AUDITING LL W/ CONNECT <C>
11th Edition
ISBN: 9781307416268
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 18, Problem 18.18MCQ
To determine
Concept Introduction:
Audit report includes the opinion of the auditor on the financial statements. Audit provides his opinion based on the audit evidences obtained during the
To choose: The case which may cause the auditor to change the opinion on previous year’s financial statements.
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When financial statements are presented in comparative form and another firm audited the prior years’ financial statements (but the other firm’s report is not presented with the financial statements), the auditors’ report on the current-year financial statements shoulda. Disclaim an opinion on the prior years’ financial statements.b. Not refer to the prior years’ financial statements.c. Refer to any procedures performed by the current auditor to verify the opinion on the prior years’ financial statements.d. Refer to the report and type of opinion issued by the other firm on the prior years’ financial statements.
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
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.
Chapter 18 Solutions
AUDITING LL W/ CONNECT <C>
Ch. 18 - Prob. 18.1RQCh. 18 - Prob. 18.2RQCh. 18 - Prob. 18.3RQCh. 18 - Prob. 18.4RQCh. 18 - Prob. 18.5RQCh. 18 - Prob. 18.6RQCh. 18 - Prob. 18.7RQCh. 18 - Prob. 18.8RQCh. 18 - Prob. 18.9RQCh. 18 - Prob. 18.10MCQ
Ch. 18 - Prob. 18.11MCQCh. 18 - Prob. 18.12MCQCh. 18 - Prob. 18.13MCQCh. 18 - Prob. 18.14MCQCh. 18 - Prob. 18.15MCQCh. 18 - Prob. 18.16MCQCh. 18 - Prob. 18.17MCQCh. 18 - Prob. 18.18MCQCh. 18 - Prob. 18.19MCQCh. 18 - Prob. 18.20MCQCh. 18 - Prob. 18.21MCQCh. 18 - Prob. 18.22PCh. 18 - Prob. 18.23PCh. 18 - Prob. 18.24PCh. 18 - Prob. 18.25PCh. 18 - Prob. 18.26PCh. 18 - Prob. 18.27PCh. 18 - Prob. 18.28P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- The accounting and auditing literature discusses several different types of accounting changes. For each of the changes listed below (a. through c.), indicate whether the auditor should add a paragraph to the audit report, assuming that the change had a material effect on the financial statements and was properly justified, accounted for, and disclosed. Assume that the organization is a U.S. non-public company. a. Change from one GAAP to another GAAP b. Change in accounting estimate not affected by a change in accounting principle c. Change in accounting estimate affected by a change in accounting principle d. Correction of an error c. Change from non-GAAP to GAAP (a special case of correction of an error)arrow_forwardwhich of the following application would an auditor apply to determine the probability of a corporation's account balance being in error? A) overinvolvement rations B) probability rules C) bayes theorem D) emprical formulaarrow_forwardWhich of the following opinions would be issued if auditors believed that the entity’s financial statements were not presented in conformity with GAAP?a. Adverse opinion.b. Disclaimer of opinion.c. Qualified opinion.d. Unmodified opinionarrow_forward
- If the statement of financial position error is discovered in a subsequent accounting period, what action is to be done by the entity? A. Reclassify the item to its proper real account but do not restate the statement of financial position of the prior year affected by the error. B. Reclassify the item to its proper real account. C. Restate the statement of financial position of the prior year affected by the error. D. Reclassify the item to its proper real account and restate the statement of financial position of the prior year affected by the errorarrow_forwardWhich of the following statements, relating to the auditor's responsibilities regarding subsequent events, if any, is/are correct? (1) Auditors do not have a responsibility to perform procedures to identify subsequent events after the date of the auditor's report(2) Where a material adjusting subsequent event is identified after the financial statements are issued, but prior to approval by the shareholders, the auditor should includeja qualified opinion in their audit report if management refuses to adjust the financial statements for the event a. 1 only b. Neither 1 nor 2 c. 2 only d. Both 1 and 2arrow_forwardWhich of the following statements regarding the consistency concept is not true? Select one: A. The objective of the consistency concept is to facilitate comparison between one period and another B. A selected accounting method must be used consistently every year C. A company cannot change the selected accounting method once it is used D. If inconsistency is found, the company must provide full explanation in the Statement of Profit or Loss and Other Comprehensive Income itself, or in the Statement of Financial Position, or in the notes to the accountsarrow_forward
- Most auditors believe that financial statements are "presented fairly" when the statements are in accordance with GAAP, and that it is also necessary to Select one: a. assure investors that net income reported this year will be exceeded in the future b. review the statements using the accounting principles promulgated by the SEC c. examine the substance of transactions and balances for possible misinformationarrow_forwardWhat type of opinion is issued by the auditor on the financial statements when there is some limitation on the scope of the audit or when one or more items in the financial statements are not presented in accordance with applicable accounting principles?arrow_forwardWhich type of audit report specifies that financial statements do not present fairly the financial position, results of operations, and cash flows in conformity with accounting standards? A. Qualified report B. Adverse report C. Unqualified report D. Disclaimer of opinionarrow_forward
- Accountants are permitted to express “negative assurance” in which of the following reports?a. Standard unmodified audit report on financial statements.b. Compilation report on unaudited financial statements.c. Review report on unaudited financial statements.d. Adverse opinion report on financial statements.arrow_forwardThe client has restated the prior-year statements because of a changefrom LIFO to FIFO. How should this be reflected in the auditor’s report?arrow_forwardIf the auditor expresses an adverse or disclaimer of opinion on the complete set of financialstatements, she or he is not permitted to:a. Express an unmodified opinion on a single financial statement.b. Express an unmodified opinion on an element of the financial statements.c. Express a similar opinion on a single financial statement.d. Perform any of the abovearrow_forward
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