CH 17 HW
The auditors' report should be dated as of the date the:
Auditors have accumulated sufficient appropriate evidence.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Johnson & Barkley, CPAs, audited the consolidated financial statements of Jordan Company (a public company) for the year ended December 31, 20X7. Johnson & Barkley previously have audited and issued unqualified audit reports on Jordan Company's financial statements for the preceding 7 years (beginning in 20X0). The 20X7 consolidated financial statements are being presented on a comparative basis (two years for the balance sheet, three years for the other statements) and an unqualified opinion is being expressed. Smith, the engagement supervisor, instructed Abler, an assistant on the engagement, to draft the auditors' report. In drafting the report below, Abler considered the following: Required: Smith reviewed Abler's draft and stated in the Supervisor's Review Notes below that there were deficiencies in Abler's draft. Items 1 through 10 represent the deficiencies noted by Smith. For each deficiency, indicate whether Smith is correct or incorrect in the criticism of Abler's draft.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
1. Auditors _____ an opinion when they are unable to form an opinion. 2. Limitations on the scope of an audit may create a situation in which the auditors are unable to obtain sufficient ________. 3. Qualified opinions are issued when the financial statements are ________ misstated. 4. When there is significant doubt as to the ability to continue as a going concern, a(n) _________ paragraph may be added. 5. A(n) _____ opinion is appropriate if a material misstatement is considered pervasive.
1. disclaim 2. evidence 3. materially 4. emphasis-of-matter 5. adverse
1. Auditors have obtained sufficiently appropriate evidence to conclude that the financial statements are not materially misstated 2. Auditors have doubt about a company's ability to continue as a going concern 3. The client has elected to not follow GAAP 4. A material misstatement is considered pervasive 5. Auditors determine that the possible effects on the financial statements of the inability to obtain sufficient evidence (i.e. a scope limitation) could be both material and pervasive
1. unmodified opinion 2. unqualified opinion with an emphasis-of-matter paragraph 3. adverse opinion 4. adverse opinion 5. disclaimer of opinion
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.
Critical audit matters are most likely to include those matters that:
Involve challenging, subjective or complex auditor judgment.
A nonpublic company's change in accounting principles that the auditors believe is not justified is likely to result in which of the following types of audit opinions? Qualified Unmodified with Emphasis-of-Matter (1) Yes Yes (2) Yes No (3) No Yes (4) No No
Option 2
A material departure from generally accepted accounting principles will result in auditor consideration of:
Whether to issue an adverse opinion rather than a qualified opinion.
