Deck 16: Audit, Review and Other Reports

Question 1

A justified departure from the accounting standards will result in the issuance of an adverse opinion.

Answer 1

False

Question 2

When the auditor concludes that there are no material misstatements the auditor would typically issue an unqualified opinion.

Answer 2

True

Question 3

If the misstatement can be isolated to one item, an emphasis of matter can be expressed rather than a qualified opinion.

Answer 3

False

Question 4

A compilation may be performed by practitioners who are not certified or licensed.

Question 5

APRA requires an insurance company to prepare its financial statements in accordance with statutory accounting principles. This situation may prevent an auditor from issuing a special report on the financial report as this is not a recognised alternative comprehensive basis.

Question 6

ASIC requires listed companies to have half-yearly financial information reviewed by independent auditors.

Question 7

A standard unqualified audit report will not be issued if:

A) there are material violations of accounting standards
B) disclosures are inadequate
C) the accounting estimates made by management are unreasonable
D) there has been a change in accounting principles that have had a material effect on the financial statements

Question 8

An emphasis of matter paragraph must be used when:

A) the financial framework used is acceptable
B) there is no material uncertainty in relation to the going concern
C) the auditor concurs that additional disclosures need to be made to prevent the financial statements or notes being misleading
D) there are no material contingent liabilities

Question 9

Compilations can be performed for:
$\begin{array}{lll}\begin{array}{c}\text { Public } \\ \underline{\text { companies} }\end{array} & \begin{array}{c}\text { Non-public } \\ \underline{\text { companies }}\end{array} \\\end{array}$

A) $\begin{array}{lll} \text { Yes } &\quad\quad\quad\quad \text { Yes } \\ \end{array}$
B) $\begin{array}{lll}\text { No } &\quad\quad\quad\quad \text { No } \\\end{array}$
C) $\begin{array}{lll} \text {No } & \quad\quad\quad\quad\text { Yes } \\ \end{array}$
D) $\begin{array}{lll}\text { Yes } & \quad\quad\quad\quad\text { No }\end{array}$

Question 10

When the practitioner is not independent with respect to a compilation client, the practitioner must:

A) not accept the engagement
B) include a separate paragraph in the report stating the lack of independence
C) change the engagement to a review engagement
D) issue a disclaimer

Question 11

When the practitioner is not independent with respect to a compilation, the practitioner must:

A) not accept the compilation engagement
B) include a separate paragraph in the compilation report stating the lack of independence
C) provide a review report
D) report the non-compliance with the AICPA

Question 12

A practitioner is required to be independent to perform:
$\begin{array}{llll} & \text {Audits } & \text { Reviews } & \text { Compilations } \\\end{array}$

A) $\begin{array}{llll} \text { Yes } &\quad\quad \text { Yes } &\quad\quad \text { Yes } &\end{array}$
B) $\begin{array}{llll} \text { Yes }&\quad\quad \text { Yes } & \quad\quad\text { No } \\\end{array}$
C) $\begin{array}{llll} \text { Yes } &\quad\quad \text { No } &\quad\quad\ \text { No } \\\end{array}$
D) $\begin{array}{llll} \text { Yes } & \quad\quad\text { No } &\quad\quad \text { Yes }\end{array}$

Question 13

The auditor's responsibility paragraph of an unqualified opinion mostly gives information relating to:

A) division of responsibilities
B) the final assessment of a company's standings with the audit firm
C) the statements and dates under audit
D) audit planning and procedure

Question 14

Audits of interim financial statements are subject to:

A) statements on review for public practitioners
B) standards set by ASIC
C) standards of the Auditing and Assurance Standards Board.
D) not subject to any standards

Question 15

Review engagements on the half-yearly financial information of public companies must be performed in accordance with:

A) statements on standards for accounting and review services
B) standards of the Auditing and Assurance Board
C) statements on reviews by ASIC
D) standards set by the Australian Securities Exchange

Question 16

Disclaimers of opinion can only be issued based on:

A) violations of accounting standards
B) incorrect estimates
C) going concern
D) material & pervasive scope limitation

Question 17

Qualified opinions can only be issued based on:

A) violations of accounting standards
B) incorrect estimates
C) going concern
D) lack of independence

Question 18

Adverse opinions can only be issued by practitioners based on:

A) violations of accounting standards
B) incorrect estimates
C) going concern
D) lack of independence

Question 19

Violations of accounting standards resulting in qualified opinions affect the standard audit report by:

A) modifying the scope paragraph
B) adding an explanatory paragraph before the opinion paragraph
C) modifying the opinion paragraph to read 'except for'
D) both B and C

Question 20

Non-attestation reporting
For a compilation report, identify:
A. for whom the report may be performed
B. the procedures the auditor must take
C. type of assurance provided
D. requirements regarding auditor independence.

Question 21

Changes in reports
Discuss the three types of reporting situations when a special purpose financial report is prepared.