1. A CPA firm has carried out an audit of the GillespieCorporation. The CPA has uncovered a material misstatement in theinventory balance. However, the CPA does not feel that this problemis so serious as to eliminate the credibility of the financialstatements taken as a whole. What wording will be used to begin theopinion paragraph of the audit report?
A. In our opinion, except for adjustments, if any, that mighthave been foundâ¦
B. The scope of our work was not sufficientâ¦
C. In our opinion, except for the effects ofâ¦
D. Because of the effects ofâ¦
2. When an auditor issues a standard unmodified audit report,the implication is that the auditor:
A. Believes the financial statements are presented fairly inconformity with U.S. GAAP.
B. Does not know if the financial statements are presentedfairly in conformity with U.S. GAAP.
C. Believes the financial statements are presented fairly inconformity with U.S. GAAP except for a specific aspect of them.
D. Does not believe the financial statements are presentedfairly in conformity with U.S. GAAP.
3. A CPA's standard report on audited financial statements wouldbe inappropriate if it referred to
A. Management's responsibilities for the financialstatements.
B. An assessment of the entity's accounting principles.
C. The significant estimates made by management.
D. The CPA's assessment of sampling risk factors.
4. The introductory paragraph of the standard audit reportstates that the financial statements and the opinion expressedabout those statements are:
A. The responsibility of management.
B. The responsibility of the auditor.
C. The joint responsibility of the auditor and management.
4. None of the above.
5. Which of the following procedures would an auditor mostlikely perform to obtain evidence about the occurrence ofsubsequent events?
A. Comparing the financial statements being reported on withthose of the prior period.
B. Confirming a sample of material accounts receivableestablished after year end.
C. Inquiring as to whether any unusual adjustments were madeafter year end.
D. Investigating personnel changes in the accounting departmentoccurring after year end.
6. The date of the management representation letter shouldbe
A. The same date as the latest interim financialinformation.
B. The same date as the latest bank reconciliation.
C. No earlier than the auditor's report.
D. No earlier than the balance sheet.
7. The audit step most likely to reveal the existence ofcontingent liabilities is
A. A review of vouchers paid during the month following theyear-end
B. Mortgage-note confirmation
C. Accounts payable confirmations
D. An inquiry directed to legal counsel
8. The Form 10-K filed by management of a public companyincludes a section on managementâs discussion and analysis(MD&A) in addition to the annual financial statements. Which ofthe following best describes the auditorâs responsibility for theMD&A information?
A. The auditor must perform sufficient appropriate auditprocedures to opine on the MD&A information.
B. The auditor has no responsibilities related to the MD&Adisclosures.
C. The auditor must read the MD&A information to determineif there is any material inconsistency with the audited financialstatements.
D. The auditor must provide a disclaimer of opinion related tothe MD&A information.
1. A CPA firm has carried out an audit of the GillespieCorporation. The CPA has uncovered a material misstatement in theinventory balance. However, the CPA does not feel that this problemis so serious as to eliminate the credibility of the financialstatements taken as a whole. What wording will be used to begin theopinion paragraph of the audit report?
A. In our opinion, except for adjustments, if any, that mighthave been foundâ¦
B. The scope of our work was not sufficientâ¦
C. In our opinion, except for the effects ofâ¦
D. Because of the effects ofâ¦
2. When an auditor issues a standard unmodified audit report,the implication is that the auditor:
A. Believes the financial statements are presented fairly inconformity with U.S. GAAP.
B. Does not know if the financial statements are presentedfairly in conformity with U.S. GAAP.
C. Believes the financial statements are presented fairly inconformity with U.S. GAAP except for a specific aspect of them.
D. Does not believe the financial statements are presentedfairly in conformity with U.S. GAAP.
3. A CPA's standard report on audited financial statements wouldbe inappropriate if it referred to
A. Management's responsibilities for the financialstatements.
B. An assessment of the entity's accounting principles.
C. The significant estimates made by management.
D. The CPA's assessment of sampling risk factors.
4. The introductory paragraph of the standard audit reportstates that the financial statements and the opinion expressedabout those statements are:
A. The responsibility of management.
B. The responsibility of the auditor.
C. The joint responsibility of the auditor and management.
4. None of the above.
5. Which of the following procedures would an auditor mostlikely perform to obtain evidence about the occurrence ofsubsequent events?
A. Comparing the financial statements being reported on withthose of the prior period.
B. Confirming a sample of material accounts receivableestablished after year end.
C. Inquiring as to whether any unusual adjustments were madeafter year end.
D. Investigating personnel changes in the accounting departmentoccurring after year end.
6. The date of the management representation letter shouldbe
A. The same date as the latest interim financialinformation.
B. The same date as the latest bank reconciliation.
C. No earlier than the auditor's report.
D. No earlier than the balance sheet.
7. The audit step most likely to reveal the existence ofcontingent liabilities is
A. A review of vouchers paid during the month following theyear-end
B. Mortgage-note confirmation
C. Accounts payable confirmations
D. An inquiry directed to legal counsel
8. The Form 10-K filed by management of a public companyincludes a section on managementâs discussion and analysis(MD&A) in addition to the annual financial statements. Which ofthe following best describes the auditorâs responsibility for theMD&A information?
A. The auditor must perform sufficient appropriate auditprocedures to opine on the MD&A information.
B. The auditor has no responsibilities related to the MD&Adisclosures.
C. The auditor must read the MD&A information to determineif there is any material inconsistency with the audited financialstatements.
D. The auditor must provide a disclaimer of opinion related tothe MD&A information.
