Chapter 17: Auditors' Reports

Form AP must be filed with the PCAOB within ______ days of the date the audit report is first included in a document filed with the SEC. -10 -90 -35 -45

-35

To evaluate whether there is substantial doubt about a client's ability to continue as a going concern, auditors should ______. -inquire of employees as to their opinion of the company's ability to continue -design separate audit procedures to be performed at the end of the audit -consider results of audit procedures performed during the audit

-consider results of audit procedures performed during the audit

True or false: An auditor is required to add an emphasis-of-matter paragraph for all uncertainties. -True -False

-False

When the auditors have obtained sufficient appropriate audit evidence to conclude that the financial statements, taken as a whole, are not materially misstated and there is no need to disclose additional information, they will issue a(n) __________(1) opinion. (Enter only one word per blank.)

(1) unmodified

Disclosure requirements come from pronouncements issued by ______. -AICPA -FASB -GASB -PCAOB

-FASB -GASB

The nature of an audit is outlined in the section called ______. -introduction -auditor's responsibility -management's responsibility for the financial statement -opinion

-auditor's responsibility

In a shared responsibility report, the ______ sections of the audit report are modified. -auditor's responsibility -management's responsibility -introduction -opinion

-auditor's responsibility -opinion

The PCAOB audit report for large public companies includes an additional paragraph indicating ______. -more detailed discussion of the responsibility of auditors in a PCAOB audit -auditors also have issued a report on the client's internal control over financial reporting -auditors are independent of the client and the board of directors

-auditors also have issued a report on the client's internal control over financial reporting

The unmodified report is divided into sections with headings that include all of the following except ______. -auditor's responsibility -introduction -management's responsibility for the financial statement -opinion

-introduction

The complete set of financial statements generally include a(n) ______. -balance sheet -income statement -statement of budget to actual expenditures -statement of cash flows -trial balance report

-balance sheet -income statement -statement of cash flows

Publicly owned companies are required to include ______ for each of the last two years in their annual reports. -statements of retained earnings -balance sheets -statements of cash flows -statements of income

-balance sheets

The term "other-matter paragraph" is used by ______. -nonpublic companies only -public companies only -neither public nor nonpublic companies -both public and nonpublic companies

-nonpublic companies only

When two or more CPA firms are involved in the audit of group financial statements, the unmodified opinion audit report is ______ modified to include reference to CPA firms considered component auditors. -sometimes -never -always

-sometimes

The unqualified audit report for audits of public companies should reference ______. -international auditing standards -the standards of the PCAOB -generally accepted accounting principles -generally accepted auditing standards

-the standards of the PCAOB

Auditors must modify the audit report if ______. -there are material departures from GAAP -the auditors choose to omit certain procedures or perform alternative procedures when gaining evidence -there is a lack of consistency in the application of GAAP -the auditors are unable to obtain sufficient appropriate audit evidence

-there are material departures from GAAP -there is a lack of consistency in the application of GAAP -the auditors are unable to obtain sufficient appropriate audit evidence

The purpose of notes to financial statements is to ______. -correct improper financial statement presentation -comply with GAAS requirements -properly disclose information required by GAAP

-properly disclose information required by GAAP

Auditors evaluate changes in accounting principles to determine if ______. -the method of accounting for the effect of the change is in conformity with GAAP -the change improves the reported results of the company -the disclosures related to the change are adequate -the newly adopted principle is generally accepted

-the method of accounting for the effect of the change is in conformity with GAAP -the disclosures related to the change are adequate -the newly adopted principle is generally accepted

Audit reports with an unmodified opinion for nonpublic companies could state that the audit was performed in accordance with AICPA generally accepted auditing standards, while the audit report for public companies refer to PCAOB standards. Both reports are modified if: -financial statements are in conformity with the appropriate financial reporting framework. -there are no material departures from GAAP in the client's financial statements. -the auditors are able to obtain sufficient appropriate audit evidence. -there are conditions, although not departures from GAAP, about which the readers of the financial statements should be informed.

-there are conditions, although not departures from GAAP, about which the readers of the financial statements should be informed.

Disclosure of the engagement partner's name and certain information about other CPA firms that participated in the audit is required by PCAOB __________(1) __________(2).

(1) Form (2) AP

Financial statements are generally presented in __________(1) form for the current year and one or more preceding years. (Enter only one word per blank.)

(1) comparative

Financial statements that cover one or more prior periods are called __________(1) financial statements. (Enter only one word per blank.)

(1) comparative