SB 12.1
When group auditors decide to refer to the work and reports of component auditors, it is referred to as a(n)
Blank 1: division Blank 2: responsibility
Paragraphs that provide information fundamental to understanding the entity's financial statements are known as - of - paragraphs.
Blank 1: emphasis Blank 2: matter
Emphasis-of-matter and other-matter paragraphs may be collectively referred to as
Blank 1: explanatory
When a large entity prepares consolidated statements that include more than one component, they are referred to as financial statements.
Blank 1: group
Matters communicated to those in charge of governance that are the most significant and may include areas of higher risk areas required significant judgment, or significant transactions or events are referred to as matters.
Blank 1: key Blank 2: audit
AU-C 705 refers to qualified opinions, adverse opinions, and disclaimers of opinion as
Blank 1: modified
Paragraphs that provide information relating to understanding the audit, auditor responsibility, or audit report are known as - paragraphs.
Blank 1: other Blank 2: matter
If a departure from GAAP is , affecting numerous accounts and financial statement relationships, or is material to the point that the financial statements as a whole are misleading a(n) opinion must be issued.
Blank 1: pervasive Blank 2: adverse
The four types of audit opinions are a(n) opinion, a(n) opinion, a(n) opinion and a disclaimer of opinion.
Blank 1: unmodified or unqualified Blank 2: qualified or modified Blank 3: adverse
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)
Blank 1: updated
The audit team is required to evaluate and express an opinion on the effectiveness of the entity's ICFR for ______.
issuers only
A departure from GAAP ______.
may be ignored if immaterial
Required SEC financial information ______.
must be filed within 60 to 90 days of the end of the fiscal year is filed using Form 10-K includes audited financial statements
When companies present required supplementary information, auditors are required to expand their report to include an ______.
other-matter paragraph
In some cases principal or group auditors perform the audit of a material portion of a consolidated entity's assets, liabilities, revenues and expenses and other independent, auditors may be engaged to audit divisions or subsidiaries that are included in the group financial statements
Blank 1: component
Auditors must communicate to those charged with the entity's governance ______ scope limitations.
any client-imposed
Which of the following statements regarding audit reports for public and nonpublic entities are correct?
The auditor's report and opinion on internal controls is only mentioned for public entities. The general content and message communicated by the reports contain many similarities.
When other information is presented along with the financial statements, the auditors' report includes an Other Information section that includes ______.
a description of any material misstatements of the other information, if found a statement that management is responsible for the other information the audit team's responsibility with respect to the information
When auditors issue a report on current-year financial statements ______.
auditor responsibility for comparative financial statements extend to the current audit report date they must consider if prior years' opinions are still appropriate
The date of the auditors' report is the date when the ______.
auditors have obtained sufficient evidence to support the opinion
A reissued report ______.
differs from an updated report does not consider events since the date the original report
When a scope limitation is encountered, the auditors' report will express a(n) ______ opinion on ICFR.
disclaimer of
Non-accelerated filers are required to ______.
have management reports on ICFR only
PCAOB standards require that the audit of ICFR be ______ the financial statement audit.
integrated with
When the design or operation of a control does not allow the entity's management or employees to detect or prevent misstatements in a timely fashion a(n) ______ exists
internal control deficiency
A non-accelerated filer ______ required to have an audit of its ICFR.
is not
Presenting balance sheets for two years and statements of income, changes in shareholders' equity and cash flow for three years in comparative format is required for ______.
issuers only
When the auditor finds a departure from GAAP that is sufficiently material to affect users' decisions, but the departure can be compartmentalized, the auditors ______.
must qualify the opinion
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
SEC filing and audit requirements apply to ______.
public entities only
The phrase "except for" is used in ______.
qualified opinions only
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
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.
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
Management's deliberate refusal to provide evidence is known as a(n) - imposed scope limitation and a situation beyond the auditors' and company's control is known as a(n) - imposed scope limitation
Blank 1: client Blank 2: circumstance
A departure from GAAP is when it can be isolated to a particular account group or transactions without materially affecting other accounts.
Blank 1: compartmentalized
Which of the following statement is correct?
The auditor's report on the effectiveness of an entity's internal controls is required for public entities only.
The Auditor's Responsibility section of the standard audit report for a nonpublic entity includes paragraphs indicating ______.
a description of the audit that audit evidence provided a basis for the opinion the audit team's responsibility to conduct the audit under GAAS
When a material weakness is ICFR is identified, the auditors' will issue a(n) ______ opinion.
adverse
When the auditor finds a pervasive departure from GAAP, a(n) ______.
adverse opinion must be issued
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
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
If a material departure from GAAP is noted during an audit examination of a public entity, the entity's financial statements and auditors' report would be classified as a(n) filing by the SEC and would not satisfy its reporting requirements
Blank 1: deficient
The auditors' report would express an adverse opinion when a(n) in ICFR is identified.
Blank 1: material Blank 2: weakness or weaknesses
When an auditor provides additional copies of a previous audit report or grants entities permission to use a previous report in another document sometimes after its original date, it is referred to as a(n)
Blank 1: reissued
When audit teams are unable to obtain sufficient appropriate evidence, either a client-imposed or circumstance-imposed exists.
Blank 1: scope Blank 2: limitation or limitations
The SEC requires issuers to present balance sheets for d , Incorrect Unavailable years and statements of income, changes in shareholders' equity, and cash flows for , Incorrect Unavailable years in comparative
Blank 1: two or 2 Blank 2: three or 3
True or false: Auditors cannot express different opinions on comparative years' financial statements in the same report.
False
True or false: If a material departure from GAAP is noted during an audit examination of an issuer, the financial statements may still be filed with the SEC to satisfy reporting requirements as long as the audit opinion is included.
False
True or false: The date on the audit reports indicates when the partner-in-charge approved of the audit materials.
False
True or false: When auditors are engaged to examine and report on supplementary information, the conclusion will express an opinion on the information.
False
If the audit key has been engaged to communicate key audit matters, they would do so in ______ section.
an additional Key Audit Matters
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
The Sarbanes-Oxley Act and Auditing Standards 2201 require ______ to prepare a report on the effectiveness of the entity's internal control over financial reporting.
both the management and the auditor
When the design or operation of a control does not allow the entity's management or employees to detect or prevent misstatements in a timely fashion a(n) ______ exists.
internal control deficiency
Responsibility to evaluate whether substantial doubt about continued existence of the entity exists rests with the ______.
management
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 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
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
An auditor issued a qualified opinion on 2018 and 2019 financial statements. In 2020, the company restated the 2018 and 2019 statements to be in accordance with GAAP. When doing the audit of the 2020 financial statements, the auditor ______.
may issue an unmodified opinion on all three years, 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
When a scope limitation is immaterial, a(n) ______.
standard report can be issued
Which of the following statements regarding engaging auditors to examine and report on summary financial statements are correct?
The report must refer to the audit report on the full financial statements. Auditors must have audited the full financial statements to accept.
A disclaimer of opinion on ICFR is appropriate when ______.
a scope limitation is encountered
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 comparative statements are issued and circumstances have changed in the intervening period, auditors should ______.
modify opinions expressed in prior years
In describing the standards under which an audit is conducted, the statement "auditing standards generally accepted in the United States of America" are found in reports of ______.
non-issuers only
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
Auditors may be engaged to examine and report on summary financial statements ______ audited the full financial statements
only if they have
Auditors may be engaged to examine and report on summary financial statements ______ audited the full financial statements.
only if they have
When a scope limitation is material and alternative procedures cannot be performed, a(n) ______.
qualified or disclaimer of opinion must be issued
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 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 management indicates the responsibilities of the audit team describes the audit
The opinion section of the standard audit report includes ______
the fact that the statements were prepared in accordance with GAAP identification of the financial statements and years examined
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
Auditors normally disclaim an opinion or even withdraw from the engagement ______.
when a scope limitation is client-imposed
