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Unmodified Report

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Which of the following parties is responsible for the fairness of the
representations made in financial statement?
a.
Client’s management
b.
Independent auditor
c.
Audit committee
d.
PICPA
PSA 700 provides guidance on the:
a.
Audit report that includes a modified opinion.
b.
Audit report that includes an unmodified opinion.
c.
Audit report that includes an unmodified opinion, though the
auditor’s report is
modified due to an emphasis of matter.
d.
Audit report, irrespective of the type of opinion issued by the
auditor.
Which of the following statement is not correct about the unmodified
audit report on the financial statement?
a.
The auditor’s report shall include a section with a heading
“Management Responsibility for the financial statement”
b.
The auditor’s report shall include a section with a heading
“Auditor’s Responsibility”
c.
The auditor’s report shall include a section with a heading “Basis
for Opinion”
d.
The auditor’s report shall include a section with a heading
“Opinion”
What is the overriding benefit of having uniformity in the report?
a.
Uniformity promotes credibility in the global marketplace by
making more readily identifiable those audits that have been
conducted in accordance with globally recognized standards.
b.
Uniformity in the form promotes the expression of unmodified
opinion.
c.
Uniformity lessens the auditor’s legal and civil liabilities.
d.
The audit report eliminates some disclosures required in the
financial statements.
Which of the following elements of the auditor’s report affirms the
auditor’s independence?
a.
Introductory paragraph
b
Auditor’s Responsibility
c.
Title
d.
Signature

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7.

8.

9.

10.

11.

The auditor’s judgment as to whether the financial statements are
presented fairly, n all material respects, is made in the context of
a.
Philippine Standard on Accounting
b.
Applicable financial reporting framework
c.
The professional ethical requirements
d.
Generally accepted auditing standards
Auditing standards require that the audit report must be titled. This is
done in order to
a.
indicate that the auditor is a CPA
b.
distinguish the independent auditor’s report from the reports that
might be issued by others
c.
identify the financial statements audited
d.
emphasize management’s responsibility for the fair presentation
of the financial statements
The auditor does not normally address the report to
a.
Those for whom the report was prepared.
b.
The president of Client Company.
c.
Those charged with government of Client Company.
d.
The stockholders of the client company.
The elements of the auditor’s report that identifies the financial
statement audited is the
a.
title
b.
introductory paragraph
c.
management responsibility
d.
opinion paragraph
The auditor’s opinion covers the complete set of financial statements.
A complete set of financial statements does not include
a.
Statement of Comprehensive Income
b.
Statement of Changes in Financial Position
c.
Statement of Cash Flows
d.
Summary of significant accounting policies and other explanatory
information
Which of the following shall be included in the introductory paragraph
of the auditor’s report?

a.
b.
c.

Name of the entity
for whom report is
prepared

The title of each
statement

Period covered by
the financial
statements

YES
YES
NO

YES
NO
YES

YES
YES
YES

In the name of the audit firm b. The description shall include an explanation that management is responsible for the preparation of the financial statements and a. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements b. The procedures selected depend on the auditor’s judgment. The auditor’s signature should be a. The auditor bills time to the client up to and including the audit report date. PSA 700 requires the audit report to be signed. Either a or b d. including the assessment of the risk of material misstatements. For such internal control as it determines necessary to enable the preparation of Financial statements that is free from material misstatement c. as well as the presentation of the financial statements 14. The date of the audit report is important because a. Which of the following statements is not included in the auditor’s report? a. YES YES NO PSA 700 requires the auditor’s report to describe management’s responsibility for the financial statements. For selecting and applying appropriate accounting policies b. An audit includes examining on a test basis. 12. The date of the auditor’s report informs the user of the auditor’s report that the auditor has considered the effect of events and transactions of which the auditor became aware and that occurred up to that date. b. Neither a or b 15. evidence supporting the amounts and disclosures in the financial statements d. whether due to fraud or error c. For making accounting estimates that are reasonable in the circumstances d. An audits includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management. Preventing collusion among employees 13.d. and the statement to the client should reflect this date . In the personal name of the auditor c.

Naming the location in the country where the auditor practices his profession b. Emphasis of matter d. February 8. identifying the country where the auditor had secured his professional license d. Coincides with the date the financial statements are issued b. and both are released on February 15. How are management’s responsibility and the auditor’s responsibility represented in the auditor’s report? . Auditor’s address b. December 31. date a letter of audit inquiry is received from the entity’s attorney 18. If the statement of financial position of a company s dated December 31. Auditor’s signature 20. date the report is delivered to the entity audited b. Addressing the report to the stakeholders or the audit client 21. 2016. Can be earlier than the date which the auditor has obtained sufficient appropriate audit evidence on which to base his opinion d. balance sheet date of the latest period reported on d. the audit report is dated February 8. date the financial statements were approved by the client management c. Should be the same as the financial statements date c. January 1. An audit report should be dated as of the a. Date of the Auditor’s report c. 2016. 2016 19. This date coincides with the date of the financial statements 16. The date of the auditor’s report a. The auditor’s address is indicated in the auditor’s report by: a. 2016 d. Including the complete mailing address of the auditor c.c. Which of the following is not one of the elements of the auditor’s report? a. 2016 c. PSAs require all audits to be performed on a timely basis d. February 15. 2015 b. this indicates that the auditor has searched for subsequent events that occurred up to: a. 2015. Should not be earlier than the date of the approval of financial statements 17.

d. in accordance with the applicable financial reporting framework is a. Management’s responsibility d. Qualified opinion b. disclaimer opinion d. Has been unable to satisfy himself/herself that the overall financial statements are presented fairly. 26. Suspects that client has not followed the identified financial reporting framework. Explicitly Implicitly The opinion expressed by the auditor when the auditor concludes that the financial statements are prepared. c. 24. Introductory paragraph b. Unmodified opinion c. The adverse opinion report will be issued by the independent auditor when he/she a. in all material respects. b. Implicitly Explicitly d. Undeniable opinion d. A disclaimer is issued whenever the auditor a. Auditor’s responsibility c. Suspects that the client’s financial statements are not in conformity with PSAs. 23.22. adverse opinion b. Denial of opinion The most common type of audit report contains a(n) a. Has knowledge that PSAs were not followed. unmodified opinion Which section of the auditor’s report gives a general description of an audit of financial statements? a. Auditor’s Opinion Report that contains Modified Opinion 25. has knowledge that the financial statements are not in conformity with the applicable financial reporting framework. . Explicitly Explicitly b. qualified opinion c. Implicitly Implicitly c. Management’s Responsibility Auditor’s Responsibility a.

d. when a.b. Which of the following circumstances would most likely cause the auditor to modify his opinion? Immaterial Misstatements Scope Limitation a. the auditor should decide between issuing a(n) a. Both disclaimer and adverse opinion are used a. Disclaimer of opinion or a qualified opinion c. No Yes 29. Whether the condition is material or not d. d. No No d. When the condition is material and pervasive b. 30. Irregardless of the client’s choice of unacceptable accounting method 28. Has determined that the financial statements are presented fairly. Yes No b. Qualified opinion or an adverse opinion b. 27. The auditor wants to draw reader’s attention to an important matter Yes Yes No Yes The financial statements are not free from material misstatement Yes No Yes Yes The auditor is unable to obtain sufficient appropriate evidence Yes Yes Yes No If the auditor’s believe that a required material disclosure is omitted from the financial statements. b. c. Irregardless of the auditor’s independence c. Believes that some material part(s) of the financial statements are not presented fairly. Yes Yes c. The auditor should express a modified opinion on the financial statements. Adverse opinion or a disclaimer opinion . Believes that the overall financial statements are not presented fairly. c.

Disclaimer of opinion and a qualified opinion. d. the auditor’s report may contain Qualified Opinion Adverse Opinion Disclaimer Opinion a. When financial statements contain material misstatements. A required disclosure that is significant is omitted from the financial statements 33. Yes Yes Yes 35. No No Yes d. b. Yes No b. Adverse opinion and an unmodified opinion. the auditor shall express a qualified opinion when the potential effect of an item under consideration is Material Pervasive a. In limitation in the scope of the audit b. Accordingly. the auditor must decide between expressing a(n) a.d. Unmodified opinion or a qualified opinion 31. Adverse opinion and a disclaimer opinion. An auditor is confronted with an exception sufficiently material to warrant a modification of the audit report. When the auditor is unable to obtain sufficient appropriate audit evidence. The financial statements are materially misstated c. Yes Yes No c. Yes Yes c. No Yes 34. If the exception relates to a departure from the PFRS. 32. Yes No Yes b. the auditor’s report may contain Qualified Opinion Opinion Adverse Opinion Disclaimer . A disagreement between the auditor and the client arose because of the capitalization of researched and development costs d. No No d. In which of the following situation would a decision of selecting between qualified or adverse opinions be inappropriate? a. c. The auditor should consider the nature of the item and the significance of effect when formulating an opinion on financial statements. Adverse opinion and a qualified opinion.

Qualified opinion b. taken as whole are a. Adverse opinion The expression o a qualified opinion means that the financial statements. Yes No Yes b. 38. Material and pervasive b. The appropriateness of the selected accounting policies b. 39. No No Yes d. Yes Yes No c. Qualified and adverse opinion d. The application of the selected accounting policies c. Material but not pervasive c. Adverse and unmodified opinion b. in the auditor’s judgment. a. Materially misstated b. the effects or possible effects of the item under consideration are a.36. the auditor may consider it appropriate to express a(n) a. Disclaimer and unmodified opinion with emphasis of matter paragraph c. Report with Emphasis of a Matter paragraph c. such as situation involving multiple uncertainties that are significant to the financial statements. Pervasive but not material d. Yes Yes Yes The qualified opinion report will be issued by the independent auditor when. The appropriateness or adequacy of disclosures in the financial statements . Disclaimer opinion d. Presented fairly d. Qualified and disclaimer of opinion In extreme cases. Do not present fairly Material misstatements in the financial statements may arise from all of the following conditions. 37. Between which of the following opinions should the entity’s auditor choose? a. except a. 40. Not material and not pervasive An auditor was unable to obtained audited financial statements or other evidence supporting an entity’s investment in a large subsidiary. Materially misleading c.

42. d. 45. the auditor becomes aware that management has imposed a limitation on the scope of the . b. b. Yes Yes No Yes Related to the nature or timing of the auditor’s work No Yes No Yes Related to client’s request to omit certain procedures Yes No Yes Yes Which of the following is an example of circumstances imposed scope limitation relating to the nature or timing of the auditor’s work? a. 44. Which of the following is the correct order of steps that the auditor should follow if. Restriction imposed by management on the scope of the audit b. d. The auditor determined that substantive tests alone are not sufficient but the internal control is not reliable. Restriction on the disclosures in the financial statements Circumstance imposed scope limitations include those that are: Beyond the control of the entity a. the auditor should express a. except a. after accepting the engagement. 43. c. An unmodified report The auditor’s inability to obtain sufficient appropriate audit evidence may arise from all of the following conditions. The entity’s accounting records were destroyed by a recent catastrophe. Limitations beyond the control of the entity c. Either qualified or disclaimer of opinion c. The sufficiency and appropriateness of audit evidence When management does not amend the financial statements in circumstances where the auditor believes they need to be amended and the auditor’s report has not been released to the entity. An unmodified opinion with emphasis of matter paragraph d.41. d. c. Either qualified or adverse opinion b. management prevents the auditor from observing the physical count of inventory. The entity is required to use the equity method of accounting for investment in associate but the client opted to use the fair value method. Limitations relating to the nature or timing of the auditor’s work d.

Other matter paragraph d. No Yes 47. This paragraph is called a. Yes Yes c.audit that likely to result in a modification of opinion on the financial statements? I. Yes No b. In making a decision of whether to disclaim an opinion or withdraw from engagement due to a client imposed limitation. III b. When an auditor expresses a qualified. If the auditor is unable to obtain sufficient appropriate evidence because of a limitation imposed by management. When an auditor modifies his opinion on the financial statements because of material misstatements. Emphasis of matter paragraph c. I. the auditor may Qualify the opinion Withdraw from engagement a. Explanatory paragraph b. III. The stage of completion of the engagement at the time the management imposed the scope limitation 48. III. II. The pervasiveness of effect on financial statements c. The auditor shall determine whether it is possible to perform alternative procedures a. II. I 46. The auditor shall communicate the matter to those charged with governance III. an adverse or a disclaimer of opinion on the financial statements. the basis for modification paragraph shall include A description of A quantification of material effects of . III d. II. I. the auditor should consider a. No No d. The materiality of the item under consideration b. II c. Basis for modification paragraph 49. Both the materiality and pervasiveness should be considered d. the auditor’s report shall include a separate paragraph that provides a description of the matter giving rise to the modification. The auditor shall request the management to remove the limitation II. I.

When this occurs. d. Yes Yes No No misstatement. Basis for modification paragraph An auditor should disclose the substantive reason for expressing an adverse opinion in a separate paragraph a. Within the notes to the financial statements An auditor who qualifies an opinion because of inability to obtain sufficient appropriate evidence should describe the matter giving rise to the qualification in a separate paragraph. Inadequacy of disclosure in the notes to financial statements normally requires the auditor to express a qualified opinion on the client’s financial statements. Following the opinion paragraph d. The auditor should also modify the Management Auditor’s Auditor’s Responsibility Responsibility opinion for the Financial 52. the basis for modification paragraph shall include A description of scope A quantification of limitation effects of misstatement. if practicable No Yes No Yes 50. Notes to the financial statements d. No Yes 51.misstatement a. No No d. c. the auditor should disclose the substantive reason for expressing a qualified opinion in the a. Preceding the opinion paragraph c. b. if practicable a. 53. Yes Yes c. Emphasis of matter paragraph b. When an auditor modifies his opinion on the financial statements because of inability to obtain sufficient appropriate evidnece. Other matter paragraph c. . Yes No b. Preceding the management’s responsibility for the financial statements b.

To draw the reader’s attention to a matter that is not presented or disclosed in the financial statements d. Yes Yes Yes No c.a. 56. To draw the reader’s attention to a matter that is presented in the financial statements b. Adverse opinion c. The auditor should also modify the Introductory Managemen Auditor’s Auditor’s paragraph t’s responsibilit opinion responsibilit y y a. Not presented in the financial statements d. 54. To draw the reader’s attention to a matter that is disclosed I the notes to financial statements c. statements Yes No Yes No No Yes Yes Yes Yes No Yes Yes An auditor who disclaim an opinion because of inability to obtain sufficient appropriate evidences should describe the matter in a separate paragraph. Qualified opinion b. Disclaimer of opinion d. No No Yes Yes Emphasis of Matter and Other Matter Paragraph 55. Yes No Yes Yes d. d. c. b. Affecting the auditor’s opinion c. Disclosed in the financial statements b. No No Yes Yes b. Which of the following is not to be construed as a modification of opinion? a. Involving an uncertainty The “Other Matter” paragraph is used by the auditor a. To draw the reader’s attention toa matter that caused the auditor to modify is opinion . Audit report with emphasis of matter paragraph The use of an “Emphasis of Matter’ paragraph shall be limited only to those matters a. 57.

c. An “Emphasis of a Matter” paragraph may be used to alert the readers that the financial statements are presented in accordance with a special purpose framework. Which of the following will not normally require an auditor to issue a report that contains an emphasis of matter paragraph? a. Addition of an “Emphasis of Matter” paragraph to an otherwise unmodified report would be inappropriate when a. d. b. Financial statements are prepared using cash basis of accounting. An “emphasis of Matter” paragraph may be used to give emphasis to a specific item that has not been appropriately disclosed in the notes to the financial statements. . c.58. A major catastrophe with a significant effect on the entity’s financial position occurred. d. There is an uncertainty relating to the future outcome of exceptional litigation or regulatory action. Which of the following is correct about “Emphasis of a Matter” paragraph? a. Financial statements contain material misstatement. b. The paragraph would preferably be presented before the opinion paragraph. d. the “Emphasis of Matter” paragraph may be used as a substitute for a qualification of an opinion. 60. The addition of such paragraph does not affect the auditor’s opinion. The addition of such paragraph is not to be construed as a modification of the auditor’s report. 59. Which of the following statements is correct about “Emphasis of a Matter” paragraph? A. The paragraph is normally used by the auditor’s to explain the basis for expressing a modified opinion. An “Emphasis of Matter” paragraph may be used to restrict the distribution of the auditor’s report. Material inconsistency exists between other information and audited financial statements. b. In very rare circumstances. b. c. Evidence obtained indicates that there is an uncertainty about entity’s continued existence. c. 61. Financial statement are reissued following a subsequent discovery of fact affecting the financial statements and the auditor’s report.

To have a basis for disclaiming an opinion. The auditor would probably issue a(n) a. b. An uncertainty arises about the entity’s continued existence. 64. c. The financial statements are not free from material misstatements. 66. 65. Unmodified report d. I only b. When the auditor concludes that there is substantial doubt about the entity’s ability to continue as a going concern. and this fact is adequately disclosed in the notes to financial statements. 63. d. II only . but the client’s financial statements have properly disclosed all of its solvency problems. To emphasize the matter. Adverse opinion The auditor should consider adding an emphasis of matter paragraph when a. To promote readers’ understanding of the auditor’s responsibility and auditor’s report. Special report d. c. b. Unmodified opinion with emphasis of matter paragraph c. II. What is the purpose of the following paragraph in an audit report on financial statements: “We draw attention to note 15 to the financial statements……” a. The auditor is prevented from completing a procedure required by PSA. An unmodified opinion with emphasis of matter paragraph. a. An auditor who concludes. Qualified Opinion c. The financial statements fail to disclose information required by PFRS. Unmodified opinion with emphasis of matter paragraph b. the appropriate audit report could be: I. To have a basis for expressing a qualified opinion. d. d. Disclaimer of opinion b. Qualified report The independent auditor has concluded that a substantial doubt remains about a client’s ability to continue in existence. A disclaimer of opinion. Financial statements are affected by a significant uncertainty. that an uncertainty is not adequately disclosed in the financial statements should issue a(n): a.62.

c. 68. 69. d. Other matter paragraph is presented before the emphasis of a matter paragraph but after the opinion paragraph. c. Management believes and the auditor is satisfied. The financial statements fail to disclose information required by PFRS. The inclusion of this paragraph: a. The auditor wants to draw the readers’ attention to an important matter that caused the auditor to modify his opinion. The auditor is prevented from completing a procedure required by PSA. The auditor decides to make reference to the report a component auditor. b. c. 71. Is appropriate and would not negate the unmodified opinion. d. Is considered a qualification of the report. b. Emphasis of a matter paragraph is presented after the opinion paragraph but before the other matter paragraph. b. The auditor wants to emphasize a matter that is presented or disclosed in the financial statements. The auditor should consider adding an emphasis of a matter paragraph to the audit report when a. An entity disclosed an early application of a new accounting standard. c. d. 70.67. I or II d. An auditor includes a separate paragraph in an otherwise unmodified report in order to emphasize an item that is properly disclosed in the notes to the financial statements. b. c. The auditor wants to restrict the distribution of the audit report. that a material loss probably will occur when pending litigation is resolved. Necessities a revision of the opinion paragraph to include the phrase “except for”. Other matter paragraph is presented after the emphasis of a matter paragraph but before the opinion paragraph. How should the “Emphasis of Matter” and “Other Matter” paragraphs be presented in the auditor’s report? a. Is a violation of standards of reporting. Management is . d. Emphasis of matter paragraph is presented before the opinion paragraph and other matter paragraph. Neither I nor II The “Other Matter” paragraph would be appropriate when a. The auditor wants to emphasize a matter that is not properly presented or disclosed in the financial statements.

Yes Yes Yes 75. Unmodified opinion with emphasis of matter paragraph d. If the entity’s disclosures concerning this matter are adequate.unable to make a reasonable estimate of the amount or range of the potential loss. Qualified opinion due to a material misstatement c. A circumstances imposed scope limitation c. Unmodified report 72. When managements prepares financial statements on the basis of a going concern but the auditor believes that the use of the going concern assumption is not appropriate. Which of the following circumstances will least likely affect the auditor’s opinion? a. report to the audit committee the need to adjust management estimates d. Inadequacy of disclosure in the notes to financial statements d. issue either qualified or adverse opinion b consider the adequacy of disclosure in the notes to financial statements c. the auditor shall a. A qualified opinion . Uncertainty arises about entity’s continued existence 74. Qualified opinion due to a scope limitation b. When the auditor concludes that the use of the going concern assumption is appropriate in the circumstances but material uncertainty exist. If the auditor wishes to call attention to the matter and management does not make an accrual in the financial statements. A client imposed scope limitation b. Yes Yes No b. the auditor should express a(n) a. the auditor should issue: a. No No No c. the audit report may include a(n): Adverse opinion Qualified Disclaimer opinion a. An auditor concludes that there is an uncertainty about an entity’s ability to continue as a going concern for a reasonable period of time. re-issue the prior years audit report and add an emphasis of a matter paragraph 73. but fully discloses the situation in the notes to the financial statements. No No Yes d.

Only the current year. but the prior year’s report should be presented d. d. For all comparatives. Both years b. the auditor’s opinion refers to each period for which the financial statements are presented. the auditor’s opinion the current period only. d. These financial statements are properly restated in the current year and presented in comparative form with the current year’s financial statements. Only the current year. Comparative financial statements d. the auditor’s opinion on the financial statements refers to the current period ony. For corresponding figures. Which of the following best describes the auditor’s responsibility when reporting on comparatives? a. c. 79. 77. the auditor’s opinion on the financial statements refes to the current period only. a. A framework of presentation where amounts and other disclosures for the prior period are included as an integral part of the current period financial statements. Current period figures b. but the prior year’s report should be referred to An auditor expressed qualified opinion on the prior year’s financial statements because of a lack of adequate disclosure. Only the current year c. For all comparatives. The auditor’s updated report on the prior year’s financial statements should . 78. c.b. b. For comparative financial statements. An unmodified opinion with respect to the income statements and an adverse opinion with respect to the statement of financial position A disclaimer of opinion An adverse opinion Comparatives 76. the continuing auditor’s report should cover a. Comparatives c. Corresponding figures When the audited financial statements of the prior year are presented together with those of the current year. and are intended to be read only in relation to the amounts and other disclosure relating to the current period.

a. Make no reference to the type of opinion expressed on the prior year’s financial statements d. When reporting on comparative financial statements where the financial statements of the prior year have been examined by the predecessor auditor whose report is not presented. Issue an updated comparative audit report . Whether the predecessor auditor’s review of the current year’s financial statements revealed any matters that might have a material effect on the successor auditor’s opinion d. If the predecessor’s opinion was modified. Comparative financial statements include the financial statements of the prior year that were audited by a predecessor auditor whose report is not presented. Be accompanied by the auditor’s original report on the prior year’s financial statements b. Request the client to reissue the predecessor’s report on the prior year’s statements c. the successor auditor’s report should indicate a. The reasons why the predecessor auditor’s report is not presented b. the successor should a. References to the predecessor auditor only if the predecessor auditor expressed an unmodified opinion d. the successor auditor should make a. Indicate the substantive reasons for the modification of predecessor’s report b. The type of opinion expressed by the predecessor auditor 81. When reporting on comparative financial statements where the financial statements of the prior period have been examined by a predecessor auditor whose report is not presented. No reference to the predecessor auditor b. The identity of the predecessor auditor who examined the financial statements of the prior year c. Continue to express a qualified opinion expressed on the prior year’s financial statements c. Disclose the substantive reasons for the different opinion 80. References to the predecessor auditor only if the predecessor auditor expressed a qualified opinion c. References to the predecessor auditor regardless of the type of opinion expressed by the predecessor auditor 82.

Not name Jewel as the predecessor auditor. audited Infinite Co. Reference to the report of the successor auditor only in the scope paragraph b. Need obtain only verbal assurance from the successor The predecessor auditor. III. Has no responsibility to become assured about events subsequent to the termination of the engagement d. 85. II. the successor auditor. which expressed a qualified opinion. CPA. The predecessor auditor’s report should make a. has reissued a report because the audit client desires comparative financial statements. Grain. a. In drafting the current year’s auditor’s report. I.’s prior year financial statements. who is satisfied after properly communicating with the successor auditor. Reference to both the work and the report of the successor auditor only in the opinion paragraph d. he a. The “other information” in a published report containing audited financial statements may be relevant to an independent auditor’s examination. I and II only d. 83. With respect to “other information” . I only b.d. Indicate the substantive reasons for Jewel’s qualification. should I. 84. II. Should take steps to determine I the opinion is still appropriate b. Reference to the work of successor auditor in the scope and opinion paragraph c. These statements are presented with those of the current year for comparative purposes without Jewel’s auditor’s report. Should obtain a letter of representation from the client c. II and III only c. Express an opinion only on the current year’s statements and make no reference to the prior year’s statements Jewel. CPA. and III When a predecessor auditor is to reissue his report on financial statements and he has not examined the financial statements for the most recent audited period. Indicate the type of opinion issued by Jewel. No reference to the report or the work of the successor auditor Other Information 86.

Consider the matter closed since the other information is in the audited financial statements c. the auditor may a. the auditor found a material inconsistency between the other information and the information presented in the financial statements. The auditor need not be concerned with the “other information” d. but the client refuses to revise or eliminate the material inconsistency. An unmodified report 88. Either qualified or disclaimer of opinion c. Disclaim an opinion on the financial statements after explaining the material inconsistency in a separate explanatory paragraph d. The auditor is obligated to perform auditing procedure to corroborate “other information” contained in a document c. Before the date of the auditor’s report. the auditor shall a. Primarily to identify material inconsistency c. To enable him to express an opinion on the other information 90. In an amendment to other information in a document containing audited financial statements is necessary and the entity refuses to make the amendment. Revise the auditor’s report to include other matter paragraph describing the material inconsistency 89. If the revision of the financial statements is necessary and management refuses to make the revision. Either qualified or adverse opinion b. Include Other Matter paragraph in the unmodified report to describe the material inconsistency .a. The auditor’s responsibility does not extend beyond the financial information identified in the report b. The auditor must include the “other information” in the report 87. the auditor would consider issuing: a. Issue an “except for” qualified opinion after discussing the matter with the client’s board of directors b. The auditor will most likely read the other information a. To determine the type of opinion to express on the financial statements d. If the auditor concludes that the financial statements do not require revision. Modify the opinion on the financial statements b. An unmodified opinion with other matter paragraph d. Primarily to identify material misstatement of fact b. An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements.

92. c. not related to matters appearing in the financial statements. a publicly held corporation. when other information. Material error affecting the other information Which of the following best describes the auditor’s responsibility for “other information” included in the annual report to the stockholders that contains financial statements and the auditor’s report? a. Disclaim an opinion on the other information This exists. Material inconsistency b.. when other information contradicts the information contained in the audited financial statements a. Mark is auditing the consolidated financial statements of Rex. Material misstatement c. Inc. 94. The auditor should extend the examination to the extent necessary to verify the other information d. Material misstatement of fact d. depending on particular circumstances. Material misstatement of fact d.91. Shek is the auditor who has audited and reported on the financial statements of a wholly owned subsidiary of . 93. Disclaim an opinion on the financial statements d. the auditor. Material misstatement c. The auditor has no obligation to read the other information b. may do any of the following except a. is incorrectly stated or presented. Withdraw from the engagement d. Not issue an audit report c. Describe the material inconsistency in other matter paragraph b. a. Express either qualified or adverse opinion Group Financial Statements 95. Material error affecting the other information This exists. The auditor has no obligation to corroborate the other information but should read it to determine whether it is materially inconsistent with the financial statements c. The auditor must modify the auditor’s report to state that the other information is unaudited or not covered by the auditor’s report If an amendment is necessary in the other information and the entity refuses to make an amendment. Material inconsistency b.

CPA. however. Rain. I only b. b. Neither I nor II 99. a. Inadequacy in the accounting records 97. Belle is unable to review Rain’s working papers. In which situation(s) should Belle refer to Rain’s audit? I. The group auditor has violated the professional standards d. Restrictions imposed by the client b. The group auditor assumes responsibility for the report on the other auditor b. If the group auditor decides to refer in the report to the audit made by component auditor a. Belle reviews Rain’s working papers and assumes responsibility for Rain’s work. Mark’s first concern with respect to the Rex financial statements is to decide whether he a. Both I and II c.Rex. The component auditor is relieved of responsibility for his work but not his report 98. Inc. Belle’s inquiries indicate that Rain has an excellent reputation for professional competence and integrity. II only d. The component auditor is relieved of responsibility for his report but not his work c. Should resign from the engagement because an unmodified opinion cannot be expressed on the consolidated financial statements 96. Should review the working papers of Shek with respect to the audit of the subsidiary’s financial statements d. CPA decides to serve as group auditor in the auditor of the financial statements of Maya Consolidated. May refer to the work of Shek in his report on the consolidated financial statements c. An auditor may issue an unmodified report when the . May serve as the group auditor and report as such on the consolidated financial statements of Rex. Reliance placed on the report of component auditor d. Belle. Inc. Inc. Inability to obtain sufficient appropriate evidence c. Which of the following will not result in a modification of the auditor’s report? a. II. audits one of Maya’s subsidiaries.

a. Issues an unmodified opinion on the consolidated financial statements b. Is satisfied as to the independence and professional reputation of the component auditor Special Purpose Audit Engagements 101. Audit of financial presentation that complies with contractual agreement 103. Audit of financial statements prepared in accordance with PFRS b. The group auditor could justify this decision if. PSA 800 “Audit of financial statements prepared in accordance with special frameworks” does not apply to a. Specific Financial Statements 102. the group auditor a. Audit of financial statements prepared using modified cash basis d. the group auditor decides not to make reference to another CPA who audited the client’s subsidiary. Which of the following is not considered a special purpose framework? a. An auditor refers to the findings of an expert Financial statements are derived and condensed from complete audited financial statements that are filed with a regulatory agency c. Group auditor assumes responsibility for the work of the component auditor 100. Special Considerations d. Income tax basis of accounting b. Audit of financial statements prepared in accordance with the cash receipts and cash disbursement basis of accounting c. Financial statements are prepared on the cash receipts and disbursements basis of accounting d. Financial statements prepared in accordance with a special purpose framework are referred to in PSA 800 as a. Is unable to review the audit programs and working papers of the component auditor d. Special Purpose Financial Statements c. Special Reports b. b. among other requirements. Cash receipts and disbursements basis of accounting . In the auditor’s report. Learns that the component auditor issued an unmodified opinion on the subsidiary’s financial statements c.

Interim financial information reviewed to determine whether material modifications should be made to the financial statements to conform with PFRS 108. The CPA is asked to audit financial statements prepared on a modified cash basis. Feasibility studies presented to illustrate an entity’s results of operations d. Pro-forma financial presentation designed to demonstrate the effect of hypothetical transactions c. A disclaimer of opinion c. An unmodified report b. To comply with contractual agreements 105. Using modified cash basis of accounting c. Qualifies the audit opinion because of a departure from PFRS c. Accrual basis of accounting 104. States clearly in the audit report that fairness was evaluated within the framework of the modified cash basis rather than PFRS 107.c. The CPA’s report must contain a. Converts the financial statements to accrual basis before rendering an audit report b. The CPA believes that the financial statements are not presented fairly in conformity with the prescribed basis. Which of the following is an example of special purpose financial statements? a. This is acceptable provided the CPA a. Of an organization that has limited the scope of the audit d. An adverse opinion 106. A negative assurance d. That are prepared on a basis of accounting that the entity uses to file its tax return b. ABC Company prepared its financial statements on an accounting basis prescribed by a government agency solely for filing with that agency. Financial presentation to comply with regulatory requirements d. Issues an disclaimer of opinion d. Which statements is correct regarding report on a component of financial statements? . Auditors may issue a special purpose audit report for all of the following except an audit of financial presentations a. Financial statements prepared in accordance with a financial reporting framework established by the Cooperative Development Authority b.

The attention devoted to the specified item is usually less than it would be if the financial statements as a whole were being audited d. This type of engagement may be undertaken as a separate engagement or in conjunction with an audit of the entity’s financial statements b.a. The auditor takes full responsibility for the fair presentation of the summary financial statements . the auditor need not consider those financial statement items that are interrelated and which could materially affect the information on which the audit opinion is to be expressed. the auditor may report components of the financial statements even if those components are so extensive as to constitute a major portion of the financial statements 109. Such a report can be issued only if the auditor is also engaged to audit the entire set of financial statements c. The client takes full responsibility for the adequacy of the procedures to be performed d. c. When an adverse opinion or disclaimer of opinion on the entire financial statements has been issued. The auditor’s examination will ordinarily be less extensive than if the same component were to be audited in connection with a report on the entire financial statements d. The auditor has expressed an unmodified opinion on the basic financial statements from which the summary financial statements were derived b. In determining the scope of the engagement. The auditor who has expressed an adverse opinion on the financial statements as a whole cannot express an opinion on a specific element of a financial statement 110. Materiality must be related to the specific item and not to the financial statements as a whole b. Which of the following statements is correct with respect to an auditor’s report expressing an opinion on a specific element of a financial statement? a. The auditor has audited the basic financial statements from which the summary financial statements were derived c. An auditor may accept an engagement to report on the summary financial statements provided a.

Both a and b . c. the auditor shoil not report on summarized financial statements b. Unless the auditor has expressed an audit opinion on the financial statements from which the summarized financial statements were derived. Summarized financial statements need not to appropriately titled to identify the audited financial statements from which they have been derived d. Should state whether the summary financial statements are consistent with the financial from which they were derived. The specific element is not a major component of the financial statements c. Should state whether the summary financial statements are fairly presented in accordance with PFRS b. Either a or b d. An auditor who expressed an adverse opinion on the financial statements cannot express an unmodified opinion on the specific element of a financial statement. The auditor’s report on summary financial statements a. The report on specific element will not be published together with the report on the financial statements b.111. Should contain the same type of opinion as the opinion expressed on the basic financial statements from which the summary financial statements were derived 113. unless a. Summarized financial statements contains all the information required by the financial reporting framework used for the annual audited financial statements 112. Which statements is incorrect regarding report on summarized financial statements? a. Summarized financial statements are presented in considerably less detail than annual audited financial statements c. Should be in the form of negative assurance d.