cpa audit review ch 17 review 6
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An auditor most likely will express an unmodified opinion and will not add additional language to the report if the auditor
Believes that there is a remote likelihood of a material loss resulting from an uncertainty.
Normally, an uncertainty does not require the auditor to add a paragraph to the report
When there has been a change in accounting principles but the effect of the change on the comparability of the financial statements is not material, the auditor should
Not refer to the change in the auditor’s report.
An auditor should evaluate whether the comparability of the financial statements has been materially affected by (1) a change in accounting principle or (2) adjustments to correct a material misstatement in previously issued financial statements. If the auditor’s report does not state otherwise, it implies that comparability has not been materially affected by such changes or corrections.
An auditor’s report on comparative financial statements should be dated as of the date of the
No earlier than completion of the auditor’s most recent audit.
The auditor’s report on comparative financial statements should be dated no earlier than the date the auditor obtained sufficient appropriate evidence for the opinion on the most recent audit.
Jewel, CPA, audited Infinite Co.’s prior-year financial statements. These statements are presented with those of the current year for comparative purposes without Jewel’s auditor’s report, which expressed a qualified opinion. In drafting the current year’s auditor’s report, the current auditor should
Not name Jewel as the predecessor auditor
Indicate the type of opinion expressed by Jewel
Indicate the reasons for Jewel’s qualification
The auditor should state in an other-matter paragraph (following the opinion paragraph and any emphasis-of-matter paragraph) (1) that the prior year’s financial statements were audited by another auditor, (2) the date of the report, (3) the type of opinion expressed and the reasons for any modification, and (4) the nature of any emphasis-of-matter or other-matter paragraph. Furthermore, the predecessor auditor is not named.
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