Question

MULTIPLE-CHOICE QUESTIONS
1. In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?
a. Information comes to the auditor's attention that raises substantial doubt about the company's ability to continue as a going concern.
b. The auditor is denied access to minutes of board of directors' meetings by the client.
c. Tests of controls indicate that the organization's ICFR is ineffective.
d. The financial statements are not in conformity with FASB requirements regarding the capitalization of leases.

2. When an auditor issues an adverse opinion, which of the following should be included in the opinion paragraph?
a. The reasons that the financial statements are misleading.
b. A reference to a separate paragraph that describes the reason for the adverse opinion.
c. A statement that indicates that the financial statements are fairly stated except for a reason that is described in the separate paragraph.
d. The financial statement effects of the departure from GAAP.

3. When disclaiming an opinion because of a client-imposed scope limitation, which of the following is false regarding changes that would be made to the audit report?
a. The auditor would indicate in a separate paragraph why the audit did not comply with professional auditing standards.
b. The auditor would omit the scope paragraph.
c. The auditor would modify the introductory paragraph.
d. The auditor would omit the opinion paragraph.

4. In which of the following situations would a disclaimer of opinion not be appropriate?
a. The auditor is not independent.
b. The client imposed a substantial restriction on the scope of the audit.
c. The financial statements have a departure from GAAP that is not justified.
d. A disclaimer of opinion would be appropriate in all of the above situations.
5. In which of the following situations would an auditor usually choose between issuing a qualified opinion and issuing a disclaimer of opinion?
a. Departure from GAAP.
b. Inadequate disclosure of accounting policies.
c. Inability to obtain sufficient appropriate evidence for a reason other than a management-imposed scope restriction.
d. Unreasonable justification for a change in accounting principles.

6. Tread Corp. accounts for the effect of a material accounting change prospectively, when the inclusion of the cumulative effect of the change is required in the current year. The auditor would choose which of the following opinions?
a. Qualified opinion or a disclaimer of opinion.
b. Disclaimer of opinion or an unqualified opinion with an explanatory paragraph.
c. Unqualified opinion with an explanatory paragraph or an adverse opinion.
d. Qualified opinion or an adverse opinion.

7. The auditor of a large U.S. public company has determined that a material weakness exists in the client's ICFR. Which of the following statements is true?
a. Such a weakness requires an adverse opinion of the financial statements.
b. The auditor should express an adverse opinion on internal controls only if a material misstatement was found in the financial statements.
c. The auditor should express an adverse opinion on internal controls, even though no material misstatements were found in the financial statements.
d. The auditor is not required to express an opinion on internal controls.

8. In which of the following situations would the auditor modify the audit report on ICFR?
a. The auditor identifies multiple unrelated significant deficiencies in ICFR.
b. The auditor concludes that management's report on ICFR is not complete or is improperly presented.
c. The auditor relies on the work of other auditors, but decides not to include a reference to the other auditors.
d. The auditor would modify the audit report on ICFR in all of the above situations.



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  • CreatedSeptember 22, 2014
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