Auditor's Report Quiz

A major purpose of the auditor's report on financial statements is to

• Assure investors of the complete accuracy of the financial statements.

• Enhance the degree of confidence of intended users in the financial statements.

• Deter creditors from extending loans in high-risk situations.

• Describe the specific auditing procedures undertaken to gather evidence for the opinion.

Whenever there is a scope limitation, the appropriate response is to issue a/an

• Qualified opinion

• Adverse opinion

• Disclaimer of opinion

• Unmodified report, a qualification of scope and opinion, or a disclaimer, depending on materiality.

When a qualified opinion is expressed, the implication is that the auditor

• Does not believe the financial statements are presented in accordance with the applicable financial reporting framework.

• Does not know the financial statements are presented in accordance with the applicable financial reporting framework.

• Believes the financial statements are presented fairly.

• Believes the financial statements are presented fairly "except for" a specific item of them.

If a misstatement is immaterial to the financial statements of the company for the current period, but is expected to have a material effect in future periods, it is appropriate to express a/an

• Qualified opinion

• Unmodified opinion

• Disclaimer of opinion

• Adverse opinion

In which of the following situations would an auditor ordinarily choose between expressing a qualified opinion or an adverse opinion?

• The auditor did not observe the entity's physical inventory and is unable to become satisfied as to its balance by other auditing procedures.

• The financial statements fail to disclose information that is required by the applicable financial reporting framework.

• The auditor is asked to report only on the entity's statement of financial position and not on the other general purpose financial statements.

• Events disclosed in the financial statements cause the auditor to have substantial doubt about the entity's ability to continue as a going concern.

In which of the following circumstances would an auditor most likely add an Emphasis of Matter paragraph to the auditor's report while expressing an unmodified opinion?

• The auditor is asked to report on a single financial statement (e.g., a statement of financial position).

• There is significant doubt about the entity's ability to continue as a going concern.

• Management's estimates of the effects future events are unreasonable.

• Certain transactions cannot be tested because of management's records retention policy.

If an auditor is satisfied that sufficient evidence supports management's assertions about an uncertainty and its presentation or disclosure, the auditor should

• Express a modified opinion with an Emphasis of Matter paragraph.

• Express an unmodified opinion with an Emphasis of Matter paragraph.

• Express an unmodified opinion with an Other Matter paragraph.

• Express a modified opinion or disclaim an opinion, depending upon the materiality of the loss.

To distinguish it from reports that might be issued by others, such as by officers of the entity, the board of directors, or from the reports of other auditors who may not have to abide by the same ethical requirements as the independent auditor, the auditor's report should have an appropriate

• Addressee

• Title

• Signature

• Opinion

The audit report date on an unmodified report indicates

• The last date on which users may institute a lawsuit against either the client or the auditor.

• The last day of the auditor's responsibility for the review of significant events occurring after the end of the reporting period.

• The end of the reporting period.

• The date on which the financial statements were filed with the Securities and Exchange Commission.

The auditor's report should be addressed

• Only to the shareholders of the entity whose financial statements are being audited.

• Only to the board of directors of the entity whose financial statements are being audited.

• To the CEO or the CFO of the entity whose financial statements are being audited.

• Either to the shareholders or the board of directors of the entity whose financial statements are being audited.