Exam 12: The Auditors Reporting Obligations

An auditor concludes that there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time.If the entity's disclosures concerning this matter are adequate, the auditor's report may include: Disclaimer of opinion Qualified opinion

At the end of the audit the auditor has two issues outstanding.The first is a disagreement with those charged with governance concerning the use of an inappropriate valuation method for inventory (LIFO).The second issue is significant uncertainty as to whether the entity will continue as a going concern, which is adequately disclosed in the notes to the accounts.What type of audit opinion should the auditor express?

For a Corporations Act 2001 audit, the auditor has reporting obligations to:

When a financial report is presented that is not in conformity with accounting standards, an auditor may issue Qualified opinion Disclaimer of opinion

The basic elements of the auditor's standard report for a Corporations Act 2001 audit include all of the following except:

Due to time and staff restrictions the auditor was unable to attend the inventory stocktake at a remote branch location for Outback Ltd.The inventory at this site accounted for 30 per cent of total assets.Alternative procedures were applied satisfactorily.The auditor should issue:

Which combination of the following three possibilities for improving the communication effectiveness has been adopted in the recently enhanced standard form auditor's report? I: Giving the auditor's opinion on the financial report greater emphasis by placing it at the beginning of the auditor's report. II: Allowing for changing the presentation and positioning of generically-worded paragraphs explaining the respective responsibilities of management (or those charged with governance) and of the auditor to make them more useful. III: The auditor providing additional information about key audit matters.

For the purposes of the approved auditing standards, what are the differences, if any, between the phrases 'true and fair view' and 'presents fairly, in all material respects'?

Your client has followed approved accounting standards but a note to the financial report indicates the early application of an accounting standard that has a pervasive effect on the financial report in advance of its effective date.The note details the reasons for this view.You, as the auditor, concur that this additional note disclosure is necessary to give a true and fair value.What type of opinion should you issue?

When restrictions are imposed by the client that significantly limit the auditor's ability to audit fixed assets (a material part of the balance sheet), the auditor generally should issue which of the following opinions?

When an auditor expresses an adverse opinion, the opinion paragraph should include:

The financial report of Charger Ltd indicates that there are going concern problems.After considering additional audit evidence, the auditor concludes that the client will not continue as a going concern during the next year.What type of audit opinion should the auditor express?

Which of the following situations will not result in modification of the auditor's report because of a scope limitation?

Your client has followed approved accounting standards but a note to the financial report indicates that the application of certain standards results in the financial report being materially misstated.The note details the reasons for this view.You do not concur with this view.What type of opinion should you issue?

How are the governing body's and auditor's responsibilities stated in the current auditor's report? Governing body's responsibility Auditor's responsibility

When a contingency is resolved immediately subsequent to the issuance of a report that was modified with respect to the contingency, the auditor should:

Certain circumstances, while not affecting the auditor's opinion on the financial report, may require the auditor to add an Emphasis of Matter paragraph to the report.These circumstances include all of the following except where:

When a client declines to include a statement of cash flows in its financial report, the auditor's report will usually:

Information in the chairman's address, accompanying the financial report in an entity's annual report, is inconsistent with information contained in the audited financial report.The entity refuses to alter the chairman's address.The appropriate auditor's report is:

Your audit client has not written inventory down to net realisable value in accordance with approved accounting standards.The write-down would reduce current assets by 8 per cent and net profit before income tax by 12 per cent.What type of auditor's report should you issue?