This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Audit situations 1 through 10 present various independent factual situations an auditor might ... (Read 23 times)

markburs

  • Full Member
  • ***
  • Posts: 147
on: Aug 21, 2022
Audit situations 1 through 10 present various independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue, and List B represents the report modifications (if any) that would be necessary. For each situation, select one response from List A and one from List B. Select, as the best answer for each item, the action the auditor normally would take. Items from either list may be selected once, more than once, or not at all.

Assume the following:
•The auditor is independent
•The auditor previously expressed an unmodified opinion on the prior-year financial statements unless otherwise noted
•Only single-year (not comparative) statements are presented for the current year (unless otherwise stated)
•The conditions for an unmodified opinion exist unless contradicted in the factual scenario
•The conditions stated in the factual scenario are material
•No report modifications are to be made except in response to the factual scenario

Factual Scenario
1. The financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows in conformity with GAAP. 
2. In auditing the Long-Term Investments account, an auditor is unable to obtain audited financial statements for an investee located in a foreign country. The auditor concludes that sufficient competent evidential matter regarding this investment cannot be obtained but it is not pervasive to the financials as a whole. 
3. Due to recurring operating losses and working capital deficiencies the auditor has substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. However, the financial statement disclosures are adequate. 
4. The principal auditor decides to refer to the work of another auditor, who audited a wholly owned subsidiary of the entity and issued an unqualified opinion. 
5. An entity issues financial statements that present financial position and results of operations but omits the related statement of cash flows. Management discloses in the notes to the financial statements that it does not believe the statement of cash flows to be useful. 
6. An entity changes its depreciation method for production equipment from straight-line to units of production based on hours of utilization. The auditor concurs with the change, although it has a material effect on the comparability of the entity's financial statements. 
7. An entity is a defendant in a lawsuit alleging infringement of certain patent rights. However, management cannot reasonably estimate the ultimate outcome of the litigation. The auditor believes that there is a reasonable possibility of a significant material loss, but the lawsuit is adequately disclosed in the notes to the financial statements. 
8. An entity discloses certain lease obligations in the notes to the financial statements. The auditor believes that the failure to capitalize these leases is a departure from GAAP. 
9. The entity wishes to show comparative financial statements and include the prior year. However, the prior year financial statements contained a qualification due to an inappropriate method of GAAP. Accordingly, management corrected the prior year GAAP deficiency and included the updated numbers in the comparative financials for the current year.
10. The entity wishes to show comparative financial statements and include the prior year. However, the prior year financial statements were audited by another auditor who refuses to reissue his opinion. 

List A
Opinion Choices		List B
Report Modification Choices
A QualifiedH Describe the circumstances in an emphasis-of-matter paragraph preceding the opinion paragraph w/o modifying the three standard paragraphs.
B UnmodifiedI Describe the circumstances in the opinion paragraph w/o adding an emphasis-of-matter paragraph.
C AdverseJ Describe the circumstances in an emphasis-of-matter paragraph preceding the opinion paragraph and modify the opinion paragraph.
D DisclaimerK Describe the circumstances in an emphasis-of-matter paragraph following the opinion paragraph and modify the opinion paragraph.
E Either Qualified or AdverseL Describe the circumstances in an emphasis-of-matter paragraph preceding the opinion paragraph and modify the scope & opinion paragraph.
F Either Disclaimer or AdverseM Describe the circumstances in an emphasis-of-matter paragraph following the opinion paragraph and modify the scope & opinion paragraph.
G Either Qualified or DisclaimerN Describe the circumstances in the scope paragraph w/o adding an emphasis-of-matter paragraph.
​O Describe the circumstances in an emphasis-of-matter paragraph following the opinion paragraph w/o modifying the three standard paragraphs.​
​P Describe the circumstances in the introductory paragraph w/o adding an emphasis-of-matter paragraph.
.Q Describe the circumstances in the introductory paragraph w/o adding an emphasis-of-matter paragraph, and modify the scope & opinion paragraphs.
​R Issue the standard auditor's report w/o modification.
​S None of the above.
Auditing and Assurance Services ¦ Arens, Elder, Beasley, Hogan ¦ 17th Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by markburs on Aug 21, 2022

jacquelyngibson

  • Full Member
  • ***
  • Posts: 161
Reply #1 on: Aug 21, 2022
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 25% of students answer this correctly


markburs

  • Member
  • Posts: 147
Reply 2 on: Aug 21, 2022
YES! Correct, THANKS for helping me on my review

Jossy

  • Member
  • Posts: 336
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Although not all of the following muscle groups are commonly used, intramuscular injections may be given into the abdominals, biceps, calves, deltoids, gluteals, laterals, pectorals, quadriceps, trapezoids, and triceps.

Did you know?

The first monoclonal antibodies were made exclusively from mouse cells. Some are now fully human, which means they are likely to be safer and may be more effective than older monoclonal antibodies.

Did you know?

In women, pharmacodynamic differences include increased sensitivity to (and increased effectiveness of) beta-blockers, opioids, selective serotonin reuptake inhibitors, and typical antipsychotics.

Did you know?

Multiple sclerosis is a condition wherein the body's nervous system is weakened by an autoimmune reaction that attacks the myelin sheaths of neurons.

Did you know?

The first oral chemotherapy drug for colon cancer was approved by FDA in 2001.

Independent assortment of chromosomes at meiosis explains Mendel’s ratio Independent assortment of chromosomes at meiosis explains Mendel’s ratio
Meiosis Accounts for Independent Assortment of Alleles p1 Meiosis Accounts for Independent Assortment of Alleles p1
Transitions from One Stage to Another: Some Possible Triggering Situations of Experiences that may ... Transitions from One Stage to Another: Some Possible Triggering Situations of Experiences that may ...
Independent assortment versus genetic linkage Independent assortment versus genetic linkage
Light-independent reactions in C3 plants. Light-independent reactions in C3 plants.
Animated Light-independent reactions in CAM plants. Animated Light-independent reactions in CAM plants.