c18 audit
Generally, the procedures applied in an audit of an element, account, or item are ______ than if the same information were considered part of an audit of the overall financial statements.
more extensive
Under the new PCAOB reporting standards, the __section of the report is now presented first
opinion
Auditing standards use the term ___to describe the potential effects of a scope limitation or departure from GAAP on the auditor's report.
pervasive
With regard to other information in documents containing audited financial statements, the auditor is required to ______.
read the other information, consider whether such information is consistent with the information in the audited financial statements
An inability to collect sufficient appropriate evidence is considered a(n):
scope limitation
An auditor issues a qualified opinion when there is ______.
a specific departure from GAAP but overall the financial statements present fairly in conformity with GAAP, a scope limitation
If an entity fails to disclose information in the financial statements or footnotes as required by GAAP, the auditor should ______.
issue a qualified or adverse audit report, provide the omitted information, if practicable, in the audit report
A change in accounting principle that does not have a material effect in the current year but which is expected to have a material effect in future years is ______.
not mentioned in the auditor's report
auditors can add explanatory language to the standard unqualified audit report by ______.
nserting an additional explanatory paragraph, adding explanatory wording to the existing paragraphs of the report
Before reissuing a report on the financial statements of prior periods which will be presented for comparative purposes, a predecessor auditor should obtain a(n) letter ___ from entity management and the current-year, successor auditor.
of representations
Under PCAOB standards, when multiple firms participate in an audit, the principal auditor must disclose the other firms that participated ______ referenced in the audit report.
whether or not they are
The procedures applied are more extensive when ______.
a separate engagement is performed on an element, account, or item
Under ASB standards, when an issue other than those presented or disclosed in the financial statements is relevant to understanding the audit, the auditor's responsibilities, or the auditor's report a(n__) - ____paragraph can be included in the audit report.
other matter
When a client significantly restricts the scope of the engagement ______.
the auditor should consider disclaiming an opinion
When there is a lack of auditor independence the auditor ______.
disclaims an opinion
A predecessor auditor should obtain a letter of representations from the current-year, successor auditor when the predecessor auditor ______.
plans to reissue a report on the financial statements of prior periods presented for comparative purposes
The successor auditor includes an explanatory paragraph indicating that the prior period financial statements were audited along with the date and type of report issued when the ______.
predecessor's report will not be included with the current report
An auditor issues a standard unqualified audit report when ______.
the audit has been performed in accordance with applicable auditing standards,the auditor believes the financial statements conform to GAAP in all material respects,sufficient evidence has been gathered by the auditor
Any matters arising from the audit of financial statements that are communicated or required to be communicated, to the audit committee, that relate to material financial statement accounts or disclosures and involved especially challenging, subjective, or complex auditor judgment are called
critical audit
An auditor adds an explanatory paragraph to a standard unqualified report on an entity's financial statements when ______.
the auditor decides to refer to the report of other auditors as the basis, in part, for the opinion, there is substantial doubt about an entity's ability to continue as a going concern, the auditor references the report on the audit of internal control for public companies.
If prior-period financial statements have been audited but the predecessor's report will not be included, the successor auditor indicates in an explanatory paragraph immediately following the opinion paragraph ______.
the date, and the type of report issued by the predecessor auditor, that the prior period financial statements were audited by other auditors
When a circumstance such as a fire restricts the scope of the engagement, ______.
alternative procedures can be used to gather sufficient appropriate evidence, the auditor can issue a standard unqualified opinion
auditors express a qualified or adverse opinion for departures from GAAP including ______.
an unjustified change in accounting principle, inadequate disclosure, use of an unacceptable accounting principle
An ASB audit report ______.
indicates the audit was conducted in accordance with generally accepted auditing standards
Generally, the materiality in an audit of an element, account, or item is set in relation to the ______.
individual element, account or item
A GAAP departure that is seen as___ and ___will generally result in an adverse opinion.
material, pervasive
When an auditor reports on an entity's compliance with certain contractual agreements or regulatory requirements, the auditor provides __ as to the entity's compliance with the requirements.
negative assurance
When an insurance company reports in compliance with the rules of a state insurance commission, the financial statements have been prepared under a(n)
regulatory
An auditor may use a disclaimer of opinion when ______.
there is insufficient appropriate evidence to form an opinion, there is a lack of independence
True or false: Auditors explicitly consider auditor subjectivity when determining what matters should be considered CAMs.
t
The auditor's standard unqualified audit report for a public company contains the ______.
"Opinion" section, "Critical Audit Matters" section, how long the auditor has served,name and signature of firm,report title,audit report date,the addressee,"Basis for Opinion" section
Which of the following is included in the footnotes to the financial statements but does not require an explanatory paragraph in the auditor's report?
A change in accounting principle that does not have a material effect in the current year but is expected to have a material effect in future years
When an entity has changed auditors, the___ auditor can reissue, at the request of the entity, the report on the financial statements of prior periods when those prior period statements are presented for comparative purposes.
When an entity has changed auditors, the auditor can reissue, at the request of the entity, the report on the financial statements of prior periods when those prior period statements are presented for comparative purposes.
When would an auditor be most likely to issue an unqualified opinion and add a discussion of the change in an explanatory paragraph?
When an entity makes a change in accounting principle and the auditor concurs with the change.
The new PCAOB reporting standards include ______.
a Basis of Opinion section, laying out the key features of an audit more clearly, the retention of the binary, pass/fair reporting approach, a clearer description of management and auditor responsibilities, separate disclosure of critical audit matters
Circumstances that likely will result in an audit opinion that departs from an unqualified opinion include ______.
a scope limitation, a departure from GAAP, lack of auditor independence
The auditor's report does not refer to the work of other auditors when the principal auditor ______.
accepts full responsibility for the work done and conclusions drawn by other auditors, is satisfied as to the professional reputation and independence of the other auditor
Changes that affect comparability but not consistency include a change in ______.
accounting estimate, classification
When the auditor is not required to audit management's assessment of internal control over financial reporting, the auditor must ______.
add an explanatory paragraph to the audit report
When there is a lack of consistency in the application of accounting principles due to accounting changes, an auditor ______.
adds an explanatory paragraph to a standard unqualified audit report
the auditor is required to read the other information and consider whether such information is consistent with the information in the audited financial statements when ______.
an entity publishes documents that contain other information in addition to the audited financial statements
Under PCAOB standards, when an auditor's opinion is based in part on the report of another auditor, explanatory language is added to the ______ paragraphs.
basis for opinion, opinion
Under ASB standards ______
both emphasis-of-matter and other-matter paragraphs are sometimes required
An auditor may choose to draw attention to significant transactions with related parties or unusually important subsequent events by adding a(n)__ paragraph to the auditor's re
emphasis
The auditor's standard unqualified audit report implies that the___ of the financial statements is not materially affected by inconsistent use of accounting principle.
combarability
A fundamental principle of accounting is that financial statements should be
comparable between periods.
Special purpose financial statements prepared under a(n) __basis comply with an agreement between th entity and one or more third parties other than the auditor.
contractual
When an entity has changed auditors, the predecessor auditor can reissue, at the request of the entity, the report on the financial statements of prior periods when those prior period statements are presented for comparative purposes. The predecessor auditor must ______.
determine if the previously issued reports are still appropriate
If an entity is experiencing immediate financial distress and a bankruptcy is impending, the auditor will generally ______.
disclaim an opinion on the entity
Under PCAOB standards ______
explanatory paragraphs are sometimes required but emphasis paragraphs are always optional
True or false: When a correction to a material misstatement in previously issued financial statements is made, the auditor is not required to mention the misstatement in the current year repo
f
True or false: When an auditor reports on an entity's compliance with certain contractual agreements or regulatory requirements, the auditor uses the words "In our opinion...." in the audit report.
f
A change in accounting estimate is ______.
generally disclosed in a footnote but does not require an explanatory paragraph in the auditor's report
That an entity will continue as a going concern ______.
is evaluated by the auditor, is a basic assumption of financial reporting,is assessed by management
A PCAOB report ______.
is titled "Report of Independent Registered Public Accounting Firm"
When a scope limitation exists but overall the financial statements present fairly due in conformity with GAAP the auditor will ______.
issue a qualified opinion, use the word "except for" in the report
An entity is issuing comparative financial statements. In prior years, the auditor expressed a standard unmodified report. This year the entity has inappropriately not capitalized certain lease obligations. The auditor should ______.
issue a report similar to a qualified report for a GAAP departure clarifying the departure only affects the current year's statements
If an entity's disclosures with respect to its ability to continue as a going concern are inadequate, the result could be for the auditor to ______.
issue an adverse opinion, issue a qualified opinion
If an entity makes a change in accounting principle and the auditor concurs with the change, the auditor will ______.
issue an unqualified opinion and add a discussion of the change in an explanatory paragraph
If an auditor is not independent, the auditor ______.
issues a two sentence report, must withdraw from the engagement or disclaim an opinion
A GAAP departure that is seen as___ but not___ will generally result in an qualified opinion.
material, pervasive
An auditor disclaimed an opinion on the prior period financial statements but was able to conduct the current year audit without limitations. In this case the auditor ______.
may issue an unmodified opinion on this year's statements
When an auditor adds explanatory wording to the existing paragraphs of the report it is referred to as
modified wording
When an auditor is not independent, the reason(s) for the lack of independence should ______ ASB standards.
not be stated under PCAOB standards, but may be stated under
An entity received a going concern report in 20X1. The auditor determines the substantial doubt regarding going concern has been removed in 20X2. The explanatory paragraph included in the prior year's audit report is ______.
not included with the auditor's report covering the comparative financial statements
A material, but not pervasive, scope limitation will normally result in a(n) ______.
qualified opinion
If an entity fails to disclose information in the financial statements or footnotes as required by GAAP, the auditor should issue a(n) __or __audit opinion report.
qualified, adverse
If the financial statements are materially affected by a departure from GAAP, the auditor should express a(n)__ or ___opinion, depending on the pervasiveness of the misstatement.
qualified, adverse
In order to be identified as a CAM, a matter must _______.
relate to accounts or disclosures that are material to the financial statements, have involved especially challenging, subjective or complex auditor judgment
Pervasive effects on the financial statements are those that ______ of the financial statements.
represent or could represent a substantial proportion, include disclosures fundamental to users' understanding
A change from an inappropriate use or application of accounting principle in prior years to an acceptable accounting principle in the current year ______.
requires the prior-period financial statements to be restated retroactively, requires an explanatory paragraph to highlight a lack of comparability
When the audit has been performed in accordance with applicable auditing standards, the auditor has gathered sufficient evidence, and the auditor believes that the financial statements conform to GAAP a(n)__ financial statement audit report is issued.
std unqualified
True or false: An entity received a going concern report in 20X1. The auditor determines the substantial doubt regarding going concern has been removed in 20X2. The explanatory paragraph included in the prior year's audit report is not included with the auditor's report covering the comparative financial statements.
t
True or false: When an entity issues comparative financial statements, the auditor can express a standard unmodified report on prior years' financial statements but qualify the opinion on the current-year financial statements.
t
When the auditor is not required to audit management's assessment of internal control over financial reporting, the auditor must add an explanatory paragraph in the Basis for Opinion section indicating ______.
the company was not required to have an audit of its ICFR, no opinion on ICFR is being expressed
If prior-period financial statements have been audited but the predecessor's report will not be included, the successor auditor indicates in an explanatory paragraph immediately following the opinion paragraph ______
the date, and the type of report issued by the predecessor auditor, that the prior period financial statements were audited by other auditors
In identifying CAMS, auditors must take into account ______.
the nature and timing of significant unusual transaction transactions, degree of auditor judgment related to areas that involved significant management judgment
The principal auditor is sharing responsibility for the audit report with others auditors when ______.
there is a reference to the other auditors in the audit report
Management's going concern assessment is independently assessed by auditors ______.
to ensure management's assessment has been adequately conducted and disclosed
When the auditor concludes there is substantial doubt about the entity's ability to continue as a going concern and management has adequately disclosed the financial problems, the auditor will typically express a(n) ______ opinion.
unqualified
An immaterial scope limitation will normally result in a(n) ______.
unqualified opinion
When the auditor concludes there is substantial doubt about the entity's ability to continue as a going concern and management has adequately disclosed the financial problems, the auditor will typically express a(n)
unqualified opinion