CPA Auditing and Attestation

CPA Auditing and Attestation practice questions, page 28 of 41, with answer review and explanations.

Question 136

When an independent CPA assists in preparing the financial statements of a publicly held entity, but has not audited or reviewed them, the CPA should issue a disclaimer of opinion. In such situations, the CPA has no responsibility to apply any procedures beyond:

  1. Ascertaining whether the financial statements are in conformity with generally accepted accounting principles.
  2. Determining whether management has elected to omit substantially all required disclosures.
  3. Documenting that the internal control structure is not being relied on.
  4. Reading the financial statements for obvious material misstatements.

Question 137

An auditor issued an audit report that was dual dated for a subsequent event occurring after the original date of the auditor's report. The auditor's responsibility for events occurring subsequent to the original date was:

  1. Extended to subsequent events occurring through the date of reissuance of the report.
  2. Extended to include all events occurring since the original date of the auditor's report.
  3. Limited to the specific event referenced.
  4. Limited to include only events occurring up to the date of the last subsequent event referenced.

Question 138

An auditor most likely would issue a disclaimer of opinion because of:

  1. Inadequate disclosure of material information.
  2. The omission of the statement of cash flows.
  3. A material departure from generally accepted accounting principles.
  4. Management's refusal to furnish written representations.

Question 139

When an auditor qualifies an opinion because of the inability to confirm accounts receivable by direct communication with debtors, the wording of the opinion paragraph of the auditor's report should indicate that the qualification pertains to the:

  1. Limitation on the auditor's scope.
  2. Possible effects on the financial statements.
  3. Lack of sufficient appropriate audit evidence.
  4. Departure from generally accepted auditing standards.

Question 140

The adverse effects of events causing an auditor to believe there is substantial doubt about an entity's ability to continue as a going concern would most likely be mitigated by evidence relating to the:

  1. Ability to expand operations into new product lines in the future.
  2. Feasibility of plans to purchase leased equipment at less than market value.
  3. Marketability of assets that management plans to sell.
  4. Committed arrangements to convert preferred stock to long-term debt. C