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AUD 1 M8
Terms in this set (16)
The date of the prior period report should be sued as long as the
FS are not restated, the report is not revised, and no significant changes have occurred that would affect the prior FS.
An auditor has previously expressed a qualified opinion on the financial statements of a prior period because of a departure from generally accepted accounting principles. The prior period financial statements are restated in the current period to conform with generally accepted accounting principles. The auditor's updated report on the prior period financial statements should:
Express an unmodified opinion concerning the restated financial statements
If an auditor has previously qualified his or her opinion on FS of a prior period, and the prior period statements are restated to conform with GAAP, the auditor should
express an unmodified opinion on the restated financial statements. In addition, the auditor would state the substantive reasons for the change in opinion in an emphasis of matter (or other matter) paragraph
Before a predecessor auditor reissues the prior year's audit report on the financial statements of a former client for inclusion with the successor auditor's report on comparative FS, the predecessor does all of the following except:
Review the audit documentation of the successor auditor
Jewel, CPA, audited Infinite Co's prior year FS. These statements are presented with those of the current year for comparative purposes without Jewel's auditor's report, which expressed a qualified opinion. In drafting the current year's auditor's report, Crain, CPA, the successor auditor should:
1) Not name Jewel as the predecessor auditor
2) indicate the type of report issued by Jewel
3) Indicate the substantive reasons for Jewel's qualification
When a group engagement partner decides to make reference to a component auditor's audit under US GAAS, the group engagement partner's report should state "We did not audit the financial statements of X Company..." in which section of the audit report?
When a predecessor auditor's report is not presented, the successor auditor should indicate the following items:
1) That the statements were audited by a predecessor auditor. The predecessor auditors should not be named unless the practice of the predecessors was acquired by or merged with that of the successor.
2) The type of opinion expressed by the predecessor auditor, and if the opinion was modified, the reason for the modification.
3) The nature of any EOM, other matter, or explanatory paragraph included in the predecessor auditor's report
4) The date of the predecessor auditor's report
An auditor expressed an adverse opinion on the prior year's FS because of a lack of adequate disclosure. These statements are properly stated in the current year and presented in comparative form with the current year's FS. The auditor's updated report on the prior year's FS should:
Express an unmodified opinion with an EOM paragraph added to the report
Foley, CPA, is the group engagement partner for a multinational corp. Pente, CPA, audits a wholly owned subsidiary of this corp. Which of the following is true about Foley's decision between assumption and division of responsibility under US GAAS.
If Foley chooses to assume responsibility, she must not make reference to the component auditor in her report.
A group engagement partner decides not to refer to the audit of a component auditor. After making inquiries about the component auditor's professional reputation and independence, the group engagement partner most likely would:
Contact the component auditor and review the audit programs and working papers pertaining to the component.
Under US auditing standards, which of the following situations would an auditor ordinarily issue an unmodified audit opinion without an EOM paragraph?
The auditor decides to make reference to the audit of a component auditor as a basis, in part, for the auditor's opinion.
Comparative FS included the prior year's statements that were audited by a predecessor auditor whose report is not presented. If the predecessor's report was unmodified, the successor should:
Indicate in an other matter paragraph that the predecessor auditor expressed an unmodified opinion on the prior year's FS
When a CPA firm decides to take responsibility for another firm's audit work, the CPA firm should
review the other firm's audit workpapers and reperform a subset of audit testing to validate the firm's conclusions.
If a component auditor does not meet the independence requirements that are relevant to a group audit of a nonissuer's FS, then the group engagement team should first:
Attempt to obtain sufficient appropriate audit evidence relating to the financial info of the component without making reference to or using the work of the component auditor.
Dual dating is used when there is a subsequent event occurring after the original date of the auditor's report, and the auditor wishes
to extend responsibility only for the one event. It is not used for comparative FS.
In the first audit of a client, an auditor was not able to gather sufficient evidence about the consistent application of accounting principles between the current and prior year, as well as the amounts of assets or liabilities at the beginning of the current year. This was due to the client's record retention policies. If the amounts in question could materially affect current operating results, the auditor would:
Be unable to express an opinion on the current year's results of operations and cash flows.
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