SU 15 Opinions And disclaimers

Question 1

Qualified or Adverse opinion

Answer 1

FS as a whole are materially misstated.

Question 2

Qualified or disclaimer

Answer 2

Unable to obtain sufficient appropriate evidence

Q: material and not pervasive
D: material and pervasive

Question 3

When are misstatements considered material?

Answer 3

If they influence the judgement of a reasonable user.

Question 4

Does the auditor express an opinion on the effectiveness of internal control?

Answer 4

No.

Question 5

What are auditors required to communicate to those charged with governance?

Answer 5

Planned scope and timing of the audit
Significant audit findings
Certain internal control matters

Question 6

Auditors report

Answer 6

Signature: manual or printed
Date: no earlier than date sufficient appropriate audit evidence was obtained

Question 7

Nonissuer audit report is in accordance with?

Answer 7

In accordance with GAAS (AICPA)

Question 8

Issuer Audit report is in accordance with?

Answer 8

In accordance with PCAOB

Question 9

Issuer audit report has a CAM section ( critical audit matters)

Answer 9

CAM: had to be communicated to the audit committee, related to material items, challenged auditor judgment

Question 10

Issuer audit report

Answer 10

Requires auditors tenure

Question 11

Financials are materially misstated

Answer 11

Qualified: Material but not pervasive

Adverse: material and pervasive

Question 12

Inability to obtain sufficient appropriate evidence

Answer 12

Qualified: material but not pervasive

Disclaimer of Opinion: material and pervasive

Question 13

Qualified opinion

Answer 13

“Except for the matter described in the report the FS are presented fairly.” Represents a misstatement or omission that is not pervasive.

Question 14

Adverse opinion

Answer 14

The auditor has obtained sufficient appropriate evidence but the misstatements are material and pervasive.

Question 15

Who should the report be addressed to?

Answer 15

Aicpa: addressed to those for whom the report is prepared

PCAOB: shareholders and board of directors and others

Question 16

What’s dual dating?

Answer 16

When a subsequent event in the FS occurs after the date of the auditors report but before the report release date, the auditor may dual date the report.

Use Original date: for matters prior to the subsequent event

Use Later date: matters affected by the subsequent event.

OR:
The auditor may accept responsibility for all events after the original report date and use the later date for the entire report. This is called a reissued report.

Question 17

What’s a scope limitation?

Answer 17

The inability to obtain sufficient appropriate evidence

Question 18

Examples of material but not pervasive misstatements

Answer 18

Inappropriate selection and/or application of accounting principles

Unjustified change in accounting principles

Inadequate disclosure

Failure to provide a basic statement like stmt of cash flows

Question 19

T or F. In addition to limitations imposed by mgmt, an auditor may express a qualified opinion for circumstances related to work.

Answer 19

True. Ex: destruction or govt seized acct records, not being able to observe inventory due to late auditor appointment, can’t get investee financials, or ineffective controls.

Question 20

When an auditor qualifies an opinion due to a scope limitation…

Answer 20

The words in the opinion section, state the qualification pertains to the possible effects on the FS, not the scope limitation itself.