Chapter 12 Reading

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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


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