Chapter 18 SB HW

Question 1

A PCAOB report is titled _________.

Answer 1

Report of Independent Registered Public Accounting Firm

Question 2

When a scope limitation exists but overall the financial statements present fairly in conformity with GAAP, the auditor will ______.

Answer 2

issue a qualified opinion and use the words ‘except for’ in the report

Question 3

Management’s going concern assessment is independently assessed by auditors to ensure ______.

Answer 3

management’s assessment has been adequately conducted and disclosed

Question 4

______ matters are identified to consider comparability.

Answer 4

Consistency

Question 5

When is an explanatory paragraph used?

Answer 5

1. Substantial doubt of going concern
2. Integrated audit and separate reports
3. Refer to report of other auditors

Question 6

When an auditor reports on an entity’s compliance with certain contractual agreements or regulatory requirements, the auditor ______.

Answer 6

1. provides negative assurance only
2. uses statement ‘nothing came to auditors attention’

Question 7

An inability to collect sufficient appropriate evidence is considered a(n) ______.

Answer 7

scope limitation

Question 8

When an insurance company reports in compliance with the rules of a state insurance commission, the financial statements have been prepared under a(n) _____ basis

Answer 8

regulatory

Question 9

Generally, the materiality in an audit of an element, account, or item is set in relation to the ______ element, account, or item.

Answer 9

individual

Question 10

The new PCAOB reporting standards include ______.

Answer 10

1. clearer description of mgmt and auditor responsibilities
2. separate disclosure of CAMs

Question 11

The auditor’s standard unqualified audit report for a public company includes ______(4 parts).

Answer 11

1. Length of time auditor served
2. Opinion
3. CAM’s
4. Name & signature

Question 12

When there is a lack of consistency in the application of accounting principles due to accounting changes, an auditor ______.

Answer 12

adds an explanatory paragraph to a standard unqualified audit report

Question 13

An ASB audit report indicates the audit was conducted in accordance with ______.

Answer 13

GAAS

Question 14

Critical audit matters

Answer 14

Any matters arising from the audit of financial statements that are communicated or required to be communicated, to the audit committee, that relate to material financial statement accounts or disclosures and involved especially challenging, subjective, or complex auditor judgment.

Question 15

Emphasis paragraph is used to _____________.

Answer 15

draw special attention to particular matter that is properly presented or disclosed

Question 16

The new PCAOB reporting standards include ______(3 parts).

Answer 16

1. Retention of binary pass/fail
2. Basis of opinion section
3. Key features of audit are more clear

Question 17

If an auditor is not independent, the auditor ______.

Answer 17

issues a two-sentence report and withdraws or disclaims the opinion

Question 18

In regard to ‘other information’, the auditor is required to _________(2 parts).

Answer 18

1. Read the information
2. Consider whether information is consistent with audited financial statements

Question 19

An immaterial scope limitation results in a ____________ report.

Answer 19

Qualified with explanatory paragraph