Which of the following is a key change to audit reports per SAS No. 134? O a. It alters the look forward period for evaluating going concern uncertainty. O b. It explicitly assigns responsibility for evaluating going concern to the auditors. O c. Reporting language related to substantial doubt about an entity's ability to continue as a going concern was eliminated. O d. Reporting language related to substantial doubt about an entity's ability to continue as a going concern was enhanced.

Which of the following is a key change to audit reports per SAS No. 134? O a. It alters the look forward period for evaluating going concern uncertainty. O b. It explicitly assigns responsibility for evaluating going concern to the auditors. O c. Reporting language related to substantial doubt about an entity's ability to continue as a going concern was eliminated. O d. Reporting language related to substantial doubt about an entity's ability to continue as a going concern was enhanced.

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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STATEMENT 1: Significant unexpected fluctuations identified by analytical review procedures will usually necessitate a review of internal control. STATEMENT 2: Working papers should generally contain the nature and extent of audit procedures done, the results of any testing, and the CPA's conclusion about how the findings will affect his report. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct
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.
Elaborate the difference between material effect of misstatement and pervasive effect of misstatement and its effect on audit opinion on the financial statements. Also explain 5 instances of both pervasive effect of misstatement and material but not pervasive effect of misstatement on financial statements (assume necessary details).
The standard uniquified audit report Select one: a. is sometimes called a disclaimer report b. can be issued only with an explanatory paragraph c. can be issued if only a balance sheet and income statement are included in the financial statements. d. is sometimes called a clean opinion
What happens when the auditor cannot issue the standard unqualified/unmodified audit report?
A significant scope limitation, determined to be pervasive, existed during an audit. The CPA will likely issue what type of report? a. Qualified Disclaimer Adverse Yes No No b. Qualified Disclaimer Adverse No Yes No c. Qualified Disclaimer Adverse No Yes Yes d. Qualified Disclaimer Adverse Yes Yes No e. Qualified Disclaimer Adverse No No Yes
7. Analytical procedures: A. are not a type of audit evidence. B. are not required during the completion phase of the audit. C. performed during the planning phase of the audit are used as a substantive test in support of account balances. D. do not provide reliable evidence unless it is corroborated with other evidence. 8. Reasonable assurance allows for: A. low likelihood that material misstatements will not be prevented or detected by internal controls. B. no likelihood that material misstatements will not be prevented or detected by internal controls. C. moderate likelihood that material misstatements will not be prevented or detected by internal controls. D. high likelihood that material misstatements will not be prevented or detccted by internal controls. 9. Management implements internal controls to ensure that all required footnote disclosures are accurate. Auditors tests those controls to provide evidence supporting the presentation. A. completeness and valuation B.…
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DETERMINE WHETHER TRUE OR FALSE S1- Toward the end of an engagement, after all audit evidence has been gathered by the auditor, the auditor again considers materiality by comparing the combined misstatements with the preliminary or revised estimate for the entire set of the financial statements as a whole. S2- Changes in the regulatory or operating environment can result in changes in competitive pressures and significantly different risks.