A1 - Audit Reports

Question 1

A1-M1

What does U.S. GAAP Encompass?

Answer 1

Conventions, rules, and procedures necessary @ a particular time!

U.S. GAAP can change!

Question 2

A1-M1

“Presumptively Mandatory” equates to the word…

Answer 2

“Should”

Question 3

A1-M1

“Use Professional Judgement” equates to the word…

Answer 3

“Could”

Question 4

A1-M1

What does GAAS measure in an audit?

A

Answer 4

the quality of an auditor’s performance

Question 5

A1-M2

What 2 adjectives describe the kind of evidence an auditor must obtain?

Answer 5

Sufficient, Appropriate

Question 6

A1-M2

What should the auditor do to obtain reasonable assurance?

Answer 6

Plan the work and supervise assistants

Question 7

A1-M3

In order for an auditor to form an opinion, what should be considered?

Answer 7

Financial statements are prepared in all material aspects according to the applicable financial reporting framework

Question 8

A1-M4

The nature of an engagement is communicated in what paragraph?

Answer 8

Opinion Paragraph

Question 9

A1-M4

Which paragraph indentifies the applicable financial reporting framework?

Answer 9

Opinion Paragraph

Question 10

A1-M4

Which paragraphs in the audit opinion refer to GAAP?

Answer 10

Opinion and Management Responsibility Paragraph

Question 11

A1-A4

Which paragraphs in the audit opinion refer to GAAS

Answer 11

Basis of Opinion and Auditor’s Responsibility

Question 12

A1-M5

“Does not present fairly” relates to what opinion?

Answer 12

Adverse

Question 13

A1-M5

Inadequate disclosures may result in which type of opinions?

Answer 13

Qualified or Adverse Opinion

Depending on pervasiveness of material mistatement

Question 14

A1-M5/M6

Omission of Cash Flows (CF) results in what type of opinion?

Answer 14

Qualified or Adverse Opnion

Question 15

A1-M6

What is the wording used for a qualified opinion due to scope limitation?

Answer 15

“Possible Effects on the Financial Statements”

Question 16

A1-M7

What type of content is described in an other matters paragraph?

Answer 16

Content NOT disclosed in the Financial Statements

Question 17

A1-M7

What type of content is described in an emphasis-of-matter paragraph?

Answer 17

Content explicitly disclosed in the Financial Statements

Question 18

A1-M7

When should auditors not refer to consistency in the auditor’s report?

Answer 18

When an accounting change has no material affect on the comparability of the financial statements

Question 19

A1-M7

What two things are needed in an emphasis-of-matter paragraph?

Answer 19

Descrption of matter + reference to matter in financial statements

Question 20

A1-M7

When is an Emphasis-Of-Matter paragraph required?

Hint: CAP

Answer 20

(lack of) CONSISTENCY*
AUDIT Opinion change
special PURPOSE frameworks

*change has material effect on the financial statements

Question 21

A1-M7

When do we add an emphasis of matter paragraph with matters pertaining to lawsuits?

Answer 21

When the lawsuit is “unusually important”

usually when lawsuit is disclosed, E-O-M is not needed

Question 22

A1-M7

When is an E-O-M Paragraph optional

Answer 22

• litigation is “unusually important”
• major catastrophe had effect on reporting
• Significant related party transactions
• going concern disclosed by management
• group engagement team involved in work of component auditor

Question 23

A1-M7

When is an Other Matters Paragraph required?

Answer 23

• Restricted Use
• AUDIT Opinion change
• Predecessor audit report not reissued from last year

Question 24

True or False: Explanatory paragraphs emcompass all matters between EOM and other matters

Answer 24

True

Question 25

True or False: Explanatory paragraphs are related to non-issuers

Answer 25

False - Related to issuers (public comps)