AUDIT REPORT CONTENTS Flashcards
What is the primary purpose of the title in an auditor’s report?
a) To attract readers
b) To differentiate it from other reports
c) To summarize audit findings
d) To highlight key issues
To differentiate it from other reports
To whom is the auditor’s report usually addressed in the case of a statutory audit?
a) Shareholders or members
b) Audit committee
c) Board of Directors
d) Government authorities
Shareholders or members
Which of the following is not included in the “Auditor’s Opinion” section?
a) Statement of compliance with AFRF
b) Statement on going concern
c) True and fair view assertion
d) Period covered by the financial statements
Statement on going concern
The “Key Audit Matters” (KAM) paragraph includes matters of high significance identified during the audit. Which of the following would most likely qualify as a KAM?
a) Non-compliance with tax laws
b) Significant management judgment required for revenue recognition in complex contracts
c) Routine transactions with related parties
d) The timing of the audit fieldwork
Significant management judgment required for revenue recognition in complex contracts
In an audit report for a listed company, the auditor has identified a significant inconsistency between the “Other Information” and the audited financial statements. How should this be addressed?
a) Issue a disclaimer of opinion on the financial statements
b) Communicate the inconsistency to those charged with governance and describe it in the audit report
c) Modify the opinion section to reflect the inconsistency
d) Ignore the inconsistency if it does not impact the financial statements directly
Communicate the inconsistency to those charged with governance and describe it in the audit report
An auditor is conducting an audit in a jurisdiction requiring reporting on additional regulatory compliance. Which of the following approaches should the auditor take?
a) Integrate the regulatory compliance report into the same section as the financial statements opinion
b) Provide a separate section in the report titled “Report on Other Legal and Regulatory Requirements”
c) Issue a completely separate report to address regulatory compliance
d) Discuss regulatory compliance only in a management letter
Provide a separate section in the report titled “Report on Other Legal and Regulatory Requirements”
Which of the following best describes the auditor’s responsibility for evaluating the overall presentation of financial statements?
a) To ensure financial statements comply with tax laws
b) To verify consistency between the financial statements and the notes to the accounts
c) To evaluate whether the financial statements provide a true and fair view in accordance with the AFRF
d) To perform procedures to detect all fraud and errors
To evaluate whether the financial statements provide a true and fair view in accordance with the AFRF
When must the date of the auditor’s report be set?
a) On the date the financial statements are signed by management
b) On the date the auditor obtains sufficient appropriate audit evidence
c) On the date the shareholders approve the financial statements
d) On the date the engagement letter is signed
On the date the auditor obtains sufficient appropriate audit evidence
Which of the following is a key responsibility of the auditor regarding fraud and error?
a) To guarantee that no fraud exists in the financial statements
b) To assess the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management
c) To conduct forensic procedures to detect intentional misstatements
d) To correct all errors identified during the audit
To assess the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by managemen
An auditor is engaged to audit a financial statement of a group where one component is audited by another auditor. What must the auditor do if they rely on the work of the other auditor?
a) Exclude the other auditor’s work from the overall conclusion and issue a disclaimer of opinion
b) Mention the other auditor in the auditor’s report without taking responsibility for their work
c) Perform procedures to assess the competence and independence of the other auditor and determine if reliance is appropriate
d) Obtain written confirmation from management regarding the work of the other auditor
Perform procedures to assess the competence and independence of the other auditor and determine if reliance is appropriate
The auditor of XYZ Ltd. identifies that the financial statements materially comply with the applicable financial reporting framework (AFRF). However, a significant inconsistency is found between the financial statements and other information presented in the annual report. The inconsistency is unresolved despite discussions with management.
What action should the auditor take?
a) Issue a qualified opinion for the financial statements
b) Include a paragraph describing the inconsistency under “Other Information” in the auditor’s report
c) Issue an adverse opinion for the financial statements
d) Ignore the inconsistency if it is not material to the financial statements
Include a paragraph describing the inconsistency under “Other Information” in the auditor’s report
While auditing ABC Ltd., the auditor identifies that the company is facing significant cash flow issues and might not be able to continue as a going concern. The company has adequately disclosed this uncertainty in the financial statements.
What should the auditor include in the report?
a) A disclaimer of opinion
b) A “Material Uncertainty Related to Going Concern” paragraph
c) A qualified opinion
d) No additional paragraph since the disclosure is adequate
A “Material Uncertainty Related to Going Concern” paragraph
During the audit of DEF Corp., the auditor finds that management has refused to provide written representations regarding compliance with laws and regulations. The auditor has performed all other procedures and obtained sufficient evidence.
What type of opinion should the auditor issue?
a) Unmodified opinion
b) Qualified opinion due to scope limitation
c) Disclaimer of opinion due to lack of evidence
d) Adverse opinion due to non-compliance with laws
Qualified opinion due to scope limitation
An auditor is conducting an audit for a listed company, LMN Ltd. Significant audit procedures involve assessing management’s estimates for goodwill impairment, which required complex judgments. The auditor concludes that these procedures were the most challenging part of the audit.
How should the auditor address this in the report?
a) Include it under the “Key Audit Matters” section
b) Modify the opinion to highlight management’s judgment
c) Address it in the “Other Information” section
d) Mention it in the management letter but exclude it from the auditor’s report
a) Include it under the “Key Audit Matters” section
Scenario: In the audit of QRS Ltd., the auditor discovers that the financial statements fail to disclose material non-compliance with tax laws. Management refuses to amend the financial statements.
What opinion should the auditor issue?
a) Disclaimer of opinion
b) Qualified opinion
c) Adverse opinion
d) Unmodified opinion with an Emphasis of Matter paragraph
Adverse opinion
