A1

Question 1

When should an auditor restrict the use of their communication for a private audit by including an alert?

Answer 1

when the written communication is based on measurement or disclosure criteria that the auditor determined to be suitable for a limited number of users who have an adequate understanding of the criteria

Question 2

T/F: An accountant can report on the application of an applicable financial reporting framework for a proposed future transaction as long as the transaction involves the facts and circumstances of a specific entity.

Answer 2

true

Question 3

In what section of the audit opinion would you include reference to component auditors with the language “we did not audit”?

Answer 3

opinion section

Question 4

If a successor auditor is issuing an audit report and they know the predecessor auditor gave a qualified opinion but those F/S aren’t being presented with the CY audit report, what should the successor auditor do?

Answer 4

indicate in an other-matter paragraph:
1. that the F/S in the PY were audited by a predecessor auditor
2. the type of opinion expressed by the predecessor auditor and the reasons for the modification (if applicable)
3. the nature of any emphasis-of-matter or other-matter paragraph (if applicable)
4. the date of the predecessor auditor’s report

Question 5

T/F: A report on a client’s compliance with a regulatory environment would contain restricted-use language.

Answer 5

true

Question 6

What should be included in an auditor’s report when the F/S were prepared on another basis of accounting (OCBOA)?

Answer 6

include an emphasis of a matter paragraph referencing the footnote that has the description of the specific basis of accounting

Question 7

If information in the Supplementary Information section does not present fairly, how does that affect the opinion on the F/S?

Answer 7

it doesn’t - the opinion on the F/S stays the same
the auditor would modify the Supplementary Information within a separate section of the auditor’s report

Question 8

What are the main differences between the responsibilities between management and the auditors?

Answer 8

management:
1. the entity’s F/S
2. selection and application of accounting principles
3. affirming that the effects of uncorrected misstatements in the F/S are immaterial

auditors:
1. obtaining reasonable assurance about whether the F/S are free of material misstatement