AUD

AUD practice questions, page 30 of 41, with answer review and explanations.

Question 146

Morris, CPA, suspects that a pervasive scheme of illegal bribes exists throughout the operations of Worldwide Import-Export, Inc., a new audit client. Morris notified the audit committee and Worldwide's legal counsel, but neither could assist Morris in determining whether the amounts involved were material to the financial statements or whether senior management was involved in the scheme. Under these circumstances, Morris should:

  1. Express an unqualified opinion with a separate explanatory paragraph.
  2. Disclaim an opinion on the financial statements.
  3. Express an adverse opinion on the financial statements.
  4. Issue a special report regarding the illegal bribes.

Question 147

The first general standard requires that an audit of financial statements is to be performed by a person or persons having:

  1. Seasoned judgment in varying degrees of supervision and review.
  2. Adequate technical training and proficiency.
  3. Knowledge of the standards of fieldwork and reporting.
  4. Independence with respect to the financial statements and supplementary disclosures.

Question 148

An auditor's report that refers to the use of an accounting principle at variance with generally accepted accounting principles contains the words, "In our opinion, with the foregoing Explanation, the financial statements referred to above present fairly...." This is considered an:

  1. Adverse opinion.
  2. "Except for" qualified opinion
  3. Unqualified opinion with an explanatory paragraph.
  4. Example of inappropriate reporting.

Question 149

Management of Hill Company has decided not to account for a material transaction in accordance with the provisions of an FASB Standard. In setting forth its reasons in a note to the financial statements, management has clearly demonstrated that due to unusual circumstances the financial statements presented in accordance with the FASB Standard would be misleading. The auditor's report should include a separate explanatory paragraph and contain a(an):

  1. "Except for" qualified opinion.
  2. "Subject to" qualified opinion.
  3. Adverse opinion.
  4. Unqualified opinion.

Question 150

A former client requests a predecessor auditor to reissue an audit report on a prior period's financial statements. The financial statements are not restated and the report is not revised. What date(s) should the predecessor auditor use in the reissued report?

  1. The date of the prior-period report.
  2. The date of the client's request.
  3. The date of reissue.
  4. The dual-dates.