MCQ Audit Homework 1.3

Question 1

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Answer 1

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Question 2

Group engagement partner work

Answer 2

Under US gaap The group engagement partner makes reference in the audit report to the work of the competent auditor when the group engagement partner is unable to review the competent auditors documentation. This is because group engagement partner will be unable to be satisfied concerning the work performed by competent auditor,
Under ISA no refrence is made unless required by laws and regulation

Question 3

When assessing management plans of dealing with adverse effects of future conditions and events Mitigating factors include

Answer 3

The postponement of expenditures
Plan to dispose assets
plan to borrow
Plan to increase equity

Question 4

Consistancy in financial statements

Answer 4

implicitly reported

Question 5

An except for qualification

Answer 5

Is used for scope limitation or a departure from GAAP

Question 6

Adverse Opinion

Answer 6

An adverse opinion is issued when the financial statements are not presented in accordance with GAAP

Question 7

When disclaiming an opinion because of scope limitation

Answer 7

The auditor should indicate in a separate paragraph the reasons that the audit did not comply with GAAS.

Question 8

When an auditor qualifies his opinion because of scope limitation

Answer 8

The wording in the opinion paragraph sould indicate the qualificaions pertains to the possible effects int he financial statements and not to the scope limitation itself.

Question 9

Going concern doubts

Answer 9

Emphasis of matter paragraph

Question 10

Engagement Letter

Answer 10

The auditor sends the engagement letter to the client not vice versa

Question 11

scope limitations

Answer 11

scope limitations either result in qualified opinion or disclaimer of opinion

Question 12

Going concern -Substantial doubt

Answer 12

GAAS- Use the wordings going concern and substantial doubt

ISA- the report use the phase significant doubt

Question 13

Disclaimer of opinion

Answer 13

When there is significant acope limitation when the auditor is not independent or when the financial statements not audited

Question 14

Under US GAAS

Answer 14

If the group auditor chooses to assume responsibility no reference to the competent auditor is made Division of responsibility is not permitted under ISA

Question 15

Going concern period under ISA’s

Answer 15

At least one year from the date of financial statements being audited

Question 16

consistancy

Answer 16

is implied in the auditors report and explicitly stated in a emphasis of matter pharagraph