AUD

AUD practice questions, page 14 of 41, with answer review and explanations.

Question 66

An auditor should disclose the substantive reasons for expressing an adverse opinion in an explanatory paragraph:

  1. Preceding the scope paragraph.
  2. Preceding the opinion paragraph.
  3. Following the opinion paragraph.
  4. Within the notes to the financial statements.

Question 67

When management does not provide reasonable justification that a change in accounting principle is preferable and it presents comparative financial statements, the auditor should express a qualified opinion:

  1. Only in the year of the accounting principle change.
  2. Each year that the financial statements initially reflecting the change are presented.
  3. Each year until management changes back to the accounting principle formerly used.
  4. Only if the change is to an accounting principle that is not generally accepted.

Question 68

When an independent CPA is associated with the financial statements of a publicly held entity but has not audited or reviewed such statements, the appropriate form of report to be issued must include a(an):

  1. Compilation report.
  2. Disclaimer of opinion.
  3. Unaudited association report.
  4. Qualified opinion.

Question 69

Restrictions imposed by a retail entity that is a new client prevent an auditor from observing any physical inventories. These inventories account for 40% of the entity's assets. Alternative auditing procedures cannot be applied due to the nature of the entity's records. Under these circumstances, the auditor should express a(an):

  1. Disclaimer of opinion.
  2. Qualified opinion.
  3. Adverse opinion.
  4. Unqualified opinion with an explanatory paragraph.

Question 70

Which of the following audit procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?

  1. Reading the minutes of meetings of the stockholders and the board of directors.
  2. Comparing the market value of property to amounts owed on the property.
  3. Reviewing lease agreements to determine whether leased assets should be capitalized.
  4. Inspecting title documents to verify whether any assets are pledged as collateral.