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Topic 3 - Audit Opinion

The document discusses different types of audit opinions including qualified, unqualified, adverse, and disclaimer of opinions. It provides examples of situations that would result in each type of opinion and discusses key elements included in the audit report for each.

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Kimberly parcia
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61 views3 pages

Topic 3 - Audit Opinion

The document discusses different types of audit opinions including qualified, unqualified, adverse, and disclaimer of opinions. It provides examples of situations that would result in each type of opinion and discusses key elements included in the audit report for each.

Uploaded by

Kimberly parcia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Topic 3 - Audit Opinion

True/False
Indicate whether the statement is true or false.

 
 1. Review reports issued by auditors give positive assurance as to the fair presentation of financial
statements.
  F 
 2. Negative assurance infers that nothing has come to the reviewer's attention that requires change.
  T 
 3. The audit report delineates the responsibility of client management and that of the audit firm.
  T 
 4. Andrews Corporation adopted an accounting principle that is a material departure from GAAP. The
auditor determined that the financial statements are fairly presented, except for this specifically
  F 
identifiable GAAP departure, and therefore would issue a disclaimer of opinion. 

 5. Uncertainties, such as doubt about the going concern of a client, may result in an adverse opinion.
  F 
 6. A justified departure from GAAP will result in the issuance of an adverse opinion.
Company
  F  (a) Form of (b) Paragraph(s) Modified (c) Explanatory
Audit Report Paragraph
 7. When financial statements contain generally accepted accounting principles in the current year that
Necessary
are different from the generally accepted accounting principles used in the preceding year, the auditor
  T  will typically make mention of it in the opinion.
Company A Qualified Opinion Yes
 8. A client that has a departure from generally accepted accounting standards that is immaterial will
Company Breceive a Disclaimer
qualified or adverse opinionOmit Introductory, Yes
  F 
Aiuditor’s Responsibility,
 9. The failure of a client to include a statementOpinion
of cash flow will result in the issuance of a disclaimer of
opinion by the auditor.
  F 
Company C Qualified Aiuditor’s Responsibility/Opinion Yes
 10. When the auditor is unable to obtain sufficient, competent evidence concerning the beginning
Company
  F  Dinventory,Unqualified N/A by adding an explanatory paragraph
which is material, the report is modified No prior to the
opinion paragraph and appropriate modification to the scope paragraph.
Company E Unqualified N/A Yes
 11. The term "except for" is used in the opinion paragraph of an audit report that will be qualified for a
GAAP violation.
  T 
Company F Unqualified N/A Yes

Company 12. When
G thereAdverse
is an uncertainty surrounding the financial statements, the auditorYes
Opinion may still be able to give
an unqualified opinion.
  T 
Company H Unqualified N/A Yes
 13. After the balance sheet date but prior to the last day of fieldwork the client decides to acquire
Company
  F  IPaperWeight Company to obtain a significantN/A
Unqualified increase in revenues. The auditor
Nowould probably give a
report that includes the statement: "except for the acquisition of PaperWeight Company...".
Company J
 14. The clientUnqualified
will not allow Olivia and Company, N/A
CPAs to read the minutes of theYes
board of director's
meetings that occurred during the year under audit. Such a limitation will usually result in the auditor
  T  issuing a disclaimer.

 15. When the audit client has engaged other audit firms to audit remote locations around the country, the
principal auditor must mention the other auditors in his or her report.
  F 
 
 16. If the auditor concludes that the financial statements taken as a whole are not fairly presented, the
auditor should issue an adverse opinion.
  T 

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