Audit Reports

Question 1

AICPA Accounting Trends and Techniques

Answer 1

summarizes disclosure requirements of a new financial accounting standards of 600 industrial and merchandising corporations

Question 2

AICPA Codification of Statements on Auditing Standards

Answer 2

codifies the various Statements on Auditing Standards and does not include information on individual company compliance with disclosure requirements.

Question 3

Quality Control Review standards

Answer 3

are established by the AICPA and because they do not include information on individual company compliance with disclosure requirements.

Question 4

In which of the following situations would an auditor ordinarily issue an unmodified audit opinion without an emphasis-of-matter paragraph?

Answer 4

The auditor decides to make reference to the report of an auditor who audited a component of group financial statements
When an auditor makes reference to the report of another auditor no additional paragraph is added to the report

Question 5

Failure to include supplementary information required by the Governmental Accounting Standards Board would result in an

Answer 5

unmodified opinion with an other-matter paragraph.

Question 6

The presentation of unaudited financial statements in comparative form with audited financial statements requires that the unaudited financial statements be clearly differentiated. In addition, the accompanying report should either

Answer 6

include a reissued report on the prior year financial statements
or
a separate paragraph in the report indicating the responsibility assumed for the prior period financial statements

Question 7

Which of the following statements would NOT normally be included in a representation letter for a review of interim financial information?

Answer 7

We understand that a review consists principally of performing analytical procedures and making inquiries about the interim financial information

Question 8

An auditor may report on summary financial statements that are derived from a complete set of audited financial statements only if the auditor

Answer 8

Indicates whether the information is fairly stated in all material respects in relation to the complete financial statements

Question 9

management Is unable to obtain audited financial statements supporting the entity’s investment in a foreign subsidiary.

Answer 9

scope limitation

Question 10

management Refuses to disclose in the notes to the financial statements related party transactions authorized by the board of directors.

Answer 10

GAAP departure

Question 11

The PCAOB identifies two specific matters that affect the auditor’s evaluation of consistency of financial statements:

Answer 11

(1) a change in accounting principle; and

2) an adjustment to correct a misstatement in previously issued financial statements (i.e., a “restatement”

Question 12

When an independent accountant’s report based on a review of interim financial information is presented in a registration statement, a prospectus should include a statement about the accountant’s involvement. This statement should clarify that the

Answer 12

Accountant’s review report is not a “part” of the registration statement within the meaning of the Securities Act of 1933.