Mod 5 Wrong Answers Flashcards
An auditor may issue an opinion on a balance sheet only and doesn’t need to…
Include an emphasis of matter paragraph in their report
Substantial doubt about the entity’s ability to continue as a going concern leads to either…
An unmodified report with an emphasis of matter paragraph
Or disclaimer of opinion
A management plan that an auditor would positively consider when a question concerning an entity’s ability to continue as a going concern exists is…
Increasing equity ownership, because it will bring in more funds
To overcome financial difficulties
A management plan that an auditor would not consider when a question concerning an entity’s ability to continue as a going concern exists is…
Reducing lines of credit, because this will not provide sufficient
Funds
Postponing expenditures for research and development may…
Mitigate entity’s going concern situation
With a going concern issue there is no guarantee that discussions with lenders…
Will lead to restructuring and loan agreements
A change in the useful life of assets is a change of estimate, and a change of estimate…
Does not result in a consistency modification
Management’s lack of responsible justification for a change in accounting principle is…
A departure from GAAP
An unjustified accounting change will result in either…
A qualified or adverse opinion, no emphasis of matter paragraph
would result
Material weakness will ordinarily result ( in terms of reporting) in…
No report modification
Change in accounting principles leads to…
An unmodified opinion with an emphasis of matter paragraph
Added to the report
Inadequate disclosure of a going concern issue is…
A departure from GAAP
Identify the information included in the opinion paragraph of an auditor’s report that is qualified due to a major inadequacy in the computerized accounting records
Opinion paragraph indicates exception is due to possible effects
On financial statements
When the opinion paragraph of an auditor’s report is qualified due to a major inadequacy in the computerized accounting records there is no indication that…
There is inadequate disclosure of necessary information
When an auditor makes reference to the report of another auditor there is…
No additional paragraph added to the report
What type of auditor’s report should be issued when financial statements of an entity that follows GASB standards include a justified departure from GAAP?
Unmodified opinion, including separate emphasis of matter
Paragraph explaining departure from GAAP
The predecessor auditor should obtain a representation letter from…
Both management and the successor auditor
AU-C 720, states that if a material inconsistency exists and the client refuses to revise the other information the auditor should…
Include an emphasis of matter paragraph that explains the
Inconsistency
AU-C 720, states that if a material inconsistency exists and the client refuses to revise the other information. Financial statements in this circumstance are…
Not misstated
Identify a situation where the auditor’s report would refer to a basis of accounting other than GAAP under AU-C
Reports on compliance with aspects of regulatory requirements
Related to audited financial statements
as special purpose financial reporting frameworks
The objective of a review of financial information is to…
Provide a basis for reporting on whether material modification
Should be made to conform with GAAP
An accountant’s review report is not part of…
The registration statement within the meaning of Section 11 of
The Securities Act of 1933
In regards to an independent accountant’s review report on interim financial information presented in a registered statement, under certain conditions an accountant is…
Required to update the report
Circumstances which lead to a modification of an interim report include…
Departure from GAAP
