AUD

AUD practice questions, page 21 of 41, with answer review and explanations.

Question 101

Blue, CPA, has been asked to render an opinion on the application of accounting principles to a specific transaction by an entity that is audited by another CPA. Blue may accept this engagement, but should:

  1. Consult with the continuing CPA to obtain information relevant to the transaction.
  2. Report the engagement's findings to the entity's audit committee, the continuing CPA, and management.
  3. Disclaim any opinion that the hypothetical application of accounting principles conforms with generally accepted accounting principles.
  4. Notify the entity that the report is for the general use of all interested parties.

Question 102

The financial statements of KCP America, a U.S. entity, are prepared for inclusion in the consolidated financial statements of its non-U.S. parent. These financial statements are prepared in conformity with the accounting principles generally accepted in the parent's country and are for use only in that country. How may KCP America's auditor report on these financial statements? I. A U.S.-style report (unmodified). II. A U.S.-style report modified to report on the accounting principles of the parent's country. III. The report form of the parent's country.

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

Question 103

Which of the following is true regarding the auditor's responsibility to report on information accompanying the basic financial statements in a client-prepared document?

  1. The auditor may report on information accompanying the basic financial statements in a client prepared document only if he or she has been specifically engaged to do so.
  2. The auditor is required to express an opinion on whether information accompanying the basic financial statements in a client-prepared document is fairly stated in all material respects in relation to the financial statements taken as a whole.
  3. If an auditor chooses to report on information accompanying the basic financial statements in a client prepared document, the report should include a description of the character of the audit work performed.
  4. If an auditor chooses to report on information accompanying the basic financial statements in a client prepared document, the report should include an opinion on the information but should not describe the character of the audit work performed.

Question 104

Which of the following reporting options is least likely with regard to supplementary information that is required by GAAP?

  1. The auditor's report on the financial statements makes no reference to the supplementary information.
  2. A disclaimer of opinion is issued on supplementary information that is not clearly distinguished from the financial statements and is not marked "unaudited."
  3. The auditor's report on the financial statements includes both an opinion on the supplementary information and a statement restricting the use of the report.
  4. The auditor's report on the financial statements includes an opinion regarding whether the supplementary information is fairly stated in all material respects in relation to the financial statements taken as a whole.

Question 105

When an auditor submits a document containing audited financial statements to a client, and those financial statements include supplementary information required by GAAP, the auditor may choose any of the following options, except:

  1. Express an opinion on the information, if he or she has been engaged to examine such information.
  2. Express negative assurance on the information, if review procedures have been appropriately performed.
  3. Report on whether the information is fairly stated in relation to the financial statements taken as a whole, if appropriate auditing procedures have been applied.
  4. Disclaim an opinion on the information.