Deck 13: Audit Reports

Question 1

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?

A)the accounting records adequately disclose the significant accounting policies used
B)the accounting policies selected are consistent with the applicable financial reporting framework
C)the accounting estimates made by management are predictable
D)the information presented in the financial statements is relevant,reliable,comparable,and understandable
E)the financial forecasts made by management are accurate
F)both A and C
G)both B and D
H)both D and E

Answer 1

G

Question 2

The auditor has general audit responsibilities when he issues an audit report on financial statements prepared in accordance with a financial reporting framework that is generally accepted in another country.

Answer 2

False

Question 3

Management is responsible for

A)the accuracy and reliability of the financial statements in accordance with the applicable financial reporting framework
B)the existence and completeness of the financial statements in accordance with the applicable financial reporting framework
C)the valuation and relevancy of the financial statements in accordance with the applicable financial reporting framework
D)the preparation and fair presentation of the financial statements in accordance with the applicable financial reporting framework

Answer 3

D

Question 4

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?

A)the financial statements provide adequate disclosures
B)the accounting policies selected are consistent with management's policies
C)the accounting estimates made by management are predictable
D)the terminology used in the financial statements is appropriate
E)the financial forecasts made by management are accurate
F)both A and B
G)both A and D
H)both C and E

Question 5

Two standards issued by the PCAOB (Auditing Standard No.4 and Auditing Standard No.5)provide guidance related to financial reporting.These standards apply to both public and private companies.

Question 6

There are four modifications the auditor can make to the opinion in the independent auditor's report.The auditor can modify the opinion by issuing: (1)a qualified opinion; (2)an adverse opinion; (3)a disclaimer of opinion;or (4)a subject to opinion.

Question 7

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework and must also consider

A)the overall presentation,structure,and content of the financial statements
B)the accounting policies selected are consistent with management's policies
C)the accounting estimates made by management are predictable
D)whether the financial statements,including the footnotes,represent the underlying transactions in a manner that achieves fair presentation
E)the financial forecasts made by management are accurate
F)both A and D
G)both B and C
H)both D and E

Question 8

The auditing standards require the auditor to express an opinion on the financial statements in accordance with the auditor's findings.

Question 9

At the end of the audit,the auditor forms an opinion about whether the financial statements as a whole are prepared,in all material respects,in accordance with the applicable financial reporting framework.

Question 10

The audit opinion is addressed to

A)management
B)the SEC
C)the board of directors and the shareholders
D)the PCAOB

Question 11

The standard unqualified audit opinion contains four sections

A)a summary section,a section describing management's responsibilities,a section describing the auditor's responsibilities,and an opinion paragraph
B)an introductory section,a section describing management's responsibilities,a section describing the auditor's responsibilities,and an opinion paragraph
C)an introductory section,a section describing the client's responsibilities,a section describing the auditor's procedures,and an opinion paragraph
D)an introductory section,a section describing management's responsibilities,a section describing the auditor's responsibilities,and a conclusion paragraph

Question 12

If the auditor expects to include an emphasis of matter or other matter paragraph in the auditor's report,the auditor should communicate with those responsible for governance regarding this expectation and the proposed wording of the paragraph.

Question 13

In which paragraph do the words "present fairly,in all material respects," appear?

A)introductory paragraph
B)management's responsibilities
C)the auditor's responsibilities
D)opinion paragraph

Question 14

The third section of the audit report describes the auditor's responsibilities.This section states that the auditor is responsible for

A)asking management and others in the company,including the in-house legal counsel about potential legal liabilities
B)reviewing minutes of meetings of those charged with governance and correspondence between the company and its internal counsel
C)expressing an opinion on the financial statements
D)testing the client's system internal controls

Question 15

If management annual report on internal controls is incomplete or improperly presented,the auditor should modify his report to include an explanatory paragraph describing his reasons for the determination that the report is incomplete or improperly presented.

Question 16

Management's responsibilities include

A)the testing of internal controls relevant to the preparation of financial statements that are free of material misstatement
B)the design and implementation of internal controls relevant to the preparation of financial statements that is free of material misstatement
C)the design and implementation of control systems relevant to the preparation of financial statements that are free of material misstatement
D)the design and implementation of internal controls to ensure that the preparation of financial statements are free of material misstatement

Question 17

The auditor should express an unmodified opinion when the auditor concludes that the financial statements are prepared,in all material respects,in accordance with the applicable financial reporting framework.The auditor should modify his opinion if the auditor concludes that

A)based on the evidence obtained,the financial statements are not free from material misstatement
B)based on the management assertions obtained,the financial statements are not free from material misstatement
C)based on the attorney letter obtained,the financial statements are not free from material misstatement
D)he is unable to obtain reasonable evidence to conclude that the financial statements are free from material misstatement
E)he is unable to obtain sufficient appropriate evidence to conclude that the financial statements are free from material misstatement
F)both A and E
G)both B and C
H)both D and E

Question 18

Which of the following is not a reporting standard?

A)Forming an Opinion and reporting on Financial Statements
B)Modifications to the Opinion in the Independent Auditor's Report
C)Reissuance and/or Dual dating the Opinion in the Independent Auditor's report
D)Emphasis of A Matter Paragraphs in the Independent Auditor's report

Question 19

When an audit report is issued for a group audit,the group engagement partner must decide whether to assume the responsibility for the work of the component auditors or whether to refer to their work in the audit report.

Question 20

The auditor must evaluate whether the financial statements are consistent with the requirements of the applicable financial reporting framework for which of the following items?

A)the financial statements adequately disclose the significant accounting policies used
B)the accounting policies selected are consistent with management's policies
C)the accounting estimates made by management are reasonable
D)the information presented in the accounting records is relevant,reliable,comparable,and understandable
E)the financial forecasts made by management are accurate
F)both A and C
G)both C and E
H)both D and E

Question 21

The auditor issues a disclaimer of opinion when

A)the auditor has sufficient appropriate audit evidence and concludes that the misstatements to the financial statements are material,but not pervasive
B)the auditor is unable to obtain sufficient appropriate evidence,but the auditor concludes that the possible effects of the misstatement could be both material and pervasive
C)the auditor is unable to obtain sufficient appropriate evidence,but the auditor concludes that the possible effects of the misstatement could be material,but not pervasive
D)the auditor has reasonable evidence to determine that the financial statements are not free from material misstatement
E)the auditor has sufficient evidence to determine that the financial statements are not free from material misstatement

Question 22

Circumstances where an "emphasis of a matter" paragraph may be necessary include

A)an uncertainty relating to the prior outcome of exceptional litigation or regulatory action
B)early application (where permitted)of a new accounting standard that has a pervasive effect on the financial statements after of its effective date
C)a major catastrophe that has had,or continues to have,a significant effect on the entity's financial position
D)insignificant transactions with related parties
E)unusually important subsequent events
F)both A and B
G)both B and D
Both C and E

Question 23

Which of the following describe an "other matter" paragraph in an audit report?

A)the paragraph is found before the opinion paragraph of the audit report
B)the paragraph indicates that the auditor's opinion is modified with respect to the matter emphasized
C)the paragraph is found after the opinion paragraph of the audit report
D)the paragraph is used when the auditor considers it necessary to communicate a matter other than those that are present or disclosed in the financial statements that the auditor believes is relevant to user's understanding of the audit,the auditor's responsibility,or the auditor's report
E)the paragraph indicates that the auditor's opinion is not modified with respect to the matter emphasized

Question 24

If there is a material misstatement in the financial statements that is related to a specific account in the financial statements,the auditor should

A)in the basis for qualified opinion modification paragraph,the auditor should include a description and quantification of the financial effects of the misstatement,if at all possible.If it is not possible to quantify the misstatements,the auditor should state this is the basis for adverse opinion modification paragraph.
B)in the basis for modification paragraph,the auditor should include a description and quantification of the financial effects of the misstatement,if at all possible.If it is not possible to quantify the misstatements,the auditor should state this is the basis for modification paragraph.
C)in the basis for adverse opinion modification paragraph,the auditor should include a description and quantification of the financial effects of the misstatement,if at all possible.If it is not possible to quantify the misstatements,the auditor should state this is the basis for disclaimer of opinion modification paragraph.
D)include in the basis for modification paragraph,a description explaining how the disclosure is misstated.

Question 25

When the auditor issues a disclaimer of opinion due to a material misstatement,the auditor should state in the opinion paragraph,that

A)in the auditor's opinion,because of the significance of the matter described in the basis for disclaimer of opinion paragraph,the financial statements are not presented fairly in accordance with the applicable reporting framework
B)because of the significance of the matter described in the basis for disclaimer of opinion paragraph,the auditor has not been able to obtain sufficient appropriate evidence to provide a basis for an audit opinion,and accordingly,the auditor does not express an opinion on the financial statements
C)except for the effects of the matter described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
D)except for the effects of the matter described in the basis for modification paragraph,the financial statements are not presented fairly,in all material respects,in accordance with the applicable reporting framework

Question 26

The auditor issues a qualified opinion when

A)the auditor has sufficient appropriate audit evidence and concludes that the misstatements to the financial statements are material,but not pervasive
B)the auditor is unable to obtain sufficient appropriate evidence,but the auditor concludes that the possible effects of the misstatement could be both material and pervasive
C)the auditor is unable to obtain sufficient appropriate evidence,but the auditor concludes that the possible effects of the misstatement could be material,but not pervasive
D)the auditor has reasonable evidence to determine that the financial statements are not free from material misstatement
E)the auditor has sufficient evidence to determine that the financial statements are not free from material misstatement
F)both A and C
G)both B and E
H)both D and E

Question 27

Which of the following describe an "emphasis of a matter" paragraph?

A)is found before the opinion paragraph of the audit report
B)indicate that the auditor's opinion is modified with respect to the matter emphasized
C)are found after the opinion paragraph of the audit report
D)are used when the auditor considers it necessary to communicate a matter other than those that are present or disclosed in the financial statements that the auditor believes is relevant to user's understanding of the audit,the auditor's responsibility,or the auditor's report
E)indicate that the auditor's opinion is not modified with respect to the matter emphasized
F)both A and B
G)both C and E
H)both D and E

Question 28

The auditor makes the decision about which of the modifications is appropriate based on

A)the conclusiveness of the matter causing the modification,that is,whether the financial statements are materially misstated or whether the auditor is unable to gather sufficient appropriate evidence
B)the subject of the matter causing the modification on the financial statements
C)the pervasiveness of the matter causing the modification on the financial statements
D)the nature of the matter causing the modification,that is,whether the financial statements are materially misstated or whether the auditor is unable to gather sufficient appropriate evidence
E)the persuasiveness of the matter causing the modification that is,whether the financial statements are materially misstated or whether the auditor is unable to gather sufficient appropriate evidence
F)both A and B
G)both B and E
Both C and D

Question 29

Circumstances where an "emphasis of a matter" paragraph may be necessary include

A)an uncertainty relating to the future outcome of exceptional litigation or regulatory action
B)early application (where permitted)of a new accounting standard that has a pervasive effect on the financial statements after its effective date
C)a major catastrophe that has had,or continues to have,a minor effect on the entity's financial position
D)significant transactions with related parties
E)unusually frequent subsequent events
F)both A and D
G)both B and C
H)both D and E

Question 30

When the auditor issues a qualified opinion due to the inability to obtain sufficient appropriate evidence,the auditor should state in the opinion paragraph that,

A)except for the possible effects of the matters described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
B)except for the probable effects of the matters described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
C)except for the likely effects of the matters described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
D)except for the unlikely effects of the matter described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework

Question 31

When the auditor issues a qualified opinion due to a material misstatement,the auditor should state in the opinion paragraph that,

A)except for the possible effects of the matters described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
B)except for the probable effects of the matters described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
C)except for the likely effects of the matters described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
D)except for the effects of the matter described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework

Question 32

The auditor issues an adverse opinion when

A)the auditor has sufficient appropriate audit evidence and concludes that the misstatements to the financial statements are material,but not pervasive
B)the auditor is unable to obtain sufficient appropriate evidence,but the auditor concludes that the possible effects of the misstatement could be both material and pervasive
C)the auditor is unable to obtain sufficient appropriate evidence,but the auditor concludes that the possible effects of the misstatement could be material,but not pervasive
D)the auditor has reasonable evidence to determine that the financial statements are not free from material misstatement
E)the auditor has sufficient evidence to determine that the financial statements are not free from material misstatement

Question 33

Circumstances where an "other matter" paragraph may be necessary include

A)the paragraph is relevant to the user's understanding of the audit
B)the paragraph is relevant to the user's understanding of management's responsibilities or the auditor's report
C)the paragraph explains that the reporting is done on more than one set of financial statements
D)the paragraph explains that the reporting is done on more than one entity
E)the paragraph explains that the opinion pertains to more than one set of financial statements
F)both A and C
G)both B and D
H)both C and E

Question 34

Circumstances where an "other matter" paragraph may be necessary include

A)the paragraph is relevant to the user's understanding of the audit
B)the paragraph is relevant to the user's understanding of the auditor's responsibilities or the auditor's report
C)the paragraph provides evidence that the reporting is done on more than one set of financial statements
D)the paragraph explains that the reporting is done on more than one entity
E)the paragraph explains that the opinion pertains to more than one set of financial statements
F)both A and B
G)both C and E
H)both D and E

Question 35

Circumstances where an "emphasis of a matter" paragraph may be necessary include

A)an uncertainty relating to the prior outcome of exceptional litigation or regulatory action
B)early application (where permitted)of a new accounting standard that has a pervasive effect on the financial statements in advance of its effective date
C)a major catastrophe that has had,or continues to have,a minor effect on the entity's financial position
D)insignificant transactions with related parties
E)unusually important subsequent events
F)both A and C
G)both B and E
H)both D and E

Question 36

Circumstances where an "other matter" paragraph may be necessary include

A)the paragraph is relevant to management's understanding of the audit
B)the paragraph is relevant to the user's understanding of the auditor's responsibilities or the auditor's report
C)the paragraph explains that the reporting is done on more than one set of financial statements
D)the paragraph explains that the reporting is done on more than one entity
E)the paragraph explains that the opinion pertains to more than one set of financial statements
F)both A and B
G)both B and C
H)both D and E

Question 37

When the auditor issues a qualified opinion due to a material misstatement,the auditor should state in the opinion paragraph,that

A)in the auditor's opinion,because of the significance of the matter described in the basis for qualified opinion paragraph,the financial statements are not presented fairly in accordance with the applicable reporting framework
B)because of the significance of the matter described in the basis for qualified opinion paragraph,the auditor has not been able to obtain sufficient appropriate evidence to provide a basis for an audit opinion,and accordingly,the auditor does not express an opinion on the financial statements
C)except for the effects of the matter described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
D)the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework

Question 38

Circumstances where an "emphasis of a matter" paragraph may be necessary include

A)an uncertainty relating to the prior outcome of exceptional litigation or regulatory action
B)early application (where permitted)of a new accounting standard that has a pervasive effect on the financial statements in advance of its effective date
C)a major catastrophe that has had,or continues to have,a minor effect on the entity's financial position
D)significant transactions with related parties
E)unusually frequent subsequent events
F)both A and B
G)both B and D
H)both C and E

Question 39

Modifying the audit report is necessary when the auditor

A)concludes that the financial statements are not free from material misstatement
B)suspects that the financial statements are not free from material misstatement
C)is unable to obtain sufficient appropriate evidence to conclude that the financial statements are materially misstated
D)is unable to obtain sufficient appropriate evidence to conclude that the financial statements are free from material misstatement
E)obtains sufficient appropriate evidence to conclude that the financial statements are free from material misstatement
F)both A and B
G)both A and D
H)both C and E

Question 40

Circumstances where an "emphasis of a matter" paragraph may be necessary include

A)an uncertainty relating to the future outcome of exceptional litigation or regulatory action
B)early application (where permitted)of a new accounting standard that has a pervasive effect on the financial statements after its effective date
C)a major catastrophe that has had,or continues to have,a significant effect on the entity's financial position
D)insignificant transactions with related parties
E)unusually frequent subsequent events
F)both A and B
G)both A and C
H)both D and E

Question 41

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.The communication can occur

A)after the auditor's report is issued and must be in writing for all public companies reporting to the SEC
B)before the auditor's report is issued and must be in writing for all public companies reporting to the SEC
C)after the auditor's report is issued and could be in writing for all public companies reporting to the SEC
D)before the auditor's report is issued and could be in writing for all public companies reporting to the SEC

Question 42

When the auditor issues an adverse opinion,the auditor should state in the opinion paragraph,that

A)in the auditor's opinion,because of the significance of the matter described in the basis for adverse opinion paragraph,the financial statements are not presented fairly in accordance with the applicable reporting framework
B)because of the significance of the matter described in the basis for adverse opinion paragraph,the auditor has not been able to obtain sufficient appropriate evidence to provide a basis for an audit opinion,and accordingly,the auditor does not express an opinion on the financial statements
C)except for the effects of the matter described in the basis for modification paragraph,the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework
D)the financial statements are presented fairly,in all material respects,in accordance with the applicable reporting framework

Question 43

Before the group engagement partner chooses to refer to the work of a component auditor he must obtain an understanding of the component auditor.This is done by determining

A)Whether the component auditor understands and will comply with the ethical requirements relevant to the group audit,and in particular whether the component auditor is independent
B)The component auditor's professional experience
C)The extent to which the component auditor will be able to be involved in the work of the group engagement partner
D)Whether the group engagement team will be able to obtain information affecting the consolidation process from a component auditor
E)Whether the group engagement team operates in a regulatory environment that actively oversees auditors
F)both A and D
G)both B and C
H)both D and E

Question 44

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)deficiencies identified in internal controls over the financial statements
B)other information in documents containing audited financial statements
C)agreements with management
D)consultation with other accountants
E)issues discussed with management after retention
F)both A and C
G)both B and D
H)both D and E

Question 45

Before the group engagement partner chooses to refer to the work of a component auditor he must obtain an understanding of the work of the component auditor.This is done by determining

A)Whether the component auditor understands and will comply with the ethical requirements relevant to the group audit,and in particular whether the component auditor is independent
B)The component auditor's professional demeanor
C)The extent to which the group engagement partner will be able to be involved in the work of the component auditor
D)Whether the component will be able to obtain information affecting the consolidation process from the group engagement team
E)Whether the group engagement team operates in a regulatory environment that actively oversees auditors
F)both A and C
G)both B and E
H)both D and E

Question 46

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)significant deficiencies and material weaknesses identified in internal controls over the financial statements
B)other information in documents containing financial information
C)disagreements with management
D)consultation with auditor's attorney
E)issues discussed with management after retention
F)both A and C
G)both B and E
H)both D and E

Question 47

A review consists primarily of gathering information through

A)analytical procedures and inquiries of individuals responsible for accounting decisions
B)substantive tests and observations of individuals responsible for accounting decisions
C)tests of controls and inspections of documentation
D)policies and procedures and business activity

Question 48

Before the group engagement partner chooses to refer to the work of a component auditor he must obtain an understanding of the component auditor.This is done by determining

A)Whether the component auditor understands and will comply with the ethical requirements relevant to the group audit,and in particular whether the component auditor is competent
B)The component auditor's professional competence
C)The extent to which the component auditor will be able to be involved in the work of the group engagement partner
D)Whether the component auditor will be able to obtain information affecting the consolidation process from a group engagement team
E)Whether the component auditor operates in a regulatory environment that actively oversees auditors
F)both A and C
G)both B and E
H)both D and E

Question 49

When the auditor issues a qualified or adverse opinion,the auditor

A)changes the description of the auditor's procedures to state that the auditor believes that the audit evidence the auditor obtained is sufficient and appropriate to provide a basis for the auditor's modified opinion
B)changes the description of the auditor's responsibility to state that the auditor believes that the audit evidence the auditor obtained is sufficient and appropriate to provide a basis for the auditor's modified opinion
C)changes only the opinion paragraph and adds a modification paragraph
D)changes the opinion and introductory paragraphs

Question 50

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)the auditor's responsibility under generally accepted accounting principles
B)significant personnel policies
C)managements' judgments and accounting estimates
D)audit adjustments
E)auditor's judgments about the quantity of the entity's accounting principles
F)both A and B
G)both C and D
H)both D and E

Question 51

Before the group engagement partner chooses to refer to the work of a component auditor he must obtain an understanding of the component auditor.This is done by determining

A)Whether the component auditor understands and will comply with the ethical requirements relevant to the group audit,and in particular whether the component auditor is competent
B)The component auditor's professional experience
C)The extent to which the group engagement partner will be able to be involved in the work of the component auditor
D)Whether the component auditor will be able to obtain information affecting the consolidation process from the group engagement team
E)Whether the component auditor operates in a regulatory environment that actively oversees auditors
F)both A and B
G)both C and E
H)both D and E

Question 52

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)the auditor's responsibility under generally accepted auditing standards
B)significant personnel policies
C)auditor judgments and accounting estimates
D)managements' adjustments
E)auditor's judgments about the quality of the entity's accounting principles
F)both A and B
G)both A and E
H)both C and D

Question 53

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)the auditor's responsibility under generally accepted auditing standards
B)significant personnel policies
C)managements' judgments and accounting estimates
D)managements' adjustments
E)auditor's judgments about the quantity of the entity's accounting principles
F)both A and C
G)both B and E
H)both D and E

Question 54

Before the group engagement partner chooses to refer to the work of a component auditor he must obtain an understanding of the component auditor.This is done by determining

A)Whether the component auditor understands and will comply with the ethical requirements relevant to the group audit,and in particular whether the component auditor is competent
B)The component auditor's professional competence
C)The extent to which the component auditor will be able to be involved in the work of the group engagement partner
D)Whether the group engagement team will be able to obtain information affecting the consolidation process from a component auditor
E)Whether the group engagement team operates in a regulatory environment that actively oversees auditors
F)both A and C
G)both B and D
H)both D and E

Question 55

The objective of the quarterly review is to provide auditors with information to determine whether quarterly reports

A)are free from material misstatement
B)are prepared in accordance with the applicable financial reporting framework
C)contain misleading information
D)are meeting projected financial ratios

Question 56

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)the auditor's responsibility under generally accepted accounting principles
B)significant accounting policies
C)auditor judgments and accounting estimates
D)managements' adjustments
E)auditor's judgments about the quality of the entity's accounting principles
F)both A and C
G)both B and E
H)both D and E

Question 57

When an auditor expects to modify the opinion of an audit report,the auditor should

A)communicate with those charged with governance the circumstances that led to the modification and the proposed wording of the modification
B)date and issue the report as of the end of field work
C)advise management that a modified report will be issued due to certain circumstances
D)increase substantive testing to substantiate the modified opinion

Question 58

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)the auditor's responsibility under generally accepted accounting principles
B)significant accounting policies
C)auditor judgments and accounting estimates
D)audit adjustments
E)auditor's judgments about the quantity of the entity's accounting principles
F)both A and C
G)both B and D
H)both D and E

Question 59

The SEC requires public companies to submit quarterly information (Form 10-Q or Form 10QSB)that has been

A)audited by the auditor
B)reviewed by the auditor
C)compiled by the auditor
D)read by the auditor

Question 60

An auditor may be required to or choose to restrict the use of an audit report.If an audit report is restricted as to use,it should contain

A)a "restricted use" paragraph
B)an "emphasis of a matter" paragraph
C)an "other matter" paragraph
D)"limited distribution" paragraph

Question 61

Following an audit report identifying a material weakness in internal control over financial reporting,

A)the auditor must be hired to complete a mandatory engagement to determine if a material weakness has been corrected
B)the auditor should be hired to complete an engagement to determine if a material weakness has been corrected
C)the auditor may be hired to complete a voluntary engagement to determine if a material weakness has been corrected
D)the auditor should be hired to complete a voluntary engagement to determine if a material weakness has been corrected

Question 62

The auditor has specific audit responsibilities when he issues an audit report on financial statements prepared in accordance with a financial reporting framework that is generally accepted in another country.These responsibilities apply only to audit reports issued on statements prepared in accordance with a financial reporting framework that has not been recognized by the council of the AICPA in the U.S.The financial reporting frameworks recognized in the U.S.include

A)the Cost Accounting Standards Board
B)the Financial Reporting Standards Board
C)the American Accounting Standards Board
D)the Federal Accounting Standards Advisory Board
E)the International Accounting Standards Board
F)both A and B
G)both C and E
Both D and E

Question 63

If the auditor plans to disclaim an opinion and the procedures performed by the auditor caused the auditor to identify a material weakness,the auditor's report should include

A)the disclaimer opinion with no mention of the material weakness
B)a qualified opinion with a definition of material weakness and a description of the particular weakness identified by the auditor
C)an adverse opinion with a definition of material weakness and a description of the particular weakness identified by the auditor
D)the disclaimer opinion with a definition of material weakness and a description of the particular weakness identified by the auditor

Question 64

The report on the effectiveness of internal control over financial reporting for companies filing reports with the SEC in the U.S.must include which of the following elements?

A)a statement that management is responsible for maintaining effective internal control over financial reporting and for assessing the effectiveness of the internal control
B)a statement that the auditor is responsible for expressing an opinion on the effectiveness of internal control over financial reporting based on management's representations
C)a statement that the audit was conducted in accordance with the standards of the American Institute of Certified Public Accountants
D)a statement that the standards of the PCAOB require that the auditor plan and perform the audit to obtain reasonable assurance about the effectiveness of internal controls over the financial reporting process
E)a statement that the auditor certifies the audit provides a reasonable basis for his opinion
F)both A and D
G)both B and C
H)both D and E

Question 65

The standard report on internal controls over the financial reporting process is modified by the auditor in which of the following circumstances?

A)Management's annual report on internal control is incomplete or improperly presented
B)There is a restriction on the purpose of the engagement
C)The auditor decides to refer to the report of management for the auditor's own report
D)There is other information in management's quarterly report on internal control over financial reporting
E)Management's annual certification pursuant to Section 302 of the Sarbanes-Oxley Act is misstated
F)both A and E
G)both B and C
H)both D and E

Question 66

The report on the effectiveness of internal control over financial reporting for companies filing reports with the SEC in the U.S.must include which of the following elements?

A)a statement that management is responsible for maintaining effective internal control over financial reporting and the auditor is responsible for assessing the effectiveness of the internal control
B)a statement that the auditor is responsible for expressing an opinion on the effectiveness of internal control over financial reporting based on his audit
C)a statement that the audit was conducted in accordance with the standards of the American Institute of Certified Public Accountants
D)a statement that the standards of the PCAOB require that the auditor plan and perform the audit to obtain reasonable assurance about the effectiveness of internal controls over the financial reporting process
E)a statement that the auditor certifies the audit provides a reasonable basis for his opinion
F)both B and D
G)both C and E
H)both D and E

Question 67

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)significant deficiencies and material weaknesses identified in internal controls over the financial statements
B)other information in documents containing financial information
C)agreements with management
D)consultation with auditor's attorney
E)major issues discussed with management prior to retention
F)both A and B
G)both A and E
H)both C and D

Question 68

The standard report on internal controls over the financial reporting process is modified by the auditor in which of the following circumstances?

A)Management's quarterly report on internal control is incomplete or improperly presented
B)There is a restriction on the scope of the engagement
C)The auditor decides to refer to the report of management for the auditor's own report
D)There is other information in management's annual report on internal control over financial reporting
E)Management's annual certification pursuant to Section 404 of the Sarbanes-Oxley Act is misstated
F)both A and C
G)both B and D
H)both D and E

Question 69

The standard report on internal controls over the financial reporting process is modified by the auditor in which of the following circumstances?

A)Management's quarterly report on internal control is incomplete or improperly presented
B)There is a restriction on the purpose of the engagement
C)The auditor decides to refer to the report of other auditors for the auditor's own report
D)There is other information in management's annual report on internal control over financial reporting
E)Management's annual certification pursuant to Section 404 of the Sarbanes-Oxley Act is misstated
F)both A and B
G)both C and E
Both C and D

Question 70

The report on the effectiveness of internal control over financial reporting for companies filing reports with the SEC in the U.S.must include which of the following elements?

A)a statement that management is responsible for maintaining effective internal control over financial reporting and for assessing the effectiveness of the internal control
B)a statement that the auditor is responsible for expressing an opinion on the effectiveness of internal control over financial reporting based on management's representations
C)a statement that the audit was conducted in accordance with the standards of the Public Companies Accounting Oversight Board (United States)
D)a statement that the standards of the AICPA require that the auditor plan and perform the audit to obtain reasonable assurance about the effectiveness of internal controls over the financial reporting process
E)a statement that the auditor certifies the audit provides a reasonable basis for his opinion
F)both A and B
G)both A and C
H)both D and E

Question 71

The standard report on internal controls over the financial reporting process is modified by the auditor in which of the following circumstances?

A)Management's quarterly report on internal control is incomplete or improperly presented
B)There is a restriction on the scope of the engagement
C)The auditor decides to refer to the report of management for the auditor's own report
D)There is other information in management's quarterly report on internal control over financial reporting
E)Management's annual certification pursuant to Section 302 of the Sarbanes-Oxley Act is misstated
F)both A and B
G)both B and E
H)both C and D

Question 72

If the auditor intends to use an "emphasis of matter" paragraph or an "other matter" paragraph or to issue a modified report,the auditor

A)must communicate that information to those charged with governance after the audit report is issued
B)should communicate that information to those charged with governance before the audit report is issued
C)must communicate that information to those charged with governance before the audit report is issued
D)could communicate that information to those charged with governance after the audit report is issued

Question 73

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)deficiencies identified in internal controls over the financial statements
B)other information in documents containing financial information
C)disagreements with management
D)consultation with other accountants
E)issues discussed with management prior to retention
F)both A and B
G)both C and D
H)both D and E

Question 74

The report on the effectiveness of internal control over financial reporting for companies filing reports with the SEC in the U.S.must include which of the following elements?

A)a statement that management is responsible for maintaining effective internal control over financial reporting and the auditor is responsible for assessing the effectiveness of the internal control
B)a statement that the auditor is responsible for expressing an opinion on the effectiveness of internal control over financial reporting based on management's representations
C)a statement that the audit was conducted in accordance with the standards of the Public Companies Accounting Oversight Board (United States)
D)a statement that the standards of the AICPA require that the auditor plan and perform the audit to obtain reasonable assurance about the effectiveness of internal controls over the financial reporting process
E)a statement that the auditor believes the audit provides a reasonable basis for his opinion
F)both A and B
G)both C and E
H)both D and E

Question 75

The standard report on internal controls over the financial reporting process is modified by the auditor in which of the following circumstances?

A)Management's annual report on internal controls is incomplete or improperly presented
B)There is a restriction on the purpose of the engagement
C)The auditor decides to refer to the report of other auditors for the auditor's own report
D)There is other information in management's quarterly report on internal control over financial reporting
E)Management's annual certification pursuant to Section 404 of the Sarbanes-Oxley Act is misstated
F)both A and C
G)both B and E
H)both D and E

Question 76

The auditor has specific audit responsibilities when he issues an audit report on financial statements prepared in accordance with a financial reporting framework that is generally accepted in another country.These responsibilities apply only to audit reports issued on statements prepared in accordance with a financial reporting framework that has not been recognized by the council of the AICPA in the U.S.The financial reporting frameworks recognized in the U.S.include

A)the Cost Accounting Standards Board
B)the Financial Accounting Standards Board
C)the Governmental Accounting Standards Board
D)the American Accounting Standards Advisory Board
E)the International Reporting Standards Board
F)both A and B
G)both B and C
H)both D and E

Question 77

For public companies in the U.S. ,the audited financial statements will include which of the following reports?

A)a report that provides management's opinion on the effectiveness of internal control over financial reporting
B)a report that provides the auditor's opinion on the efficiency of internal control over financial reporting
C)a report that states whether the financial statements are materially misstated
D)a report that provides the auditor's opinion on the effectiveness of internal control over financial reporting
E)a report that states whether the financial statements are accurately stated
F)both A and B
G)both C and D
H)both D and E

Question 78

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

A)deficiencies identified in internal controls over the financial statements
B)other information in documents containing audited financial statements
C)agreements with management
D)consultation with auditor's attorney
E)major issues discussed with management prior to retention
F)both A and D
G)both B and C
Both B and E

Question 79

The report on the effectiveness of internal control over financial reporting for companies filing reports with the SEC in the U.S.must include which of the following elements?

A)a statement that management is responsible for maintaining effective internal control over financial reporting and the auditor is responsible for assessing the effectiveness of the internal control
B)a statement that the auditor is responsible for expressing an opinion on the effectiveness of internal control over financial reporting based on his audit
C)a statement that the audit was conducted in accordance with the standards of the American Institute of Certified Public Accountants
D)a statement that the standards of the AICPA require that the auditor plan and perform the audit to obtain reasonable assurance about the effectiveness of internal controls over the financial reporting process
E)a statement that the auditor believes the audit provides a reasonable basis for his opinion
F)both A and C
G)both B and E
H)both D and E

Question 80

If there are deficiencies in internal controls over financial reporting that result in material weaknesses,the auditor

A)must express an adverse opinion on the company's internal control over financial reporting
B)must express an adverse opinion on the company's internal control over financial reporting,unless there was a restriction in the scope of the audit
C)may express an adverse opinion on the company's internal control over financial reporting,unless there was a restriction in the scope of the audit
D)may express an adverse opinion on the company's internal control over financial reporting