Audit Ch. 15 Day 1

Audit reports explicitly state that the financial statements are presented fairly.

• True

• False

If an auditor cannot issue an unqualified opinion, it can

• Issue an unqualified opinion, with report modifications

• Qualify the opinion

• Issue an adverse opinion

• Issue a disclaimer of opinion

Who is responsible for the Company's financial statements?

• Shareholders

• Auditors

• Company management

• SEC

Errors due to fraud receive more emphasis in the audit report.

• True

• False

Answer explanation

"free of material misstatement, whether due to error or fraud."

The notes to the financial statement are covered by the audit opinion.

• True

• False

The date of the audit report is

• the most recent year-end of the Company

• the date fieldwork is completed

• no earlier than the date the auditor has obtained sufficient appropriate audit evidence

When misstatements are material and pervasive, the auditor issues

• a qualified opinion

• an unqualified opinion

• an adverse opinion

• no opinion

A disclaimer of opinion should NOT be expressed when

• A scope limitation exists (and a qualified opinion is not appropriate)

• Substantial doubt exists about the client being a going concern (and an additional paragraph to an unqualified opinion is not appropriate)

• there are material departures from GAAP

• the auditor lacks independence

Answer explanation

These are all reasons to disclaim an opinion except material departures from GAAP are a client issue and should result in a qualified or adverse opinion.