CPA Auditing and Attestation

CPA Auditing and Attestation practice questions, page 23 of 41, with answer review and explanations.

Question 111

An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. The auditor believes that the financial statements do not require revision, but the client is unwilling to revise or eliminate the material inconsistency in the other information. Under these circumstances, what action would the auditor most likely take?

  1. Consider the situation closed because the other information is not in the audited financial statements.
  2. Issue an "except for" qualified opinion after discussing the matter with the client's audit committee.
  3. Disclaim an opinion on the financial statements after explaining the material inconsistency in a separate explanatory paragraph.
  4. Revise the auditor's report to include a separate explanatory paragraph describing the material inconsistency.

Question 112

In the standard report on condensed financial statements that are derived from a public entity's audited financial statements, a CPA should indicate that the:

  1. Condensed financial statements are prepared in conformity with another comprehensive basis of accounting.
  2. CPA has audited and expressed an opinion on the complete financial statements.
  3. Condensed financial statements are not fairly presented in all material respects.
  4. CPA expresses limited assurance that the financial statements conform with GAAP. B

Question 113

Investment and property schedules are presented for purposes of additional analysis in an auditor submitted document. The schedules are not required parts of the basic financial statements, but accompany the basic financial statements. When reporting on such additional information, the measurement of materiality is the:

  1. Same as that used in forming an opinion on the basic financial statements taken as a whole.
  2. Lesser of the individual schedule of investments or schedule of property taken by itself.
  3. Greater of the individual schedule of investments or schedule of property taken by itself.
  4. Combined total of both the individual schedules of investments and property taken as a whole.

Question 114

What is an auditor's responsibility for supplementary information which is outside the basic financial statements, but required by the FASB?

  1. The auditor has no responsibility for required supplementary information as long as it is outside the basic financial statements.
  2. The auditor's only responsibility for required supplementary information is to determine that such information has not been omitted.
  3. The auditor should apply certain limited procedures to the required supplementary information, and report deficiencies in, or omissions of, such information.
  4. The auditor should apply tests of details of transactions and balances to the required supplementary information, and report any material misstatements in such information.

Question 115

Which of the following best describes the auditor's reporting responsibility concerning information accompanying the basic financial statements in an auditor- submitted document?

  1. The auditor has no reporting responsibility concerning information accompanying the basic financial statements.
  2. The auditor should report on the information accompanying the basic financial statements only if the auditor participated in its preparation.
  3. The auditor should report on the information accompanying the basic financial statements only if the auditor did not participate in its preparation.
  4. The auditor should report on all the information included in the document.