Reports on Audited Financial Statements

Question 1

What should the auditor evaluate based on the applicable financial reporting framework?

Answer 1

Adequately disclose, consistent, accounting estimates are reasonable, information is relevant, reliable, comparable, and understandable, understand the effect of material transactions and events, terminology is appropriate, fairly presented, and represent the underlying transactions and events

Question 2

What are the sections of the audit report?

Answer 2

Title, Addresse, Introductory paragraph, Management’s responsibility for the financial statements, Auditor’s responsibility, Auditor’s opinion, Other Reporting Responsibilities, Signature of the Auditor, Auditor’s Address, and Date of the Auditor’s Report

Question 3

The statement of management’s responsibility should include?

Answer 3

Design, Implementation, and Maintenance

Question 4

Auditor’s responsibility paragraph should include?

Answer 4

Responsibility to express an opinion, Conducted in accordance with auditing standards, Plan and perform the audit to obtain reasonable assurance, Performing procedures to obtain audit evidence, Assessment of the risks of material misstatement, Test internal control, Fair presentation of the financial statements, Control, Reasonableness, Accounting estimates, Management, and Evaluating overall presentation

Question 5

The statement for the auditor’s opinion should include?

Answer 5

The financial statements present fairly, in all material respects, the financial position of the entity as of the balance sheet date and the results of operations and its cash flows for the period then ended, in accordance with the applicable financial reporting framework.

Question 6

What should the date of the auditor’s report be?

Answer 6

The date on which the auditor has obtained sufficient appropriate audit evidence.

Question 7

What standards should be used for audits of issuers?

Answer 7

Standards of the Public Company Accounting Oversight Board

Question 8

What standards should be used for audits of nonissuers?

Answer 8

auditing standards generally accepted in the United States of America

Question 9

What paragraph refers to GAAS?

Answer 9

Auditor’s Responsibility Paragraph(Scope)

Question 10

What paragraph refers to GAAP?

Answer 10

Opinion Paragraph

Question 11

What is a component?

Answer 11

An entity

Question 12

What is an auditor who performs work on the financial information?

Answer 12

Component auditor

Question 13

Who is the partner or other person in the firm who is responsible for the group audit engagement?

Answer 13

Group engagement partner

Question 14

What includes the group engagement partner, other partners, and staff who establish the overall audit strategyh, communicate with component auditors, and perform work?

Answer 14

Group Engagement Team

Question 15

What are financial statements that include the financial information of more than one component?

Answer 15

Group Financial Statements

Question 16

What are the characteristics a group engagement team must understand about each component auditor?

Answer 16

Reputation, independent, professional competence, and program steps

Question 17

Should the group engagement partner reference the component auditor if the partner decides to assume responsibility for the work?

Answer 17

No

Question 18

What type of problem should be labeled qualified or adverse?

Answer 18

GAAP

Question 19

What type of problem should be labeled qualified or disclaimer?

Answer 19

GAAS

Question 20

What paragraphs are used when additional information is needed without modifying the auditor’s opinion?

Answer 20

Emphasis-of-matter and Other-matter

Question 21

When should the auditor’s opinion be modified?

Answer 21

Materially misstated or unable to obtain sufficient appropriate audit evidence

Question 22

What paragraph is used when referring to a matter that is appropriately presented or disclosed in the financial statements and is of such importance that it is fundamental to the users’ understanding of the financial statements?

Answer 22

Emphasis-of-matter

Question 23

What are the reporting requirements for the Emphasis-of-matter paragraph?

Answer 23

After the opinion paragraph but before the other matter paragraph, heading “Empasis-of-matter”, describe the matter, and indicate that the auditor’s opinion is not modified

Question 24

When is an emphasis-of-matter paragraph required?

Answer 24

Going concern, consistency, changing prior opinion, and special purpose framework

Question 25

What paragraph refers to matters other than those presented or disclosed in the financial statements that are relevant to the user’s understanding?

Answer 25

Other-Matter

Question 26

What are the reporting requirements for the Other-Matter Paragraphs?

Answer 26

After the opinion and emphasis-of-matter paragraph, heading “Other-Matter, and describe the matter being emphasized

Question 27

What evidence should be examined for the basic principle of going concern?

Answer 27

Analytical procedures, debt compliance, minutes, inquiry, third parties, and subsequent events review

Question 28

What are conditions and events that may be indicative of substantial doubt?

Answer 28

Financial difficulties, internal matters, negative trends, and external matters

Question 29

What are mitigating factors for dealing with going concern conditions?

Answer 29

Borrow money, restructure debt, sell assets, delay or reduce expenditures, or increase ownership equity

Question 30

What terms must be included in the emphasis-of-matter paragraph for a going concern?

Answer 30

Substantial doubt and going concern

Question 31

What does it mean when the entity’s going concern disclosures are inadequate?

Answer 31

A departure from GAAP exists

Question 32

When should an auditor restrict the use of the written communication?

Answer 32

measurement or disclosure criteria that are suitable for only a limited number and a by-product report

Question 33

What are examples of GAAP problems?

Answer 33

Consistency change, inadequate disclosure, Departure/violation of GAAP, and unreasonable accounting estimate

Question 34

What changes in an audit report when expressing a qualified or adverse opinion?

Answer 34

Change in auditor’s responsibility paragraph, include a “Basis for Modification” paragraph, and opinion paragraph

Question 35

What are causes of scope limitations?

Answer 35

Circumstances and management

Question 36

What changes in an audit report when expressing a qualified or disclaimer opinion?

Answer 36

Change in auditor’s responsibility paragraph, include a “Basis for Modification” paragraph, and opinion paragraph

Question 37

What other paragraph must be amended when a disclaimer of opinion is expressed?

Answer 37

Introductory paragraph

Question 38

What type of opinion is given when there is no audit work?

Answer 38

No audit opinion