subject: auditing (act480)

Question 2 (35 Points) Please choose the suitable audit report opinion for the following situations. (5 points per situation) 1. Standard Unmodified Opinion 2. Unmodified Opinion with an emphasis-of-matter or nonstandard wording 3. Qualified Opinion 4. Adverse Opinion 5. Disclaimer of Opinion Suitable Situation Opinion Type Client has a very specific process and financial reporting practice needs a justified departure from IFRS. The amounts are immaterial. A scope limitation from the client prevents the auditor from finalizing an audit procedure for accounts receivable with material balance. Auditor relied upon another CPA firm to perform a material part of the audit. Client changed its depreciation from Double Declining to Straight Line in 2021. Auditor concurred with the change and balances are material. The client fails to appropriately calculate impairment for obsolete inventories. The amount of misstatement is immaterial. Client is facing a financial problem in the last quarter of 2021. According to the auditor's estimation, the client can survive through this problem but the situation is on material level. Four days before the end of audit, partner auditor discovered that the audit manager on the client engagement owns an immaterial amount of client's common stock. Question 3 (50 Points) Risk Sales and Collection Payroll and Acquisition and Cycle Personnel Cycle Payment Cycle Many Few Misstatement Expectation Some misstatements misstatements misstatements Inherent Risk Level Internal Control Effective- Low Medium effectiveness effectiveness High effectiveness Control Risk Level Acceptable Audit Risk Low willingness Low willingness Assessment Low willingness Acceptable Audit Risk Level Planned Detection Risk Planned Audit Evidences a. Fill in the blanks for planned detection risk and planned evidence using the terms low, medium, or high. (30 points, 2 points per each cell) b. Please explain why "Acceptable Audit Risk Level" should not be "medium." (20 Points, 150 words minimum) ness