AUD

AUD practice questions, page 24 of 41, with answer review and explanations.

Question 116

If management (of a governmental body) declines to present supplementary information required by the Governmental Accounting Standards Board (GASB), the auditor should issue a(an):

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

Question 117

The objective of auditing procedures applied to segment information is to provide the auditor with a reasonable basis for concluding whether:

  1. The information is useful for comparing a segment of one enterprise with a similar segment of another enterprise.
  2. Sufficient audit evidence has been obtained to allow the auditor to be associated with the segment information.
  3. A separate opinion on the segment information is necessary due to inconsistent application of accounting principles.
  4. The information is presented in conformity with the FASB Statement on segment information.

Question 118

Green, CPA, is requested to render an opinion on the application of accounting principles by an entity that is audited by another CPA. Green may:

  1. Not accept such an engagement because to do so would be considered unethical.
  2. Not accept such an engagement because Green would lack the necessary information on which to base an opinion without conducting an audit.
  3. Accept the engagement but should form an independent opinion without consulting with the continuing CPA.
  4. Accept the engagement but should consult with the continuing CPA to ascertain all the available facts relevant to forming a professional judgment.

Question 119

In its annual report to shareholders, Lake Co. included a separate management report that contained additional information. Lake's auditor is expressing an unqualified opinion on Lake's financial statements but has not been engaged to examine and report on this additional information. What is the auditor's responsibility concerning such a report?

  1. The auditor should add an explanatory paragraph to the report on the financial statements disclaiming an opinion on the additional information.
  2. The auditor has no obligation to read the management report or to verify the accuracy or appropriateness of its contents.
  3. The auditor should request Lake to place the management report in its annual report where it will not be misinterpreted to be the auditor's assertion.
  4. The auditor should read the management report and consider whether it contains a material misstatement of fact.

Question 120

An auditor is reporting on condensed financial statements for an annual period that are derived from the audited financial statements of a publicly-held entity. The auditor's opinion should indicate whether the information in the condensed financial statements is fairly stated in all material respects:

  1. In conformity with accounting principles generally accepted in the United States of America.
  2. In relation to the complete financial statements.
  3. In conformity with another comprehensive basis of accounting.
  4. In relation to supplementary filings under federal security statutes