Chapter 12 Reading
The auditors' report would express an adverse opinion when a(n) ____ ____ in ICFR
Blank 1: material Blank 2: weakness or weaknesses
Paragraphs that provide information relating to understanding the audit, auditor responsibility, or audit report are known as ____ - ____ paragraphs.
Blank 1: other Blank 2: matter
The four types of audit opinions are a(n) _____
Blank 1: unmodified or unqualified Blank 2: qualified or modified Blank 3: adverse
True or false: When auditors are engaged to examine and report on supplementary information, the conclusion will express an opinion on the information.
False
When two different auditors examined financial statements included in comparative years ______
When two different auditors examined financial statements included in comparative years ______
When group auditors decide to refer to the work and reports of component auditors, it is referred to as a(n) ____ of ____.
division of responsibility
When group auditors decide to refer to the work and reports of component auditors, it is referred to as a(n) _____ of _____
division of responsibility
Emphasis-of-matter and other-matter paragraphs may be collectively referred to as ____
explanatory paragraphs.
True or false: When auditors are engaged to examine and report on supplementary information, the conclusion will express an opinion on the information.
false
Required SEC financial information ______.
is filed using Form 10-K includes audited financial statements must be filed within 60 to 90 days of the end of the fiscal year
When group auditors decide to refer to the work and reports of component auditors ______.
it is referred to as a division of responsibility the extent of the component auditors' work must be disclosed
When auditors believe something, such as a warning that a bankruptcy filing may be imminent, needs to be emphasized they ______.
may add additional paragraphs to their report
A departure from GAAP ______.
may be ignored if immaterial
When auditing public entities, auditors ______.
may either prepare separate reports or provide a single, combined report
An auditor issued a qualified opinion on 2018 and 2019 financial statements. When doing the audit of the 2020 financial statements the auditor ______.
may issue an unmodified opinion if appropriate
When a audit firm becomes the auditor of a company in 2020, the predecessor auditor ______ be referenced in the current audit report.
may or may not
Auditors may be engaged to examine and report on summary financial statements ______ audited the full financial statements.
only if they have
When companies present required supplementary information, auditors are required to expand their report to include an ______.
other-matter paragraph
SEC filing and audit requirements apply to ______.
public entities only
The phrase "except for" is used in ______.
qualified opinions only
When a scope limitation is material and alternative procedures cannot be performed, a(n) ______.
qualified or disclaimer of opinion must be issued
The standard auditors' report on the financial statements for nonpublic entities ______.
should have a title that stresses auditor independence is also referred to as the ASB report
A deficiency or combination of deficiencies important enough to merit attention to those charged with governance is identified as a(n) ____ deficiency.
significant
When group auditors decide to refer to the work and reports of component auditors ______.
the extent of the component auditors' work must be disclosed it is referred to as a division of responsibility
Which of the following statements is correct?
Auditors may add one or more paragraphs to a standard report to describe circumstances that present business or information risk.
Both prior-year audits and information that has come to the auditor's attention since then (particularly in the most recent audit) is the basis for a(n)
Auditors must have audited the full financial statements to accept. The report must refer to the audit report on the full financial statements.
Which of the following statements regarding engaging auditors to examine and report on summary financial statements are correct?
Auditors must have audited the full financial statements to accept. The report must refer to the audit report on the full financial statements.
The three sections of the PCAOB report are: Opinion of the Financial Statements; Basis for Opinion; and
Blank 1: Critical Blank 2: Audit Blank 3: Matters
True or false: Auditors cannot express different opinions on comparative years' financial statements in the same report.
False
SEC filing and audit requirements apply to ______.
SEC filing and audit requirements apply to ______.
True or false: Auditors cannot express different opinions on comparative years' financial statements in the same report.
a separate report on the information may be prepared an other-matters paragraph may be added to the audit report
When auditors are engaged to examine and report on supplementary information ______.
a separate report on the information may be prepared an other-matters paragraph may be added to the audit report
When other information is presented along with the financial statements, the auditors' report includes an Other Information section that includes ______.
a statement that management is responsible for the other information the audit team's responsibility with respect to the information a description of any material misstatements of the other information, if found
When two different auditors examined financial statements included in comparative years ______.
an other-matters paragraph can be used to reference the predecessor auditor the predecessor auditor's report should be included with the statements
With respect to required supplementary information included with the basic financial statements, auditors are required to ______.
compare information with the financial statements for consistency obtain written representations from management
The standard auditors' report on the financial statements for nonpublic entities ______.
is also referred to as the ASB report should have a title that stresses auditor independence
When there is a reasonable possibility that a material misstatement would not be prevented or deducted on a timely basis a(n) ______ exists.
material deficiency
When there is a reasonable possibility that a material misstatement would not be prevented or deducted on a timely basis a(n) ______ exists.
material weakness
When an annual report contains other information such as a president's letter or MD & A, the auditor ______.
must read the information and determine if it is consistent with audited financial statements
With respect to required supplementary information included with the basic financial statements, auditors are required to ______.
obtain written representations from management compare information with the financial statements for consistency
When no material issues are encountered during the audit and the financial statements are prepared in accordance with GAAP a(n) ____ audit report is appropriate
standard
When no material issues are encountered during the audit and the financial statements are prepared in accordance with GAAP a(n) ____ audit report is appropriate
standard or unmodified
When no material issues are encountered during the audit and the financial statements are prepared in accordance with GAAP a(n) ____ audit report is appropriate.
standard or unmodified
When a scope limitation is immaterial, a(n) ______.
standard report can be issued
When the auditor finds a departure from GAAP, a(n) ______.
standard report may still be appropriate
The Basis for Opinion paragraph on a PCAOB audit report ______.
states the firm is registered with the PCAOB indicates the responsibilities of the audit team indicates the responsibilities of management describes the audit
When two different auditors examined financial statements included in comparative years ______.
the predecessor auditor's report should be included with the statements an other-matters paragraph can be used to reference the predecessor auditor
When auditors issue a report on current-year financial statements ______.
they must consider if prior years' opinions are still appropriate auditor responsibility for comparative financial statements extend to the current audit report date
Both prior-year audits and information that has come to the auditor's attention since then (particularly in the most recent audit) is the basis for a(n) _____ report.
updated
If group auditors are satisfied with the independence and professional reputation of the component auditors, a standard report may be issued ______.
with the group auditors assuming full responsibility for the audit
