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Yaeger AUD > Mod 5 Wrong Answers > Flashcards

Mod 5 Wrong Answers Flashcards

0
Q

An auditor may issue an opinion on a balance sheet only and doesn’t need to…

A

Include an emphasis of matter paragraph in their report

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1
Q

Substantial doubt about the entity’s ability to continue as a going concern leads to either…

A

An unmodified report with an emphasis of matter paragraph

Or disclaimer of opinion

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2
Q

A management plan that an auditor would positively consider when a question concerning an entity’s ability to continue as a going concern exists is…

A

Increasing equity ownership, because it will bring in more funds
To overcome financial difficulties

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3
Q

A management plan that an auditor would not consider when a question concerning an entity’s ability to continue as a going concern exists is…

A

Reducing lines of credit, because this will not provide sufficient
Funds

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4
Q

Postponing expenditures for research and development may…

A

Mitigate entity’s going concern situation

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5
Q

With a going concern issue there is no guarantee that discussions with lenders…

A

Will lead to restructuring and loan agreements

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6
Q

A change in the useful life of assets is a change of estimate, and a change of estimate…

A

Does not result in a consistency modification

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7
Q

Management’s lack of responsible justification for a change in accounting principle is…

A

A departure from GAAP

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8
Q

An unjustified accounting change will result in either…

A

A qualified or adverse opinion, no emphasis of matter paragraph
would result

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9
Q

Material weakness will ordinarily result ( in terms of reporting) in…

A

No report modification

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10
Q

Change in accounting principles leads to…

A

An unmodified opinion with an emphasis of matter paragraph

Added to the report

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11
Q

Inadequate disclosure of a going concern issue is…

A

A departure from GAAP

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12
Q

Identify the information included in the opinion paragraph of an auditor’s report that is qualified due to a major inadequacy in the computerized accounting records

A

Opinion paragraph indicates exception is due to possible effects
On financial statements

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13
Q

When the opinion paragraph of an auditor’s report is qualified due to a major inadequacy in the computerized accounting records there is no indication that…

A

There is inadequate disclosure of necessary information

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14
Q

When an auditor makes reference to the report of another auditor there is…

A

No additional paragraph added to the report

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15
Q

What type of auditor’s report should be issued when financial statements of an entity that follows GASB standards include a justified departure from GAAP?

A

Unmodified opinion, including separate emphasis of matter

Paragraph explaining departure from GAAP

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16
Q

The predecessor auditor should obtain a representation letter from…

A

Both management and the successor auditor

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17
Q

AU-C 720, states that if a material inconsistency exists and the client refuses to revise the other information the auditor should…

A

Include an emphasis of matter paragraph that explains the

Inconsistency

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18
Q

AU-C 720, states that if a material inconsistency exists and the client refuses to revise the other information. Financial statements in this circumstance are…

A

Not misstated

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19
Q

Identify a situation where the auditor’s report would refer to a basis of accounting other than GAAP under AU-C

A

Reports on compliance with aspects of regulatory requirements
Related to audited financial statements

as special purpose financial reporting frameworks

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20
Q

The objective of a review of financial information is to…

A

Provide a basis for reporting on whether material modification
Should be made to conform with GAAP

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21
Q

An accountant’s review report is not part of…

A

The registration statement within the meaning of Section 11 of
The Securities Act of 1933

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22
Q

In regards to an independent accountant’s review report on interim financial information presented in a registered statement, under certain conditions an accountant is…

A

Required to update the report

23
Q

Circumstances which lead to a modification of an interim report include…

A

Departure from GAAP

24
Q

Circumstances which lead to a modification of an interim report consists of departure from GAAP, which includes…

A

Inadequate disclosure

25
Q

What 3 situations would ordinarily not cause a modification of a review report?

A

1 uncertainty

2 lack of consistency

3 reference to another accountant (not considered a modification)

26
Q

Professional standards require that a review report include…

A

A description of procedures performed

27
Q

For a review report information was…

A

Reviewed, not examined, in accordance with standards of PCAOB

28
Q

Determine the circumstance under which an auditor may report on summary financial statements that are derived from complete audited financial statements.

A

Report may be issued when information in summary financial statements is fairly stated in all material respects in relation to FS

29
Q

Summary financial statements need not be…

A

Distributed with the complete financial statements

30
Q

Determine the appropriate reference to an independent accountant
In a prospectus (relating to an SEC registration statement) that includes a statement about the auditor’s involvement with the independent audit report.

AU-C 920 indicates that the independent accountant is…

A

An expert in auditing and accounting

31
Q

In a comfort letter, auditors provide…

A

An opinion as to whether the audited financial statements

Comply in form with the accounting requirements of the SEC

32
Q

Negative assurance concerning whether the entity’s internal control procedures operated as designed during the period is…

A

Not provided in the comfort letter

33
Q

What is an auditor’s reporting responsibility when asked by a prospective client to render an opinion on the application of accounting principles to a specific transaction?

AU-C 915 indicates that The report must include a statement that…

A

any difference in the facts, circumstances or assumptions presented may change the report as well as various other disclosures

34
Q

an auditor is asked by a prospective client to render an opinion on the application of accounting principles to a specific transaction.

The report need not indicate it is…

A

For management use only

35
Q

Suitable criteria may be…

A

Available publicly in the CPA’s report

36
Q

Suitable criteria may be included with…

A

The subject matter or in the assertion

37
Q

In an agreed upon procedure the specified party does not…

A

Take responsibility for sufficiency of procedures

38
Q

The agreed upon procedures report provides…

A

Procedures performed and findings

39
Q

The agreed upon procedures report does not provide…

A

Limited assurance

40
Q

Attestation standards explicitly exclude…

A

Expert witness work

41
Q

Attestation standards include…

2) what should be noted?

A

The compilation of a financial projection

2) in most areas compilations are not included in Attestation
Standard coverage

42
Q

In the area of prospective financial statements, Attestation standards have coverage of…

A

Prospective financial statement forecasts and objectives

43
Q

Identify the type of general use prospective financial statement on which the accountant may appropriately report.

A

Financial forecasts are considered prospective financial statements
And their are appropriate for general use

44
Q

Financial projections are only appropriate for…

A

The party preparing them or for third parties with whom the
Responsible party is negotiating directly

45
Q

What do Attestation standards indicate are embodied assertions in MD&A?4

A

1 consistency with financial statements
2 occurrence
3 completeness
4 presentation and disclosure

46
Q

Reliability is…

A

Not an embodied assertion in MD&A

47
Q

When management has properly disclosed an instance of material noncompliance, AT 601 states that the opinion should…

2) AT 601 requires the CPA’s report to…

A

be qualified or adverse

2) relate directly to the subject matter when the opinion is modified

48
Q

Scope of a governmental (yellow book) audit in addition to financial statements, such an audit may include consideration of…3

A

1 program results

2 compliance with laws and regulations

3 economy and efficiency

49
Q

Performing an audit in accordance with government auditing standards (yellowbook) is required to report on…

A

Scope of auditor’s testing of internal controls

50
Q

In a financial statement audit conducted in accordance with Government Auditing Standards (the Yellow Book) the auditor…

A

Issues a report on compliance with laws and internal control

And a report on financial information

51
Q

Government Auditing Standards (yellow book) require documentation of…

A

Supervisory review before the report is issued

52
Q

The AICPA Accounting and Audit Guide, Audits of State and Local Governmental Units, requires the…

A

Communication of weaknesses that are material in relation to

The federal financial assistance program

53
Q

What is an auditor’s responsibility when auditing a not for profit entity that receives governmental assistance?

AU-C 806 requires that the auditor…

A

Assess whether management has identified laws and regulations
That have a direct and material effect on the entity’s FS

54
Q

According to AU-C 806, in the auditor’s assessment of a not for profit the receives governmental financial assistance, the CPA…

A

Does not express an opinion on the entity’s continued eligibility
For governmental financial assistance

Yaeger AUD (38 decks)

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