AUD

AUD practice questions, page 11 of 41, with answer review and explanations.

Question 51

A limitation on the scope of an audit sufficient to preclude an unqualified opinion will usually result when management:

  1. Is unable to obtain audited financial statements supporting the entity's investment in a foreign subsidiary.
  2. Refuses to disclose in the notes to the financial statements related party transactions authorized by the Board of Directors.
  3. Does not provide the auditor with an engagement letter specifying the responsibilities of both the entity and the auditor.
  4. Fails to correct a significant deficiency in internal control communicated to those charged with governance after the prior year's audit.

Question 52

In which of the following situations would an auditor ordinarily choose between expressing an "except for" qualified opinion or an adverse opinion?

  1. The auditor did not observe the entity's physical inventory and is unable to become satisfied as to its balance by other auditing procedures.
  2. The financial statements fail to disclose information that is required by generally accepted accounting principles.
  3. The auditor is asked to report only on the entity's balance sheet and not on the other basic financial statements.
  4. Events disclosed in the financial statements cause the auditor to have substantial doubt about the entity's ability to continue as a going concern.

Question 53

When an auditor expresses an adverse opinion, the opinion paragraph should include:

  1. The principal effects of the departure from generally accepted accounting principles.
  2. A direct reference to a separate paragraph disclosing the basis for the opinion.
  3. The substantive reasons for the financial statements being misleading.
  4. A description of the uncertainty or scope limitation that prevents an unqualified opinion.

Question 54

Under which of the following circumstances would a disclaimer of opinion not be appropriate?

  1. The financial statements fail to contain adequate disclosure of related party transactions.
  2. The client refuses to permit its attorney to furnish information requested in a letter of audit inquiry.
  3. The auditor is engaged after fiscal year-end and is unable to observe physical inventories or apply alternative procedures to verify their balances.
  4. The auditor is unable to determine the amounts associated with illegal acts committed by the client's management.

Question 55

Green, CPA, concludes that there is substantial doubt about JKL Co.'s ability to continue as a going concern. If JKL's financial statements adequately disclose its financial difficulties, Green's auditor's report should:

  1. Option A
  2. Option B
  3. Option C
  4. Option D