Auditing Theory

1. An auditor includes a separate paragraph in an otherwise unmodified report to emphasize that the entity
being reported on had significant transactions with related parties. The inclusion of this separate paragraph:
a.  Is considered an "except for" qualification of the opinion.
b. Violates PSA if this information already disclosed in footnotes to the financial statements.
c.  Necessitates a revision of the opinion paragraph to include the phrase "with the foregoing
explanation."
d. Is appropriate and would not negate the unqualified opinion.

2. Which of the following auditing procedures most likely would assist an auditor in identifying conditions
and events that may indicate substantial doubt about an entity's ability to continue as a going concern?
a. Inspecting title documents to verify whether any assets pledged as collateral.
b. Confirming with third parties the details of arrangements to maintain financial support.
c. Reconciling the cash balance per books with the cut-off bank statement and the bank confirmation.
d. Comparing the entity's depreciation and asset capitalization policies to other entities in the industry.