CPA Auditing and Attestation

CPA Auditing and Attestation practice questions, page 30 of 41, with answer review and explanations.

Question 146

Tech Company has disclosed an uncertainty due to pending litigation. The auditor's decision to issue a qualified opinion rather than an unqualified opinion most likely would be determined by the:

  1. Lack of sufficient evidence.
  2. Inability to estimate the amount of loss.
  3. Entity's lack of experience with such litigation.
  4. Lack of insurance coverage for possible losses from such litigation. A

Question 147

It is not appropriate to refer a reader of an auditor's report to a financial statement footnote for details concerning:

  1. Subsequent events.
  2. The pro forma effects of a business combination.
  3. Sale of a discontinued operation.
  4. The results of confirmation of receivables. D

Question 148

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 149

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 150

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.