cpa audit review ch 17 review 2

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Joens1313
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cpa audit review ch 17 review 2
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2014-10-22 23:13:17
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cpa audit review 17
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cpa audit review ch 17 review 2
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  1. 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

    Refer to the change in an emphasis-of-matter paragraph.  

    Refer to the change in the opinion paragraph.  

    Not refer to consistency in the auditor’s report.

    Explicitly concur that the change is preferred.
    Not refer to consistency in the auditor’s report.  

    If the change in principle does not have a material effect on the current-year statements, the auditor need not recognize the change in the current-year report.
  2. An auditor has previously expressed a qualified opinion on the financial statements of a prior period because of a material misstatement. The prior-period financial statements are restated in the current period to conform with the applicable reporting framework. The auditor’s updated report on the prior-period financial statements should

    Bear the same date as the original auditor’s report on the prior period.  

    Express an unmodified opinion concerning the restated financial statements.  

    Qualify the opinion concerning the restated financial statements because of a change in accounting principle.

    Be accompanied by the original auditor’s report on the prior period.
    Express an unmodified opinion concerning the restated financial statements. 

    .If an auditor has previously modified the opinion on statements of a prior year because of a material misstatement, and the statements are subsequently restated in conformity with the applicable reporting framework, the auditor’s updated report on the prior period’s statements should indicate that they have been restated and should express an unmodified opinion.
  3. Comparative financial statements include the financial statements of the prior year that were audited by a predecessor auditor whose opinion is not presented. If the predecessor’s opinion was qualified, the auditor should  

    Indicate the reasons for the qualification in the predecessor auditor’s opinion.  

    Express an opinion only on the current year’s statements and make no reference to the prior year’s statements.  

    Issue an updated comparative audit report indicating the division of responsibility.

    Request the client to reissue the predecessor’s report on the prior year’s statements.
    Indicate the reasons for the qualification in the predecessor auditor’s opinion. 

    When the predecessor’s report is not presented, the auditor’s report should include in an other-matter paragraph (1) a statement that the financial statements of the prior period were audited by another auditor, (2) the date of the report, (3) the opinion expressed, (4) the reasons if the opinion was modified, and (5) the nature of any emphasis-of-matter or other-matter paragraph.
  4. The auditor has a substantial doubt about the firm’s ability to continue as a going concern for a reasonable period of time. Accordingly, the auditor should include an emphasis-of-matter paragraph after the opinion paragraph in the report. This paragraph should include the terms “-----------------” and “--------------------------.” The specific phrases included in the question are not required.
    substantial doubt


    going concern.”
  5. Before reissuing the prior year’s auditor’s report on the financial statements of a former client, the predecessor auditor should obtain a letter of representations from the

    Former client’s board of directors.  

    Former client’s attorney.  

    Securities and Exchange Commission.

    Successor auditor.
    Successor auditor.  

    Before reissuing the report, the predecessor auditor should consider whether the report is still appropriate. The predecessor auditor should (1) read the current period financial statements, (2) compare the prior period statements reported on with those to be presented comparatively, and (3) obtain written representations from the successor auditor and management (AU-C 560).

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