In which of the following instances would an auditor most likely issue a standard unqualified opinion?

Audit Final Chapter 15

Auditing reporting standards for financial statement and integrated audits require auditors to provide which of the following?
a.
Positive assurance.
b.
Negative assurance.
c.
Materiality assurance.
d.
No assurance.

Which of the following is a change that is not being debated by auditing standard setters and investors?
a.
Adding disclosure about which engagement partner at the firm supervised the audit and who from outside the audit firm participated in the audit
b.

All of the above are being debated.

According to the AICPA, the auditor needs to form an opinion on the financial statements based on an evaluation of the audit evidence obtained. This is stated in which AICPA principle governing an audit conducted in accordance with GAAS?
a.
Principle 1
b.

According to the AICPA, the auditor needs to clearly express an opinion based on audit evidence obtained in the form of a written report.This is stated in which AICPA principle governing an audit conducted in accordance with GAAS?
a.
Principle 1
b.
Princi

According to the AICPA principles, which of the following is incorrect?
a.
If the auditor has reservations about the fairness of financial statement presentation, the reason(s) must be stated in the auditor's report.
b.
If there is a material departure fr

Auditors should issue an unqualified opinion in all cases where companies have provided an entire set of financial statements and footnotes that include all years presented for comparative purposes.

Which one of the following is not a type of unqualified audit opinion issued by auditors?
a.
Standard with three paragraphs.
b.
Includes explanatory paragraph.
c.
Includes modifications.
d.
Does not include the opinion paragraph.

Does not include the opinion paragraph.

Which one of the following is an example of the contents of an opinion paragraph found in an audit report?
a.
"We have audited...."
b.
"Nothing came to our attention..."
c.
"The financial statements referred to above present fairly,..."
d.
"An audit inclu

The financial statements referred to above present fairly,...

In which one of the following instances would an auditor most likely issue a standard unqualified opinion without explanatory language?
a.
Management's disclosures are missing or inadequate.
b.
There is substantial doubt about the entity's ability to cont

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

The division of responsibility between the reporting company's management and the audit firm is described in which one of the following?
a.
Scope paragraph.
b.
Introductory paragraph.
c.
Notes to the financial statements.
d.
Opinion paragraph.

If the auditor believes that there is a remote probability that resolution of an uncertainty will have a
material effect on the financial statements, which of the following would the auditor issue?
a.
A disclaimer of opinion.
b.
A standard unqualified opi

An unqualified opinion with explanatory paragraphs.

The scope paragraph of an unqualified opinion primarily gives information relating to which of the following?
a.
The division of responsibilities.
b.
The final assessment of a company's standings with the audit firm.
c.
The statements and dates under audi

The division of responsibilities.

Audit reports are designed to promote clear communication between the auditor and the financial statement user. Which of the following is not delineated in the audit report?
a.
What was audited and the relative responsibilities of the client and the audit

The experience level of the audit team.

If the auditor decides to draw attention to large related party transactions occurring in the financial statements of the client, which report will most likely be issued?
a.
Qualified.
b.
Unqualified with an explanatory paragraph
c.
Adverse.
d.
Consolidat

Unqualified with an explanatory paragraph

The use of another CPA firm by an audit firm to perform part of the engagement on a client's subsidiary will require the audit firm to do which of the following?
a.
Merge with the other CPA firm.
b.
Perform a peer review on the other CPA firm.
c.
Ensure t

List the other firm in the footnotes to the client's financial statements.

When the financial statements contain a material departure from GAAP that the auditor believes is justified, where should the justification appear?
a.
In a footnote.
b.
In a paragraph added before the scope paragraph.
c.
In the opening paragraph.
d.
In a

In a paragraph added before the opinion paragraph.

Which one of the following is an instance where the auditor would add a paragraph after the opinion paragraph?
a.
There is serious doubt that the client can continue as a going concern.
b.
Management's disclosures are not adequate.
c.
There are significan

Management's disclosures are not adequate.

A client company has a history of negative cash flow trends and continuing losses. Which type of opinion will the auditor most likely issue?
a.
Adverse.
b.
Unqualified with explanatory language.
c.
Qualified.
d.
Disclaimer of opinion.

Unqualified with explanatory language.

When the auditor wishes to emphasize a matter in the financial statements, which of the following would the audit report contain?
a.
A Qualification: Yes; An Explanatory Paragraph After the Opinion Paragraph: No.
b.
A Qualification: Yes; An Explanatory Pa

A Qualification: No; An Explanatory Paragraph After the Opinion Paragraph: Yes.

When the auditor is unable to obtain sufficient appropriate evidence because the client did not allow a procedure to be completed, which of the following would the report most likely contain?
a.
A Qualification: Yes; An Explanatory Paragraph After the Opi

c.
A Qualification: No; An Explanatory Paragraph After the Opinion Paragraph: Yes.

In the audit of consolidated financial statements under U.S. auditing standards when more than one CPA firm is involved and the principal audit firm chooses to mention the other firm(s), the wording of which paragraph(s) is modified?
a.
Introductory Parag

Introductory Paragraph: Yes; Scope Paragraph: Yes; Opinion Paragraph: No.

Which of the following would not result in an unqualified audit report with an explanatory paragraph?
a.
Going concern issue.
b.
Scope limitation.
c.
Emphasis of a matter.
d.
Consistency of presentation.

How would the auditor categorize a situation when the financial statements do not contain a footnote the auditor believes is necessary for fair presentation?
a.
A scope limitation.
b.
An uncertainty.
c.
A departure from GAAP.
d.
An act discreditable.

In which one of the following cases would an auditor most likely issue a qualified opinion?
a.
There is a highly material, and very pervasive departure from SFAS No. 141 and No. 142.
b.
There is a change in accounting principles promulgated by the FASB.
c

There is a highly material, and very pervasive departure from SFAS No. 141 and No. 142.

Qualified opinions can only be issued by auditors for which of the following?
a.
Violations of GAAP.
b.
Scope limitations.
c.
Going concern.
d.
Lack of independence.
e.
Either A and B.

Violations of GAAP resulting in qualified opinions affect the standard audit report through which of the following?
a.
Modifying the scope paragraph.
b.
Adding an explanatory paragraph before the opinion paragraph.
c.
Modifying the opinion paragraph to re

Which of the following is an example of circumstances that would not limit the audit scope?
a.
An inadequacy in the accounting records.
b.
The inability to gather sufficient competent evidence.
c.
Emphasis of an important matter.
d.
The timing of the fiel

Emphasis of an important matter.

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?
a.
Except for.
b.
Subject to.
c.
With the exception of.
d.
With the qualification of.

If a client expensed the acquisition cost of some assets that should have been capitalized and depreciated them over their useful lives, which of the following would be incorrect?
a.
A qualified opinion would be appropriate.
b.
The opinion paragraph shoul

The opinion paragraph should be modified to include language such as: "except for the effects of not capitalizing the acquisition costs of some assets...

dverse opinions affect the standard audit report in which of the following ways?
a.
Modifying the scope paragraph.
b.
Adding an explanatory paragraph before the opinion paragraph.
c.
Modifying the opinion paragraph to read " does not present fairly."
d.
B

The opinion paragraph of the audit report for Schnook Co. states that the financial statements "do not present fairly". Which type of audit report is this?
a.
Improper.
b.
Adverse.
c.
Disclaimer.
d.
Qualified.

An audit of the Flagler Company, a diamond mining company, brings to light the fact that its equipment has been marked up to the owners' expectation of market values. Such a situation will most likely result in which type of report?
a.
Disclaimer.
b.
Revi

In which one of the following instances would an auditor most likely issue an adverse opinion?
a.
Management declines to present earnings per share in the income statement.
b.
There is substantial doubt about the entity's ability to continue as a going co

There is a material dollar misstatement that overshadows the overall financial statements.

When an auditor is faced with a material departure from GAAP that is pervasive, which of the following should the audit report contain?
a.
An unqualified opinion.
b.
A qualified opinion with an explanatory paragraph.
c.
An adverse opinion.
d.
A disclaimer

In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?
a.
The client has had significant transactions with related entities that the auditor wants to emphasize.
b.
The fin

The financial statements are not in conformity with FASB requirements regarding the capitalization of leases.

When an auditor issues an adverse opinion, which of the following should be included in the opinion paragraph?
a.
The financial statement effects of the departure from GAAP.
b.
A statement that indicates that the financial statements are fairly stated exc

The reasons that the financial statements are misleading.

In which one of the following instances would an auditor most likely issue a disclaimer of opinion?
a.
Management will not sign a management representation letter.
b.
Management declines to provide a statement of cash flow.
c.
The auditor is independent o

The auditor is independent of the client.

In which one of the following instances would an auditor not issue a disclaimer of opinion?
a.
The auditors are not invited to the periodic inventory at year end.
b.
There are significant misstatements in the financial statements.
c.
There is a significan

There are significant misstatements in the financial statements.

When an auditor lacks independence with respect to a client, which of the following should the auditor issue?
a.
A disclaimer of opinion.
b.
An adverse opinion.
c.
A qualified opinion with explanatory paragraph.
d.
An unqualified opinion.

When the auditor is not independent with respect to a client, what must the auditor do?
a.
Not accept an audit engagement.
b.
Include a separate paragraph in the audit report stating the lack of independence.
c.
Provide a review report.
d.
Report the non-

Include a separate paragraph in the audit report stating the lack of independence.

Disclaimers of opinion can only be issued by auditors based on which of the following?
a.
Violations of GAAP.
b.
Substantial scope limitations.
c.
Going concern. It is this one also...
d.
Lack of independence.
e.
Either B or D.

Scope limitations resulting in disclaimers under U.S. auditing standards affect the standard audit report through which of the following?
a.
Modifying the introductory paragraph
b.
Eliminating the scope paragraph.
c.
Adding an explanatory paragraph before

A justified departure from GAAP may result in which of the following?
a.
A disclaimer of an audit opinion.
b.
An unqualified audit opinion with an explanatory paragraph either before or after the opinion paragraph.
c.
An adverse opinion.
d.
A qualified op

An unqualified audit opinion with an explanatory paragraph either before or after the opinion paragraph.

An emphasis of a matter may result in which of the following?
a.
A disclaimer of an audit opinion.
b.
A qualified audit opinion.
c.
An adverse opinion.
d.
An unqualified audit opinion with an explanatory paragraph either before or after the opinion paragr

An unqualified audit opinion with an explanatory paragraph either before or after the opinion paragraph.

A reference to another auditor under U.S. auditing standards may result in which of the following?
a.
A disclaimer of an audit opinion.
b.
A qualified audit opinion.
c.
An adverse opinion.
d.
An unqualified audit opinion with modified wording for all thre

An unqualified audit opinion with modified wording for all three paragraphs.

When might an auditor modify the introductory paragraph and replace the scope paragraph with explanatory paragraph?
a.
When a scope limitation exists.
b.
When there is substantial doubt about going-concern.
c.
When the auditor lacks independence.
d.
When

When a scope limitation exists.

PCAOB Auditing Standard 5 does not identify which of the following situations as one in which the auditor will modify the audit report on ICFR effectiveness?
a.
When there is a restriction on the scope of the engagement.
b.
When there is other information

When the annual report includes a copy of the annual certification pursuant to Section 302 of the Sarbanes-Oxley Act.

When there is a restriction on the scope of the internal control over financial reporting (ICFR) engagement, what should the auditor do?
a.
The auditor will either withdraw from the engagement or disclaim an opinion.
b.
The auditor will issue an adverse o

The auditor will issue an adverse opinion.

In which of the following situations would the auditor modify the audit report on ICFR?
a.
When the auditor relies on the work of other auditors but decides not to include a reference to the other auditors.
b.
When the auditor is unable to perform all pro

When the auditor concludes that management's report on ICFR is not complete or is improperly presented.

When management chooses to include information in its report on ICFR that is in addition to the information required to be provided, what should the auditor do?
a.
The auditor must endorse the information.
b.
The auditor must include the information as pa

The auditor will present the information in a separate schedule in the footnotes.

In which of the following circumstances would the auditor most likely issue an unqualified opinion?

Under what circumstances would an auditor issue a qualified opinion?

In which of the following circumstances would an auditor not express an unqualified opinion?

What are examples of unqualified opinions?