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ACC 450 > Exam 3 > Flashcards

Exam 3 Flashcards

1
Q

A client changed the depreciable life of certain assets from 10 years to 12 years the auditor concurs with the change

A

Standard unmodified

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2
Q

A client changed the depreciable life of certain assets from 10 years to 12 years the auditor does not concur with the change confined to fixed assets and accumulated depreciation is not considered pervasive

A

Qualified

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3
Q

A company has not followed gaap in the recording of its leases

A

Qualified or adverse

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4
Q

A company has not followed gaap in the recording of its leases the amounts involved are immaterial

A

Standard unmodified

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5
Q

An auditor reporting on group financial statements decides to take responsibility for the work of a component auditor who audited a 70% owned subsidiary and issued an unmodified opinion the total assets and revenues of the subsidiaries are 5% and 8% respectively of the total assets and revenues of the entity being audited

A

Standard unmodified

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6
Q

An auditor reporting on group financial statements decides not to take responsibility for the work of a component auditor who audited a 70% owned subsidiary and issued an unqualified opinion the total assets and revenues of the subsidiaries are 5% and 8% respectively of the total assets and revenues of the entity being audited

A

Other

Modify existing paragraphs

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7
Q

A client changed its a depreciation method for production equipment from the straight-line method to the units of production method based on hours of utilization auditor concurs with the change

A

Unmodified with an emphasis of matter paragraph

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8
Q

A client changed its depreciation method for production equipment from the straight line to a units of production method based on hours of utilization the auditor does not concur with the change

A

Qualified or adverse

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9
Q

A client uses the specific identification method of accounting for valuable items in inventory and Lifo for less valuable items. The auditor concurs that this is a reasonable practice

A

Standard unmodified

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10
Q

Due to recurring operating losses and working capital deficiencies in auditor and substantial doubt about an entity’s ability to continue as a going concern for a reasonable. Of time the notes to the financial statements adequately disclose the situation

A

Unmodified with an emphasis of matter paragraph or disclaimer

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11
Q

A company valued in its inventory at current replacement cost. while the auditor believes that the inventory costs to approximate replacement costs these costs to not approximate any gaap inventory valuation method

A

Qualified or adverse

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12
Q

A client’s financial statements follow gaap but the auditor wishes to emphasize in his audit report a significant related party transaction that is adequately described in the notes to the financial statements

A

Unmodified with an emphasis of matter paragraph

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13
Q

A client’s financial statements follow gaap except that they do not include a note on a significant related party transaction

A

Qualified or adverse

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14
Q

A client changed from the method that uses to calculate post employment benefits from one acceptable method to a non-gaap method that affected the changes in material this year but expected to be material in the future

A

Standard unmodified

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15
Q

A client changed the salvage value of certain assets from 5% to 10% of original cost the auditor concurs with the change

A

Standard unmodified

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16
Q

A client is issuing two years of comparative financial statements the first year was audited by another auditor who’s being asked to reissue her audit report reply as a successor Auditors report

A

Other

17
Q

Scope limitation

A

Qualified or disclaimer

Disclaimer if substantial

18
Q

Substantial doubt the notes in the financial statements adequately disclose the substantial doubt situation

A

Unmodified with an emphasis of matter paragraph or disclaimer

19
Q

An auditor was hired after year-end and was unable to observe the counting of the year-end inventory she is unable to apply other procedures to determine whether ending inventory is properly stated

A

Qualified or disclaimer

20
Q

You decide to rely upon the component Auditors work

A

Standard unmodified

21
Q

A client omits a note disclosure related to a significant accounting policy that the auditor believes to be fundamental two users understanding of the financial statements

A

Adverse

22
Q

Adverse

A

Financial statement departure from gaap

Pervasive or substantial or fundamental

23
Q

Disclaimer

A

No opinion

significant scope limitation

24
Q

Qualified

A

Fairly good except for there is a departure from gaap or scope of limitation

25
Q

Standard unmodified

A

Clean opinion

26
Q

Unmodified with emphasis of matter paragraph

A

Refers to a matter of appropriately presented in financial statements

27
Q

Type 1

A

Conditions existed during first year but didn’t know enough information at the time

Examples lawsuit settlement or bankruptcy of client

28
Q

How to handle type 1

A

Have clients adjust financial statements

29
Q

Type 2

A

Conditions didn’t exist until December 31st

New information that happened in the subsequent period

Example fire or flood

30
Q

How to handle type 2

A

Notes in financial statements to provide disclosure

31
Q

PERCCV - Management assertion

A 
Presentation 
Existence 
rights 
cutoff 
completion 
valuation
32
Q

Voucher system

A

Prepared by A/P

Requires purchase order, receiving report and invoice

33
Q

Are confirmations of accounts receivable required?

A

Yes

Concerned with existence

34
Q

Are confirmations of accounts payable required?

A

No

Concerned with the completeness because it’s a liability

35
Q

Accounts receivable confirmation

A

Look at largest outstanding balances at year end

36
Q

Accounts payable confirmation

A

Look at largest total purchase amount from throughout the year

ACC 450 (1 decks)

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