent situations involving auditorreports. For each scenario (1) identify the reporting issue involved; (2) explain the type of opinion that should be- issued; (3) identify any requiredmodifications of the standard auditor'sreport. The auditor determines that a material uncertainty existsregarding the ability of the audit client to remain in business for the foreseeable future. However, the auditor believesthat the use of normal GAAP reporting is still appropriate. Management has adequately disclosed the material uncertainty in the footnotes to the financial- 7.4 statements. The client has a significant going concern problem, and the auditor believes that going concern accounting is no longer appropriate. However, management disagrees and has insisted on issuing normal GAAP (going concern) financial statements. 8.
Audit standards require auditors to _______. conduct specific audit procedures to identify subsequent events that may occur up through the date of the auditor’s report conduct specific audit procedures to identify subsequent events that may occur after the date of the auditor’s report. apply optional use of analytical procedures to increase assurance levels related to subsequent events delegate auditing of subsequent events to the internal audit function A compilation engagement is _______. an audit of the financial statements, whereby an auditor expresses an opinion on the financial statements an audit of the system of internal control, whereby an auditor expresses an opinion on the system of internal control when an accounting firm assists management in the presentation of financial statements but does not audit, review, nor provide assurance as to whether the financial statements are presented fairly. when an audit firm assists management in the presentation of financial…
Auditors have a responsibility related to management’s disclosure of new informationrelated to subsequent events untila. The date of the financial statements.b. The date of the auditor’s report.c. The audit report release date.d. The following year’s date of the financial statements
Which of the following would be an example of a reasonable assurance engagement? * The review of annual financial statements. The audit of annual financial statements. The reporting of procedures O performed by the auditor as agreed by the client. All of the above
During an audit engagement, pertinent data are compiled and included in the auditfiles. The audit files primarily are considered to be(1) a client-owned record of conclusions reached by the auditors who performedthe engagement.(2) evidence supporting financial statements.(3) support for the auditor’s representations as to compliance with auditing standards.(4) a record to be used as a basis for the following year’s engagement
1. Which of the following is a principle underlying an audit conducted in accordance with generally accepted auditing standards? Select one:a. Auditors are responsible for, among other things, maintaining professional objectivism, exercising professional engagement, and obtaining appropriate documentation.b. The audit report expresses an opinion on whether the financial statements are free of material and immaterial misstatement.c. The audit provides reasonable assurance the client will remain in business for at least one year.d. An auditor's opinion enhances the degree of confidence that intended users can place in the financial statements.
basis. An auditor shall prepare audit documentation on a O a. Annually O b. Regularly Oc. Quarterly O d. Timely
Which required SEC filing would contain the following content? "Our auditors identified the following critical audit matter: Significant judgment may be required by the Company in determining revenue recognition for these customer agreements. a) 8-K b) Proxy c) 10-K
An auditor issues a report dated 2/12/Year 2 on financial statements for the year ended 12/31/Year 1. Which best describes the auditor's responsibility for an event occurring on 2/1/Year 2 and an event occurring on 3/1/Year 27 A. The auditor has an active responsibility to investigate both events. B. The auditor has an active responsibility to investigate the 2/1/Year 2 event, but no responsibility concerning the 3/1/Year 2 event. C. The auditor has an active responsibility to investigate the 2/1/Year 2 event, and must also consider the effect of the 3/1/Year 2 event if it comes to his/her attention. D. The auditor has no responsibility for either event, since both occur after the date of the financial statements.
Discuss the auditor’s responsibility for detecting subsequent events(a) prior to the completion of field work;(b) prior to signing the audit report, and(c) between the date of the audit report and the issuance of the financialreport.
The statement that the auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the auditor's opinion is in what section of the new auditor's report? a.Responsibilities for the Financial Statements. b.Basis for Opinion. c.Auditor's responsibility. d.Opinion Paragraph.