Chapter 3: Audit Reports Flashcards
Which of the following is a correct statement regarding the standard unmodified opinion audit report?
A) The format of the audit report for public and nonpublic entities are identical.
B) The auditor’s responsibility paragraph includes a statement that the auditors are responsible for selecting the appropriate accounting principles.
C) The audit report includes the name of the lead partner on the audit.
D) The scope paragraph includes a statement that the auditor considers internal controls when designing the audit procedures performed.
D) The scope paragraph includes a statement that the auditor considers internal controls when designing the audit procedures performed.
Auditing standards require that the audit report must be titled and that the title must
A) include the word “independent.”
B) indicate if the auditor is a CPA.
C) indicate if the auditor is a proprietorship, partnership, or corporation.
D) indicate the type of audit opinion issued.
A) include the word “independent.”
The auditor’s responsibility section of the standard unmodified opinion audit report states that the audit is designed to
A) discover all errors and/or irregularities.
B) discover material errors and/or irregularities.
C) conform to generally accepted accounting principles.
D) obtain reasonable assurance whether the statements are free of material misstatement.
D) obtain reasonable assurance whether the statements are free of material misstatement.
The audit report date on a standard unmodified opinion audit report indicates
A) the last day of the fiscal period.
B) the date on which the financial statements were filed with the Securities and Exchange Commission.
C) the last date on which users may institute a lawsuit against either the client or the auditor.
D) the last day of the auditor’s responsibility for the review of significant events that occurred after the date of the financial statements.
D) the last day of the auditor’s responsibility for the review of significant events that occurred after the date of the financial statements.
Which of the following is notexplicitly stated in the standard unmodified opinion audit report?
A) The financial statements are the responsibility of management.
B) The audit was conducted in accordance with generally accepted accounting principles.
C) The auditors believe that the audit evidence provides a reasonable basis for their opinion.
D) An audit includes assessing the accounting estimates used.
B) The audit was conducted in accordance with generally accepted accounting principles.
The standard unmodified opinion audit report for a nonpublic entity must
A) have a report title that includes the word “CPA.”
B) be addressed to the company’s stockholders and creditors.
C) be dated.
D) include an explanatory paragraph.
C) be dated.
The management’s responsibility section of the standard unmodified opinion audit report for a nonpublic company states that the financial statements are
A) the responsibility of the auditor.
B) the responsibility of management.
C) the joint responsibility of management and the auditor.
D) none of the above.
B) the responsibility of management.
The introductory paragraph of the standard unmodified opinion audit report for a nonpublic company performs which functions?
I. It states the CPA has performed an audit.
II. It lists the financial statements being audited.
III.It states the financial statements are the responsibility of the auditor.
A) I and II
B) I and III
C) II and III
D) I, II and III
A) I and II
Which of the following statements are true for the standard unmodified opinion audit report of a nonpublic entity?
I. The introductory paragraph states that management is responsible for the preparation and content of the financial statements.
II. The scope paragraph states that the auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management.
A) I only
B) II only
C) I and II
D) Neither I nor II
B) II only
The first paragraph is the introductory paragraph and indicates that an audit was performed and the financial statements that were audited. The introductory paragraph also indicates that the financial statements are the responsibility of management and that the auditor’s responsibility is to express an opinion on the financial statements.
The auditor’s responsibility section of the standard unmodified opinion audit report states that the auditor is
A) responsible for the financial statements and the opinion on them.
B) responsible for the financial statements.
C) responsible for the opinion on the financial statements.
D) jointly responsible for the financial statements with management.
C) responsible for the opinion on the financial statements.
If the balance sheet of a private company is dated December 31, 2016, the audit report is dated February 8, 2017, and both are released on February 15, 2017, this indicates that the auditor has searched for subsequent events that occurred up to
A) December 31, 2016.
B) January 1, 2017.
C) February 8, 2017.
D) February 15, 2017.
C) February 8, 2017.
The appropriate audit report date for a standard unmodified opinion audit report for a nonpublic entity should be
A) the date the financial statements are given to the Board of Directors.
B) the date of the financial statements.
C) the date the auditor completed the auditing procedures in the field.
D) 60 days after the date of the financial statements as required by the SEC.
C) the date the auditor completed the auditing procedures in the field.
Most auditors believe that financial statements are “presented fairly” when the statements are in accordance with GAAP, and that it is also necessary to
A) determine that they are not in violation of FASB statements.
B) examine the substance of transactions and balances for possible misinformation.
C) review the statements using the accounting principles promulgated by the SEC.
D) assure investors that net income reported this year will be exceeded in the future.
B) examine the substance of transactions and balances for possible misinformation.
An audit provides a guarantee that a material misstatement will notexist in the financial statements.
TRUE OR FALSE
FALSE
AICPA auditing standards provide uniform wording for the auditor’s report to enable users of the financial statements to understand the audit report.
TRUE OR FALSE
TRUE
Users of the financial statements rely on the auditor’s report because of the absolute assurance the report provides.
TRUE OR FALSE
FALSE
The introductory paragraph of the auditor’s report states that the auditor is responsible for the preparation, presentation and opinion on financial statements.
TRUE OR FALSE
FALSE
The first paragraph is the introductory paragraph and indicates that an audit was performed and the financial statements that were audited. The introductory paragraph also indicates that the financial statements are the responsibility of management and that the auditor’s responsibility is to express an opinion on the financial statements.
The audit report date is the date the auditor completed audit procedures in the field.
TRUE OR FALSE
TRUE
The scope paragraph of the auditor’s responsibility section of the audit report issued for financial statements of a nonpublic company should refer to auditing standards generally accepted in the United States of America.
TRUE OR FALSE
TRUE
In the scope paragraph of the audit report issued for financial statements of a nonpublic company, the auditor expresses an opinion about the internal controls of the company.
TRUE OR FALSE
FALSE
The audit report is normally addressed to the company’s president or chief executive officer.
TRUE OR FALSE
FALSE
The phrase “accounting principles generally accepted in the United States of America” can be found in the opinion paragraph of a standard unmodified opinion report.
TRUE OR FALSE
TRUE
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of General Ring Corporation as of December 31, 2016 and 2015, and the results of their operations and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
The date of the auditor’s report is indicative of the last day of the auditor’s responsibility for the review of significant events occurring after the balance sheet date.
TRUE OR FALSE
TRUE
The phrase “auditing standards generally accepted in the United States of America” can be found in the opinion paragraph of a standard unmodified opinion report for a nonpublic company.
TRUE OR FALSE
FALSE
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.