AUD Chap 17

An unqualified audit report for a public company must include "Report of__Public Accounting Firm" in the title.

Independnet Registered

Key audit matters ______.

are included in the report based on the client's desire for disclosure are selected from matters communicated to those charged with governance may be required to be included by law or regulation

A situation in which conclusive audit evidence concerning the ultimate outcome cannot be gathered because the outcome will occur in the future is called a(n):

uncertainty.

Qualified Opinion-Lack of Sufficient Appropriate Audit Evidence (Scope Limitations)

Scope limitations: • Imposed by circumstances. • Important accounting records destroyed. • Due to nature of audit. • Engaged too late in year to observe client's beginning inventory. • Imposed by client. • Client refused to allow auditors to send confirmations to customers. • Often results in a disclaimer as opposed to a qualification.

In which of the following types of audit reports is a change in the estimated life of certain assets which the auditors consider appropriate and to have a material effect on income is most likely to result?

Unqualified with no additional section added.

Which of the following is least likely to result in an Emphasis of Matter section being added to an unmodified auditor's report on the financial statements of a nonpublic client that sells jewelry through a retail store?

Use of an unacceptable method to value inventory with results that differ materially from GAAP.

Nonpublic Company Audit Report: Key Audit Matters Section

[Description of each key audit matter in accordance with S A S Communicating Key Audit Matters in the Independent Auditor's Report]

An unmodified opinion with additional audit-related information included in the audit report is appropriate when ______.

a report is filed with comparative statements when there are predecessor auditors

A disclaimer of opinion is most frequently the result of ______.

a scope limitation that leaves auditors unable to obtain sufficient appropriate audit evidence

Limitations on the scope of the audit may occur due to all of the following except ______.

auditor-imposed limitations

The PCAOB audit report for large public companies includes an additional paragraph indicating ______.

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

The date of the audit report is significant because ______.

auditors have a responsibility to perform procedures through that date

Publicly owned companies are required to include ______ for each of the last two years in their annual reports.

balance sheets;

Limitations on the scope of the audit may occur due to all of the following

client refusal to allow confirmations to be sent to customers circumstances related to the nature and timing of the auditor's work circumstances beyond the control of the client

When predecessor auditors have audited the prior-period financial statements for a comparative period, the current auditor may have the predecessor auditor reissue their audit report for the prior period or they can ______.

include an other-matter paragraph to the current audit report

If substantial doubt regarding Going Concern status remains after considering management's plans, auditors ______ opinion.

may still issue an unmodified

When a nonpublic client's financial statements are presented as part of an annual report that includes other information, such as a management report and financial summaries, the auditors ______.

must assess the other information for consistency and potential material misstatement must read all other information for consistency must include an Other Information paragraph in the audit report

The term "other-matter paragraph" is used by ______.

nonpublic companies only

The PCAOB requires that critical audit matters (CAMs)

only be reported for the period being audited

Re-expressing or revising an audit opinion that was previously issued is referred to as

updating the report.

For a change in accounting principle, the client must report in the note to the financial statements all of the following

ustification for nature of effect of

Conditions that may raise substantial doubt about the going-concern assumption include ______.

work stoppages adverse financial ratios legal proceedings uninsured catastrophe

Additional Emphasis-of-Matter Situations —Auditor Discretionary

• A risk or uncertainty. • Significant related party transactions described in a note to the financial statements. • The company is a component of a larger business enterprise. • Unusually important significant events. • Accounting matters affecting comparability (other than changes in accounting principles) of financial statements with those of the preceding year. • In either a nonpublic or public company report the section is added at a point following the Basis for Opinion section.

Auditors' Unmodified Report - Nonpublic Clients

• Title that includes the word independent. • Ordinarily addressed to the company itself, the shareholders, the audit committee, and/or the board of directors. • Sections: Opinion, Basis for Opinion, Key Audit Matters (when in terms of engagement), Management Responsibilities, and Auditor Responsibilities. • Signed with name of C P A firm not individual partner unless the firm is structured as a sole practitioner. • Dated no earlier than the date on which the auditors obtained sufficient appropriate audit evidence to support their opinion.

Which of the following is a discretionary inclusion in an audit report?

An unusually important significant event.

Auditors issue a(n) adverse opinion when the deficiencies in the financial statements are both

material and pervasive

The term "explanatory paragraph" is used by __.

public companies only

Group Financial Statements 3

Communicate with component auditors: • Inform component auditors how their work will be used. • Communicate ethical requirements. • Provide list of related parties. • Communicate significant risks of misstatement. Group auditor alternatives: • Make no reference to the component auditors. • Make reference to the component auditors.

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

F

Group Financial Statements 2

Group engagement team should obtain understanding of • Whether component auditors are competent and understand and will comply with ethical requirements. • Extent of group engagement team involvement with component auditors. • Whether group engagement team will be able to obtain necessary information on the consolidation process. • Whether component auditors operate in a regulatory environment that actively oversees auditors.

Due to complications related to a national health crisis, the auditors were unable to observe major portions of the client's year-end inventory count. However, they believe that they have been able to perform adequate alternative procedures. If this is the only area of concern, the most likely audit report opinion is:

unqualified

Placement of Going Concern Section

Placement of Going Concern Section: • Nonpublic Company—At an appropriate point following the Basis for Opinion section. • Public Company—Following the Opinion section, before Basis for Opinion section.

Financial statements that cover one or more prior periods are called

comparative financial statments

The title for an unmodified report for a nonpublic company must include the word__ to describe the auditor's relationship to the client.

independent

The purpose of notes to financial statements is to ______.

properly disclose information required by GAAP

Form 8-Ks are used to report ______.

significant events for a company

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.

35

Which of the following is least likely to result in an additional paragraph being added to an audit report?

A decision not to confirm accounts receivable.

The nonpublic company audit report should be signed with the name of ______.

CPA firm

Disclosure requirements come from pronouncements issued by ______.

FASB GASB

Group auditors need to obtain an understanding of whether the ___ auditors are competent.

component

Modified opinions are required when there is a ______.

departure from GAAP scope limitation

For each critical audit matter (CAM), the auditors must include in the audit report ______.

description of how the matter was addressed in the audit reference to the accounts and disclosures affected principal considerations that led the auditor to determine it is a CAM identification of the matter

Auditors must modify the audit report if ______.

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

Conditions Requiring a Modification of the Auditors' Report

• Conditions, although not departures from G A A P, about which the readers of the financial statements should be informed. • Material departure from G A A P in the client's financial statements. • Material scope limitation (and auditor unable to obtain sufficient appropriate audit evidence).

A disclaimer of opinion ______.

-cannot be issued when the auditors have formed an opinion on the financial statements -should include any and all reservations auditors have about the statements -should be issued whenever possible as it avoids warning financial statement users about known problems

Not significant. component

1. The group engagement team should perform analytical procedures at the group level. Audit additional components if sufficient appropriate audit evidence has not been obtained.

Disclosure of the engagement partner's name and certain information about other CPA firms that participated in the audit is required by PCAOB

Form AP

In the United States, financial statements are most frequently prepared following the general-purpose framework of ______.

GAAP

A I C P A A S B Key Audit Matters (nonpublic company audit reports) 2

Matters of most significance to audit; auditors should take into account: • Areas of higher assessed risk of material misstatement or identified significant risks. • Significant auditor judgments relating to financial statement areas that involved significant management judgment, including accounting estimates with high estimation uncertainty. • Effect on the audit of significant events or transactions that occurred during the period. Required in audit reports? No, not in general. But the auditors may be required to communicate by the terms of the engagement (either by client choice, law or regulation).

When the report on a public company is qualified for a departure from GAAP, the modification involves ______.

adding an additional untitled paragraph after the opinion paragraph

CAM and KAM sections are omitted from audit reports when ______ issued.

adverse and disclaimer of opinions are

A material and pervasive departure from GAAP requires a basis for modification paragraph and a(n) ______.

adverse opinion

Financial statement disclosures regarding the firm's going concern status include all of the following except:

audit procedures performed to identify and review going concern status

In a shared responsibility report, the ______ sections of the audit report are modified.

auditor's responsibility opinion

When a company is in the process of, or about to discontinue operating, the __ basis of accounting must be followed.

liquidation

When there is substantial doubt about a company's going concern status, GAAP has not been consistently applied, or there are other circumstances such as an unusually important subsequent event, additional information ______.

may or may not be required to be added to the unmodified audit report

For scope limitations that have a material but not pervasive effect on the financial statements, auditors should issue a report that includes modifications to the ______ sections.

opinion basis for opinion

Auditors evaluate changes in accounting principles to determine if ______.

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 Management must justify that the new accounting principle is preferable

Group auditors that make no reference to the component auditors should issue a(n) ______.

unmodified report

Emphasis-of-Matter Section (Paragraph)— Lack of Consistency

A lack of consistent application of accounting principles results in an emphasis-of-matter section, such as: Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for revenues from contracts with customers in 20X2. Our opinion is not modified with respect to this matter. Placement of Consistency Section: • Nonpublic Company—At an appropriate point following the Basis for Opinion section. • Public Company—Following the Opinion section, before Basis for Opinion section.

Disclaimer of Opinion

Auditor has no opinion. Issued whenever the auditor is unable to form an opinion as to fairness of financial statements. Circumstances resulting in a disclaimer are those in which the possible misstatements are material and pervasive. • Multiple uncertainties may also lead to a disclaimer. Not an alternative to adverse opinion.

Which of the following statements is correct?

Both KAMs and CAMs are selected from matters communicated to those charged with governance.

When a financial statement note appropriately discloses substantial doubt about the ability of a client to continue as a going concern it may result in which type(s) of opinion?

Both unmodified and disclaimer.

True or false: CAM and KAM sections are optional when either an adverse or disclaimer of opinion is issued.

F

True or false: A basis-of-modification paragraph due to omitted information must include the omitted information.

F; The omitted information is only included if it is practicable to do so.

Reports to S E C

Forms filed with S E C which include audited financial statements. • Forms S-1 through S-11 (registration statements). • Forms S B-1 and S B-2 (registration for small businesses). • Form 8-K (current report). • Form 10-Q (quarterly report). • Form 10-K (annual report). Auditors should be well versed on requirements of each form.

P C A O B Critical Audit Matters (public company audit reports)

Matters arising from the audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved especially challenging, subjective, or complex auditor judgment. Limited to matters communicated or required to be communicated to those charged with governance? YES

A I C P A, A S B Key Audit Matters (nonpublic company audit reports)

Those matters that, in the auditors' professional judgment, were of most significance in the audit of the financial statements of the current period. Key audit matters are selected from matters communicated to those charged with governance. Limited to matters communicated or required to be communicated to those charged with governance? YES

Audits that involve a modification for both a departure from GAAP and a scope limitation that together result in material and pervasive misstatements should result in a(n) ______.

adverse opinion

If auditors have substantial doubt about a company's ability to continue as a going concern and management's disclosures are materially inadequate, appropriate audit opinions are a(n) ______.

adverse opinion qualified opinion

Sufficient appropriate audit evidence is obtained when ______.

all audit documentation has been reviewed the financial statements are prepared representation letter is obtained from managment

When comparative financial statements are presented by the client company, the auditors' report should ______.

always cover all years presented

A scope limitation that does not allow the auditors to obtain sufficient appropriate audit evidence for a substantial proportion of the financial statements should result in a(n) ______ opinion.

disclaimer of

An audit report that states the auditors do not express an opinion on the financial statements is called a(n) ______ opinion

disclaimer of

If substantial doubt regarding going concern status does not remain after considering management's plans, auditors ______ opinion.

may issue an unmodified

Significant risks ______ be considered key audit matters.

may or may not

Auditors should use separate____to describe emphasis-of-matter items and basis for modifications of the audit report.

paragraphs

A major assumption underlying the inclusion of an emphasis-of-matter paragraph for an uncertainty is ______.

the matter is adequately disclosed in the notes

For comparative financial statements, the auditor can issue an opinion that cover both years if ______.

the prior year was audited by the firm

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

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

Component significant due to its individual financial significance to the group.

1. The group auditors or component auditors should perform an audit of the component, adapted as necessary to the needs of the group engagement team, using the materiality of the component. 2. The group engagement team should be involved in the risk assessment and should. • Discuss with the component auditors or component management the component's business activities of significance to the group. • Discuss with the component auditors the susceptibility of the component to material misstatement. • Review the component auditors' documentation of identified significant risks of material misstatement of the group financial statements.

Component significant because it is likely to include significant risks of material misstatement of the group financial statements.

1. The group auditors or the component auditors. • Should perform an audit of the component, adapted as necessary to the needs of the group engagement team, using the materiality of the component. • Should audit one or more component account balances, classes of transactions, or disclosures that relate to the significant risks. • Should perform specified audit procedures relating to the likely significant risks of material misstatement of the group financial statements. 2. The group auditors should also perform the procedures described in 2. above.

Types of Reports with Unmodified Opinions

1. Unmodified (Unqualified) opinion. This report may be issued only when the auditors have obtained sufficient appropriate audit evidence to conclude the financial statements are not misstated and there is no need to alter the report for situations 2, 3, or 4 below. 2. Unmodified opinion—with additional financial statement related information. To emphasize a matter appropriately presented in the financial statements (for example, a change in accounting principles). 3. Unmodified opinion—with additional audit-related information included. To emphasize a matter other than those presented or disclosed in the financial statements (for example, reporting on comparative statements when thee is a predecessor auditor involved). 4. Unmodified opinion on group financial statements. When two or more C P A firms are involved in an audit and the group auditor (the firm that performs majority of the work) does not wish to take responsibility for the work of the component auditors.

Going Concern

Generally accepted accounting principles assume that a company is a going concern. • Assets and liabilities are valued on the assumption that the company will continue to operate for a reasonable period of time. Requirements: • Management must evaluate whether there is substantial doubt about the company's ability to continue in existence for a reasonable period of time (a year from the date of issuance of the financial statement). • Auditor not required to perform procedures specifically designed to test going-concern assumption but must evaluate the assumption. • Conditions indicative of going concern problem. • Negative cash flows from operations. • Defaults on loan agreements. • Adverse financial ratios. • Work stoppages. • Legal proceedings. • Loss of a key franchise, customer, or supplier. • An uninsured catastrophe. • Dividend arrearages.

Additional information may be added to what remains a report with an unmodified (unqualified) opinion if it relates to:

the financial statements and the audit.

For auditors that are reporting on two periods, consistency of GAAP application should be evaluated between the current period and the preceding ______.

two periods

If a client changes depreciation methods but the change is immaterial, the auditor should issue a(n) ______.

unmodified opinion

Consistency in Application of Accounting Principles

Auditors are required to indicate in the report when a company has changed accounting principles resulting in a material effect on the financial statements being reported on. This requirement pertains to changes in accounting principles but not changes in accounting estimates. In accepting the change, the auditors should evaluate whether: • The newly adopted principle is generally accepted. • The method of accounting for the effect of the change is in conformity with generally accepted accounting principles. • The disclosures related to the change are adequate. • Management has justified that the new accounting principle is preferable.

Auditors that are responsible for issuing the audit report on a group of companies (e.g. a parent and its subsidiaries) are known as ______ auditors.

group

When, after considering management's plans, substantial doubt about the company's going concern status does not remain, an Emphasis of Matter section ______.

may be added at the auditors' discretion

Auditors who want to emphasize significant client transactions with related parties can issue a(n) ______

unmodified opinion with an emphasis-of-matter paragraph

Additional circumstances that may result in an unmodified opinion with an emphasis-of-matter paragraph include ______.

unusually important subsequent events significant transactions with related parties a major catastrophe with significant effects

Adverse Opinion

• Financial statements do not present fairly the financial position, results of operations, and cash flows of client in conformity with G A A P. • Material and pervasive departures from G A A P. • Auditor believes departure causes financial statements taken as a whole to be misleading.

Audit Report

• Providing an independent and expert opinion on the fairness of financial statements through an audit is the most frequent attestation service. • When performing an audit, the auditors gather evidence to obtain reasonable assurance that the statements are in conformity with G A A P.

Two or More Report Modifications

• Qualified for two or more reasons. • Example: Qualified because of both a scope limitation and separate departure from G A A P. • Wording of report would include appropriate qualifying language and explanatory paragraphs for both types of qualifications. • Auditor should consider cumulative effects - disclaimer of opinion may be appropriate.

If the auditors of a nonpublic company decide that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive, a(n) ______ opinion is appropriate.

qualified

When auditors believe a change in accounting principle does not meet one or more of the four requirements, appropriate audit opinions are ______.

qualified adverse

Auditors sometimes conclude that the financial statements are misstated. They should consider the materiality of the effects of any departure from GAAP to determine the appropriate type of audit report to issue. When the effects of the departures are ______, an unmodified opinion may be issued

immaterial

A lawyer who refuses to provide appropriate information for a case that has not yet been settled creates a(n) ______ for the auditor.

scope limitaion

Auditors' Unqualified Report - Public Clients

• Includes the words "Registered" and "Independent" in the title. • Must be addressed to shareholders and board of directors (additional parties are allowable). • Indicates audit performed following standards of the P C A O B. • In Basis for Opinion section, provides auditor and management responsibilities. • If appropriate, includes a paragraph indicating that the auditors have also issued a report on the client's internal control over financial reporting, or is a combined report on both the financial statements and internal control. • Includes a Critical Audit Matters section. • Includes statement on year audit firm began serving the client. • Signed with name of C P A firm not individual partner. • Includes the City of the office with responsibility for the audit. • Dated no earlier than the date on which the auditors obtained sufficient appropriate audit evidence to support their opinion.

Which of the following modifications of the auditors' report does not include an additional section or paragraph?

The audit report of a nonpublic company indicates a division of responsibility between two CPA firms.

When a company that is in the process of, or about to liquidate is still following the going-concern basis of accounting, the result is ordinarily either a

qualified or adverse opinion

The unmodified report is divided into sections with headings that include all of the following except ______.

introduction

A qualified opinion is issued when auditors are unable to obtain sufficient appropriate audit evidence on which to base the opinion because of a(n)

scope limitation

Qualified Opinion—Departure from G A A P

Departure from G A A P: • Immaterial - unmodified. • Material - qualified. • Material and pervasive—Adverse. Misstatements become pervasive when any one of the following applies: • Not confined to specific accounts. • If confined, they represent a substantial proportion of the financial statements. • In relation to disclosures, they are fundamental to users' understanding of the financial statements.

When an auditor of financial statements has substantial doubt about an entity's ability to continue as a going concern, the auditor most likely would express a qualified or adverse opinion if:

Information about the entity's ability to continue as a going concern is not disclosed in the financial statements.

Different Opinions on Different Statements

It is acceptable to express an unqualified opinion on one statement while expressing a qualified or adverse on the others. • Example: Auditors retained after client has taken its beginning inventory. A disclaimer may be issued on the income statement (the auditor doesn't know if income is reasonably stated), but an unqualified opinion may be issued on the year-end balance sheet.

P C A O B Critical Audit Matters (public company audit reports) 2

Matters involving especially challenging, subjective, or complex auditor judgment related to material financial statement accounts or disclosures. Required in audit reports? Yes, for most public companies. Certain companies are excluded (for example, broker dealers, investment funds, benefit plans).

Reporting on Comparative Financial Statements

Report should cover current year as well as prior period audited by their firm. Can express different opinions on different years. Auditor should update report for all prior periods presented for comparison. If prior period audited by another (predecessor) C P A firm. • Current year opinion only covers years the C P A firm audited. • For financial statements audited by predecessor auditor either: • Predecessor auditor reissues report with original date, or • Current auditor refers to report of other auditor.

For a nonpublic company, a matter leading to a qualified opinion ______ considered a KAM.

is always

Matters that, in the auditor's professional judgment, were of most significance in the current period audit of financial statements are defined as __audit matters in nonpublic company audit reports.

key

For a public company, a matter leading to a qualified opinion ______ considered a CAM.

may be

An opinion that states the financial statements are presented in conformity with GAAP "except for" the effects of some matter is referred to as a(n) ______ opinion..

qualified

The period of time required by the applicable financial reporting framework or, if no requirement exists, within one year after the date the financial statements are issued is referred to as

reasonable period of time

Unmodified opinion for group audits

The component auditors are referred to in the opinion section when the group auditors do not take responsibility for the component auditors' work. If the group auditors take responsibility, no modification of the audit report is necessary.

Unmodified Opinions With Additional Financial Statement-Related Matter

• Substantial doubt about the company's going-concern status. • Generally accepted accounting principles not consistently applied. • Reissued financial statements correcting a misstatement. • Other circumstances that the auditors believe should be emphasized.

To evaluate consistent application of GAAP when reporting on only the current period, auditors should consider the current period under audit and the preceding ______.

period.

A nonpublic company audit report is always signed with the name of the CPA firm, not the personal name of the CPA.

FALSE; If a CPA is practicing under his or her own name as a sole practitioner, the report is signed with CPA's personal name.

Typical Coverage of Audit Reports

Reports on the financial statements ordinarily include an opinion that is on both the: Financial statements themselves: • Balance sheet. • Income statement. • Statement of cash flows. • Statement of retained earnings (equity). Financial statement disclosures: • The notes to the financial statements are considered an integral part of the financial statements.

Group financial statements are those of a company that consists of more than one

component

Which of the following reports are likely when management has not made available minutes to the board of directors meetings during the year?

discliamer only

Publicly owned companies are required to include ______ for each of the last three years in their annual reports.

statement of cash flows, statements of income, and statement of retained earnings

In group financial statements, issues arise when one or more subsidiaries are audited by ___ auditors other than the group auditors.

component

An identified and assessed risk of material misstatement that, in the auditors' judgment, requires special audit considerations are called

significant risks

The auditor of a nonpublic company agrees with the company's change in accounting principles from one generally accepted accounting principle to another generally accepted accounting principle. When the change has a pervasive effect on net income, this usually results in an audit report with unmodified opinion and an Emphasis of Matter section.

TRUUE

Nonpublic Company Audit Report: Management Responsibilities Section

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about A B C Company's ability to continue as a going concern for one year subsequent to issuance of these financial statements.

The complete set of financial statements generally include a(n) ______.

statement of cash flows balance sheet income statement

Primary circumstances that result in an audit report with an unmodified opinion but with additional financial statement-related information include ______.

substantial doubt about the company's going concern status inconsistent application of generally accepted accounting principles important subsequent events

Items that may be considered KAMs (CAMs) include ______.

the allowance for sales returns going concern assessments income taxes goodwill impairment loan loss provsions

Audit considerations for client-imposed limitations include ______.

the assessment of fraud risk determining whether or not to withdraw from the engagement

Financial statement disclosures regarding the firm's going concern status include all of the following

possible discontinuance of operations pertinent conditions and events giving rise to substantial doubt management's evaluation and plan for dealing with the conditions

Types of Reports with Modified Opinions

1. A qualified opinion. A qualified opinion states that the financial statements are presented fairly in conformity with generally accepted accounting principles "except for" the effects of some matter. 2. An adverse opinion. An adverse opinion states that the financial statements are not presented fairly in conformity with generally accepted accounting principles. 3. A disclaimer of opinion. A disclaimer of opinion states that due to a significant scope limitation, the auditors were unable to form an opinion or did not form an opinion on the financial statements.

Correction of Previously Issued Financial Statements

Situation: Previously issued financial statements contained a material misstatement and are being reissued. A report with an unmodified opinion with additional information is appropriate. The additional section includes a statement that the previously issued financial statements have been restated for correction of a material misstatement and a reference to the entity's disclosure of the correction in the notes to the financial statements. Placement of Going Concern Section: • Nonpublic Company—At an appropriate point following the Basis for Opinion section. • Public Company—Following the Opinion section, before Basis for Opinion section.

To evaluate whether there is substantial doubt about a client's ability to continue as a going concern, auditors should ______.

consider results of audit procedures performed during the audit

Group auditors are never __ to rely on the work of component auditors. Instead, they may insist upon personally auditing any aspect of the client's operations. If the client refuses to permit them to do so, the auditors may regard this as a scope limitation and, depending upon materiality, issue a qualified report or a disclaimer of opinion. As a practical matter, opinions are seldom modified for this reason. Satisfactory arrangements about who will audit the various aspects of a client's business normally will be worked out before the audit begins.

forced