California State University, Stanislaus

ACCOUNTING 4110

Chapter 17

1)A material departure from generally accepted accounting principles will result in auditor consideration of:

2. The auditors’ report should be dated as of the date the:

3. In an audit report on combined financial statements, reference to the fact that a portion of the audit was performed by a component auditor is:

4. Assume that the opinion paragraph of an auditors’ report begins as follows: “With the explanation

given in Note 6, . . . the financial statements referred to above present fairly . . .” This is:

5. The auditors who wish to draw reader attention to a financial statement note disclosure on significant transactions with related parties should disclose this fact in:
6. What type or types of audit opinion are appropriate when financial statements are materially and pervasively misstated?

7. Which of the following ordinarily involves the addition of an emphasis-of-matter paragraph to an audit report of a nonpublic company?
8. An audit report for a public client indicates that the audit was performed in accordance with:
9. An audit report for a public client indicates that the financial statements were prepared in

conformity with:

10. When the matter is properly disclosed in the financial statements of a nonpublic company, the likely result of substantial doubt about the ability of the client to continue as a going concern is the issuance of which of the following audit opinions?

11. A nonpublic company’s change in accounting principles that the auditors believe is not justified is likely to result in which of the following types of audit opinions?

12. Which of the following is least likely to result in inclusion of an additional paragraph being added to an audit report?

13. For each of the following brief scenarios, assume that you are reporting on a client’s financial statements. Select the type(s) of opinion (per below) possible for the scenario. In addition:

• Unless stated otherwise, assume the matter involved is material. If the problem doesn’t tell you whether a misstatement pervasively misstates the financial statements or doesn’t list a characteristic that indicates pervasiveness, two reports may be possible (i.e., replies 6 to 9).
• Do not read more into the circumstances than what is presented.
• Do not consider an auditor discretionary circumstance for modification of the audit report unless the situation explicitly suggests that the auditor wishes to emphasize a particular matter.

Types of Opinion

1. Unmodified—standard.
2. Unmodified with an emphasis-of-matter paragraph.
3. Qualified.
4. Adverse.
5. Disclaimer.
6. Unmodified with an emphasis-of-matter paragraph or disclaimer.
7. Qualified or adverse.
8. Qualified or disclaimer.
9. Adverse or disclaimer.
10. Other.