Audit reports II

Question 1

The requirement for audit evidence

Answer 1

Sufficient and appropriate

Question 2

The requirement for audit evidence

Answer 2

Sufficient and appropriate

Question 3

Subsequent events are

Answer 3

Material events or transactions occurring subsequent to the balance sheet date, but prior to the issuance of the F/S that require adjustment to OR disclosure(两种类型EVENTS) in the F/S.

Question 4

Subsequent events not include

Answer 4

Sales occurring after year-end

Question 5

If an omitted audit procedure is discovered, the auditor should

Answer 5

1. Access the importance of the omitted procedure to the auditor’s PRESENT ABILITY to support the opinion. it might be the case that other audit procedures tended to COMPENSATE for the omitted procedure. in which no further action would be necessary.
2. If no other procedures compensated for the missing one, the auditor would need to determine whether there were person relying on the F/S
3. 如果第一项compensation没有达成，且第二项达成有人使用依赖F/S， the auditor would request permission to perform substantive procedures.

Question 6

U.S GAAP identified two types of subsequent events, they are

Answer 6

Type I events, conditions existing ON or BEFORE the balance sheet date, an ADJUSTMENT to the F/S is usually required. Type II event, conditions existing AFTER the balance sheet date, require NO adjustment to the F/S but may require significant additional disclosure.

Question 7

Certain limited procedures should be applied to REQUITED SUPPLEMENTARY INFO

Answer 7

The required supplementary info is an essential part of F/S, but this info need NOT be audited. However, the audit report on the F/S should include an OTHER-MATTER paragraph to explain such info.

Question 8

An auditor is not responsible for determining whether other info in documents containing the audited F.S and the auditor’s report is properly stated.

Answer 8

However, the auditor should read the other info and consider whether any material inconsistencies or material misstatement of fact. An other-matter paragraph DISCLAIMING an opinion on the other info is optional .

Question 9

The engagement should performed in accordance with

Answer 9

AICPA standards not SSARS.

Question 10

Changes in accounting estimate ( depreciation method) or correction of error (数学错误等）

Answer 10

DO NOT affect the consistency standard.

Question 11

If an accounting change has NO MATERIAL EFFECT on the comparability of the F/S

Answer 11

The auditor DOES NOT need to recognize (refer) to consistency in the auditor’s report

Question 12

If an accounting change has MATERIAL EFFECT on the comparability of the F/S

Answer 12

The change would be referred to in an emphasis-of-matter paragraph in

Question 13

When QUALIFYING an opinion due to an inability to obtain sufficient appropriate audit evidence(GAAS) or due to inadequate disclosure(GAAP), the auditor should should refer the situation or omission

Answer 13

In the BASIS FOR QUALIFIED OPINION paragraph PRECEDING the opinion paragraph and in the OPINION paragraph, but NOT IN the management’s or auditor ‘s responsibility paragraph.

Question 14

When disclaiming an opinion due to an client-imposed scope limitation, an auditor should indicate in a separate paragraph why the audit did not comply with GAAS,

Answer 14

But auditor’s responsibility paragraph and opinion paragraph are NOT OMITTED.

Question 15

A scope limitation is a departure from GAAS NOT GAAP. The wording in the qualified opinion paragraph regrading scope limitation should indicate that

Answer 15

The qualification pertains to the possible effects on the F/S and not to the scope limitation itself.

Question 16

When the auditor express a qualified or adverse opinion due to material misstatement of the F/S,

Answer 16

The AUDITOR’S RESPONSIBILITY paragraph is modified and the auditor’s report will include a “basis for modification” paragraph and a a “Qualified Opinion” or “Adverse Opinion” paragraph .

Question 17

The adequate disclosure of the auditor’s substantial doubt about the entity’s ability to continue as a going concern will result in

Answer 17

Emphasis-of-matter after unmodified opinion OR DISCLAIMER of opinion(第二个选择）

Question 18

If the CPA is disclaiming an opinion that is not in conformity with GAAP and provides appropriate revision to the F/S, but management refuse to accept the CPA’s suggestion

Answer 18

No qualified or reversed opinion should provide because disclaimer of opinion is express no opinion, no qualified or reversed opinion provide a level of assurance. The CPA needs to describe the nature of the departure from GAAP in the CPA’s report and state the effects on the F/S.

Question 19

As long as it is FULLY disclosed, an inability to estimate the amount of loss from a future event (outcome of pending legislation) would most likely result in

Answer 19

Unmodified opinion.

Question 20

Subsequent event is transaction or event which happens after the B/S date but before the F/S date. while subsequent period is the period between the F/S date and the auditor’s report date.

Answer 20

B/S date to F/S date to auditor’s report date.

Question 21

Auditor’s responsibility for subsequent events

Answer 21

1. post B/S transaction.
2. representation letter should be obtain from management.
3. inquiry of management and those with governance and inquiry the client’s legal consul about litigation,claim etc.
4. minutes of stockholder, director and other committee meeting should be read during the subsequent period.
5. examine the latest interim F/S, compare them with the F/S under audit.

Question 22

As long as it is fully disclosed, an inability to estimate the amount of loss from a future event (outcome of pending legislation) would most likely result in

Answer 22

an unmodified opinion

Question 23

Insufficient evidence and scope limitation(其实两者是差不多一个鸡巴玩意 ) all result in

Answer 23

qualified opinion or disclaimer of opinion.(depend on the materiality)