Auditing simulated exam

Deficiency exists when

Auditing final exam simulation

11 of 100
An auditor is reporting on condensed financial statements for an annual period that are derived from the audited financial statements of a publicly-held entity.  The auditor's opinion should indicate whether the information in the condensed financial statements is fairly stated in all material respects:
a.  In conformity with accounting principles generally accepted in the United States of America.
b.  In relation to the complete financial statements.
c.  In conformity with an other comprehensive basis of accounting.
d.  In relation to supplementary filings under federal security statutes.

Answer:  "b" is correct.  The auditor should report whether the information in the condensed financial statements is fairly stated, in all material respects, in relation to the financial statements from which it has been derived.

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Audit Reports, Topic 3: Reports on Audited Financial Statements

12.  Under which of the following circumstances would a disclaimer of opinion not be appropriate?

a.  The auditor is unable to determine the amounts associated with an employee fraud scheme.
b.  Management does not provide reasonable justification for a chance in accounting principles.
c.  The client refuses to permit the auditor to confirm certain accounts receivable or apply alternative procedures to verify their balances.
d.  The chief executive officer is unwilling to sign the management representation letter.

Answer:  b.

Audit Reports, Topic 3: Reports on Audited Financial Statements

A scope limitation sufficient to preclude an unqualified opinion always will result when management:
a.  Prevents the auditor from reviewing the audit documentation of the predecessor auditor.
b.  Engages the auditor after the year-end physical inventory is completed.
c.  Requests that certain material accounts receivable not be confirmed.
d.  Refuses to acknowledge its responsibility for the fair presentation of the financial statements in conformity with GAAP.
Answer:  d