cpa audit review ch 16 review 1

Card Set Information

Author:
Joens1313
ID:
286069
Filename:
cpa audit review ch 16 review 1
Updated:
2014-10-16 23:28:12
Tags:
cpa audit review 16
Folders:

Description:
cpa audit review ch 16 review 1
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user Joens1313 on FreezingBlue Flashcards. What would you like to do?


  1. A CPA is considered not associated with unaudited financial statements of a public entity when (s)he  

    Performed a review of an issuer’s unaudited financial statements that are presented in a quarterly report to the shareholders.  

    Completed an audit and reported on the financial statements that, without the CPA’s consent, were part of a prospectus including unaudited financial statements.

    Received all input data from the client, analyzed it, and returned it to the client for processing by an independent computer service company.

    Assisted in the preparation of the unaudited financial statements for an issuer.
    Completed an audit and reported on the financial statements that, without the CPA’s consent, were part of a prospectus including unaudited financial statements.  


    PCAOB auditing standards apply to engagements involving issuers. Under these standards, a CPA is associated with unaudited financial statements of a public entity when (s)he prepares or assists in preparing them or consents to the use of his/her name with them. If neither condition is met, the CPA is not associated with the unaudited statements in the prospectus (PCAOB Interim Auditing Standards).
  2. The financial statements include a separate statement of changes in equity. This statement should  

    Be excluded from both the introductory and opinion paragraphs.

    Be identified in the introductory paragraph of the report and must be reported on separately in the opinion paragraph.  

    Be identified in the introductory paragraph of the report but need not be reported on separately in the opinion paragraph.

    Not be identified in the introductory paragraph but should be reported on separately in the opinion paragraph.
    Be identified in the introductory paragraph of the report but need not be reported on separately in the opinion paragraph. 

    The balance sheet, statement of income, statement of changes in equity, and statement of cash flows are the financial statements upon which the auditor customarily reports. The introductory paragraph identifies the titles of the entity’s financial statements. However, the statement of changes in equity and a separate statement of comprehensive income are not separately reported on the opinion paragraph. The reason is that changes in equity and comprehensive income are included in financial position, results of operations, and cash flows.
  3. The auditor may express an unmodified opinion on one of the financial statements and express a qualified or adverse opinion or disclaim an opinion on another if the -------------------------------------.
    circumstances warrant
  4. True or False

    An auditor may not express an unmodified opinion on one financial statement and a qualified opinion on another.
    False.

    The auditor may express an unmodified opinion on one of the financial statements and express a qualified or adverse opinion or disclaim an opinion on another if the circumstances warrant.
  5. True or False

    In the standard report, the opinion paragraph contains three sentences.
    False.

    The opinion paragraph presents the auditor’s conclusion.

    It contains one sentence.
  6. True or False

    The introductory paragraph describes the nature of the audit.
    False.

    The introductory paragraph identifies the financial statements and period(s) under audit.

    The auditor’s responsibility section describes the nature of the audit.
  7. True or False

    The description about management‘s responsibility for the financial statements in the auditor’s report would ordinarily reference a separate statement by management about such responsibilities if such a statement is included in a document containing the auditor’s report
    False.

    The auditor’s report should not reference a separate statement by management about its responsibilities if such a statement is included in a document containing the auditor’s report.For example, if management includes a description of their responsibility for internal control in a section of the annual report, the auditor’s report should not reference that section as it may lead users to believe the auditor is lending assurance to the description.
  8. True or False

    A qualified opinion should be expressed if a newly adopted accounting principle is not generally accepted, but the effect of the change is not so significant that it overshadows the financial statements as a whole.
    True.

    A qualified opinion should be expressed if a newly adopted accounting principle is not generally accepted, the method of accounting for the effect of the change is not in conformity with GAAP, or management’s justification for the change is not reasonable.
  9. True or False

    Whenever an accounting change results in a qualified or adverse opinion for the year of change, the possible effects should be considered in reporting on financial statements for subsequent years.
    True.

    If the statements for the year of change are presented and reported on with a subsequent year’s statements, the report should disclose the auditor’s reservations about the earlier statements.
  10. True or False

    When a qualified opinion results from a scope limitation or insufficient evidence, the situation is described in an explanatory paragraph following the Opinion paragraph.
    False.

    When a qualified opinion results from a scope limitation or insufficient evidence, the situation is described in a Basis for Qualified Opinion paragraph preceding the Opinion paragraph.

    The wording in the Opinion paragraph should indicate that the qualification pertains to the possible effects on the financial statements and not to the scope limitation itself.
  11. True or False

    The auditor must prepare and include in the report a basic financial statement omitted by management.
    False.

    The auditor need not prepare and include in the report a basic financial statement omitted by management, such as a statement of cash flows.The opinion would be appropriately modified.
  12. True or False

    When issuing a disclaimer of opinion, piecemeal opinions should be expressed when the auditor believes certain identified items are presented fairly in the financial statements.
    False.

    Piecemeal opinions (expressions of opinion as to certain identified items) should not be expressed when the auditor has disclaimed an opinion (or has expressed an adverse opinion) because they would overshadow or contradict the report issued.

What would you like to do?

Home > Flashcards > Print Preview