27509893
Description
Quiz by Kayla Harbaugh, updated more than 1 year ago
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Created by Kayla Harbaugh
about 4 years ago
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Question 1
Question
Audit reporting standards for financial statement and integrated audits require auditors to provide which of the following?
Answer
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a. No assurance.
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b. Materiality assurance.
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c. Negative assurance.
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d. Positive assurance.
Question 2
Question
Which of the following statements is true regarding audit reporting?
Answer
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a. The auditor should provide an opinion based on the audit evidence obtained.
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b. Auditing standards require auditors to provide positive assurance.
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c. The auditor's opinion should state whether the financial statements are presented fairly.
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d. All of the above statements are true.
Question 3
Question
According to the AICPA's audit reporting principles, which of the following is incorrect?
Answer
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a. The purpose of an audit is achieved when an auditor expresses an opinion on the financial statements.
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b. The auditor expresses an opinion as to whether the financial statements are free of material misstatement or states that an opinion cannot be expressed.
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c. The purpose of an audit is to enhance the degree of confidence that users can place in the financial statements.
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d. The auditor provides positive assurance that the financial statements are free of errors, either intentional or unintentional.
Question 4
Question
Which of the following is an example of the contents of an opinion paragraph found in an unqualified audit report?
Answer
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a. "The financial statements referred to above present fairly..."
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b. "Nothing came to our attention..."
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c. "We have audited...."
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d. "An audit includes examining, on a test basis..."
Question 5
Question
If the auditor has no reservations about the fairness of the financial statements but believes there is a remote possibility that resolution of an uncertainty will have a material effect on the financial statements, which of the following would the auditor issue?
Answer
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a. A disclaimer of opinion.
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b. An adverse opinion.
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c. An unqualified opinion with no report modifications.
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d. An unqualified opinion with explanatory paragraphs.
Question 6
Question
Audit reports are designed to promote clear communication between the auditor and the financial statement user. Which of the following is not delineated in the audit report?
Answer
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a. The nature of the audit opinion formulation process.
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b. The auditor's opinion on the fairness of the financial statements.
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c. The experience level of the audit team.
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d. What was audited and the relative responsibilities of the client and the auditor.
Question 7
Question
If the auditor decides to draw attention to large related party transactions occurring in the financial statements of the client, which report will most likely be issued?
Answer
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a. Adverse opinion.
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b. Consolidated opinion.
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c. Qualified opinion.
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d. Unqualified opinion with an explanatory paragraph.
Question 8
Question
A client company has a history of negative cash flow trends and continuing losses. Which type of opinion will the auditor most likely issue?
Answer
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a. Unqualified with explanatory language.
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b. Disclaimer of opinion.
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c. Adverse.
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d. Qualified.
Question 9
Question
In which one of the following cases would an auditor most likely issue a qualified opinion?
Answer
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a. There is an immaterial dollar misstatement on the financial statements.
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b. There is one material departure from GAAP that affects only two accounts.
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c. There is a highly material, and very pervasive departure from SFAS No. 141 and No. 142.
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d. There is a change in accounting principles promulgated by the FASB.
Question 10
Question
Qualified opinions can only be issued by auditors for which of the following?
Answer
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a. Violations of GAAP.
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b. Scope limitations.
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c. Going concern.
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d. Lack of independence.
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e. Either A or B.
Question 11
Question
Which of the following is an example of circumstances that would not limit the audit scope?
Answer
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a. The timing of the fieldwork.
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b. An inadequacy in the accounting records.
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c. Emphasis of an important matter.
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d. The inability to gather sufficient competent evidence.
Question 12
Question
Adverse opinions can only be issued by auditors based on which of the following?
Answer
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a. Violations of GAAP.
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b. Scope limitations.
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c. Going concern.
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d. Lack of independence.
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e. Either B or D.
Question 13
Question
An audit of the Flagler Company, a diamond mining company, brings to light the fact that its equipment has been marked up to the owners' expectation of market values. Such a situation will most likely result in which type of opinion?
Answer
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a. Review.
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b. Adverse.
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c. Unqualified with explanatory language.
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d. Disclaimer.
Question 14
Question
In which one of the following instances would an auditor most likely issue an adverse opinion?
Answer
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a. There is substantial doubt about the entity's ability to continue as a going concern.
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b. Management declines to present earnings per share in the income statement.
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c. There is a material dollar misstatement that is pervasive in the financial statements.
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d. The client does not allow the auditor to send confirmations to its three largest customers.
Question 15
Question
In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?
Answer
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a. There is substantial doubt about the entity's ability to continue as a going concern.
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b. The financial statements are not in conformity with FASB requirements regarding the capitalization of leases.
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c. The client has had significant transactions with related entities that the auditor wants to emphasize.
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d. The auditor is not independent.
Question 16
Question
In which one of the following instances would an auditor most likely issue a disclaimer of opinion?
Answer
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a. Management declines to provide a statement of cash flows.
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b. The auditor is unable to confirm receivables but performs alternative procedures.
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c. Management will not sign a management representation letter.
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d. The auditor is independent of the client.
Question 17
Question
In which one of the following instances would an auditor not issue a disclaimer of opinion?
Answer
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a. There are significant misstatements in the financial statements.
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b. There is a significant limitation on the scope of the engagement.
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c. The auditors are not invited to observe the periodic inventory at year-end.
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d. There is insufficient evidence for the auditor to form an opinion on the fairness of the financial statements.
Question 18
Question
When an auditor lacks independence with respect to a client, which of the following should the auditor issue?
Answer
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a. A qualified opinion with explanatory paragraph.
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b. A disclaimer of opinion.
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c. An unqualified opinion.
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d. An adverse opinion.
Question 19
Question
Disclaimers of opinion can only be issued by auditors based on which of the following?
Answer
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a. Violations of GAAP.
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b. Substantial scope limitations.
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c. Going concern.
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d. Lack of independence.
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e. Either B or D.
Question 20
Question
A justified departure from GAAP may result in which of the following?
Answer
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a. A qualified opinion.
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b. A disclaimer of an audit opinion.
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c. An adverse opinion.
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d. An unqualified audit opinion with an explanatory paragraph.
Question 21
Question
An emphasis of a matter may result in which of the following?
Answer
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a. An adverse opinion.
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b. A disclaimer of an audit opinion.
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c. A qualified audit opinion.
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d. An unqualified audit opinion with an explanatory paragraph.
Question 22
Question
When there is a restriction on the scope of the internal control over financial reporting (ICFR) engagement, what should the auditor do?
Answer
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a. The auditor will report this directly to the Treadway Commission.
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b. The auditor will either withdraw from the engagement or disclaim an opinion.
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c. The auditor will issue an opinion on the ICFR based on another audit firm's work.
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d. The auditor will issue an adverse opinion.
Question 23
Question
After an audit report is issued, the auditor discovers through a peer review that an important audit procedure has been omitted. In this case, what should the auditor do?
Answer
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a. Notify all parties known to be relying on the report.
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b. Contact his or her professional liability insurance carrier.
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c. Immediately request the client recall the report.
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d. Determine whether the report can still be supported in light of the omitted procedure.
Question 24
Question
If the auditor failed to confirm receivables when that should have been done and it may be too late to confirm now, what should the auditor do?
Answer
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a. Issue a disclaimer of opinion.
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b. Automatically decide that the previously issued audit report cannot be supported in light of the omitted procedures.
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c. Extend the previous work done on subsequent collections to help determine that the receivables existed and were properly valued at the balance sheet date.
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d. Issue an adverse opinion.
Question 25
Question
How would the auditor categorize a situation when the financial statements do not contain a note the auditor believes is necessary for fair presentation?
Answer
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a. A scope limitation.
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b. A departure from GAAP.
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c. An act discreditable.
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d. An uncertainty.
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