Flashcards in AUD 1 Deck (20):
How do the OMB’s Uniform Guidance rules define a
As a non federal entity that expends federal awards received from another entity to carry out a federal program.
If management declines to present supplementary information required by the Governmental Accounting Standards Board (GASB), the auditor should issue:
an unmodified opinion with an additional explanatory paragraph.
Reporting on internal control under Government Auditing Standards differs from reporting under generally accepted auditing standards in that Government Auditing Standards require a:
written report describing each significant deficiency observed, including identification of those considered material weaknesses.
Which of the following would be an appropriate title for a statement of revenue and expenses prepared using a special-purpose framework?
Statement of income—regulatory basis
In an integrated audit of a nonissuer, if an auditor concludes that a material weakness exists as of the date specified in management's assertion, the auditor should take which of the following actions?
Issue a modified opinion
When an accountant examines projected financial statements, the accountant's report should include a separate paragraph that
describes the limitations on the usefulness of the presentation
An accountant compiled the financial statements of a nonissuer in accordance with Statements on Standards for Accounting and Review Services (SSARS). If the accountant has an ownership interest in the entity, which of the following statements is correct?
The accountant should include a final paragraph in the accountant's compilation report.
When an entity changes its method of accounting for income taxes, which has a material effect on comparability, the auditor should refer to the change in an emphasis-of-matter paragraph added to the audit’s report. In addition to indicating that the matter does not modify the opinion, this paragraph should describe the change and:
provide a reference to the entity’s disclosure
A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain
a statement of restrictions on the use of the report
How does an accountant make the following representations when issuing the standard report for the compilation of a nonissuer’s financial statements?
1. The financial statements have not been audited.
2 The accountant has compiled the financial statements.
I: Implicitly; II: Explicitly
An auditor decides to issue a qualified opinion on an entity’s financial statements because a major inadequacy in its computerized accounting records prevents the auditor from applying necessary procedures. The opinion paragraph of the auditor’s report should state that the qualification pertains to:
the possible effects on the financial statements
A CPA's standard report on audited financial statements would be inappropriate if it referred to:
the CPA's assessment of sampling risk factors
If an auditor performing an integrated audit identifies one or more material weaknesses in a nonissuer's internal control, the auditor should
express an adverse opinion on the entity's internal control
When unaudited financial statements of a nonissuer are presented in comparative form with audited financial statements in the subsequent year, the unaudited financial statements should be clearly marked to indicate their status and:
1. the report on the unaudited financial statements should be reissued.
2.the report on the audited financial statements should include a separate paragraph describing the responsibility assumed for the unaudited financial statements.
Either I or II
In performing an integrated audit of internal controls with an audit of the financial statement, the auditor should design tests to accomplish which of the following objectives?
1. To obtain sufficient evidence to support the auditor's opinion on internal control over financial reporting as of year-end
2. To obtain sufficient evidence to support the auditor's control risk assessments for purposes of the audit of financial statements
Both I and II
March, CPA, is engaged by Monday Corp., a client, to audit the financial statements of Wall Corp., a company that is not March's client. Monday expects to present Wall's audited financial statement with March's auditor's report to First Federal Bank to obtain financing in Monday's attempt to purchase Wall. In these circumstances, March's auditor's report would usually be addressed to:
Monday Corp., the client that engaged March.
On August 13, a CPA completed fieldwork on an engagement to audit financial statements for the year ended June 30. On August 27, an event came to the CPA's attention that should be disclosed in the notes to the financial statements. The event was properly disclosed by the entity, but the CPA decided not to dual date the auditor's report and dated the report August 27. Under these circumstances, the CPA was taking responsibility for:
all subsequent events that occurred through August 27
A scope limitation sufficient to preclude an unmodified opinion always will result when management:
refuses to acknowledge its responsibility for the fair presentation of the financial statements in conformity with GAAP.
In which of the following situations would an auditor ordinarily choose between expressing a qualified opinion or an adverse opinion?
Conditions that cause the auditor to have substantial doubt about the entity's ability to continue as a going concern are inadequately disclosed.