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PLEASE ANSWER THE FOLLOWING QUESTIONS IN DETAIL

1. What is the duty of the auditor after the issuance ofthe financial statements?

2. Under what circumstances can an additional paragraphbe issued in an unqualified opinion? Where is this additionalparagraph presented in the auditor’s report?

3. When there is a group audit with a sharedresponsibility or when an auditor relies on the work of anotherauditor, what reference is contained in the audit report and whichparagraphs contain the reference?

4. Is it possible for the auditor to issue two differentopinions in the same year on the same financial statements? If yes,give an example?

5. What must be done by the auditor if internal controlsare found to be ineffective?

6. What are the opinions that can be issued by theauditor on the internal control report?

7. List 10 terms that can be used when performingsubstantive tests, ex. Trace, review, etc.

8. Give 2 examples of substantives tests for each of thefollowing: Inventory, A/R, A/P and cash.

9. What type of audit procedures are performed by anauditor? Why are they performed?

10. Why are auditors required to retain auditdocumentation?

11. What are audit working papers? Who owns thesedocuments? These papers must be kept confidential. Can they ever bereleased to other parties?

12. How long is the auditor required by the PCAOB toretain the audit working papers of public companies? Of privatecompanies?

13. What is required of an auditor for the varioussubsequent events?

14. What two criteria must be met for the financialstatements to be adjusted for a subsequent event?

15. What is the auditor’s responsibility after the endof field work but before the financial statements have been issued?After the financial statements have been issued?

16. What reports are filed with the SEC by publiccompanies? Under what circumstances are they filed?

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Trinidad Tremblay
Trinidad TremblayLv2
28 Sep 2019

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Chapter 15

1. Consider the following statements:

I. For the last several years, both the FinancialAccounting Standards Board (FASB) and the

International Auditing and Assurance Standards Board (IAASB)have been considering possible

changes to the standard unqualified audit report.

II. The audit report is modified to five paragraphs as a resultof another audit firm performing part of

the financial statement audit (Refer to Shared Reporttopic).

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

2. Consider the following statements:

I. Inconsistent application of accounting principles is a GAAPviolation and would result in a

qualified or adverse audit opinion.

II. For a change in accounting principles thatmanagement does justify to the auditor, the

auditor will likely choose between a qualified or an adverseopinion.

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

3. Consider the following statements:

I. The failure of a client to include a Statement of Cash Flowswill result in the issuance of a

disclaimer of opinion by the auditor.

II. The auditor will issue an unqualified opinionon Internal Controls over Financial Reporting (ICFR)

if the auditor has identified only one material weakness inICFR.

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

4. In which of the following instances would an auditor mostlikely issue a standard unqualified opinion

WITH an explanatory paragraph?

a. Management disclosures are missing or inadequate.

b. There is substantial doubt about the entity’s ability tocontinue as a going-concern.

c. There is a significant limitation on the scope of theengagement.

d. There is an immaterial deviation from GAAP related tocapitalizing repairs.

5. Which one of the following is an example of the contents ofan opinion paragraph found in an audit

report?

a. “We have audited …”

b. “Nothing came to our attention…”

c. “The financial statements referred to above present fairly…”

d. “An audit includes examining, on a test basis …”

6. A client company has a history of negative cash flow trendsand continuing losses. What would this

seem to involve?

a. GAAP problem

b. Going concern.

c. Lack of consistency.

d. Lack of independence.

7. An audit of the Flagler Company, a diamond mining company,brings to light the fact that its

equipment has been marked up to the owners’ expectation ofmarket values. Such a situation will

most likely result in which type of report?

a. Disclaimer.

b. Review.

c. Adverse.

d. Unqualified, with explanatory paragraph.

8. In which of the following instances would an auditor issue adisclaimer of opinion?

a. Lack of consistency.

b. GAAP problem.

c. There is a significant limitation on the scope of theengagement.

d. The principle auditor decides to make reference to anotherauditor who has issued an unqualified

audit report.

9. When might an auditor modify the introductory paragraph andreplace the scope paragraph with an

explanatory paragraph? The ANSWER is A.

a. When a pervasive scope limitation exists.

b. When there is substantial doubt about going-concern.

c. When the auditor lacks independence.

d. When there is an emphasis of a matter.

You are an audit accountant and you boss asks you the followingquestions

answer For financial audits, generally accepted governmentauditing standards (GAGAS) incorporate AICPA standards. GAGASprescribe additional requirements for reporting on Laws,Regulations, Reporting on Contracts, and Grants InternalControl

Yes No

No No

No Yes

Yes Yes

When reporting on an entity’s internal control over financialreporting in compliance with generally accepted government auditingstandards, an auditor should issue a written report that includesa

Statement of positive assurance that the results of testsindicate that internal control either can, or cannot, be relied onto reduce control risk to an acceptable level.

Statement of negative assurance that nothing came to theauditor’s attention that caused the auditor to believe significantdeficiencies were present.

Description of the scope of the auditor’s testing of internalcontrol.

Description of the material weaknesses and the strengths thatthe auditor can rely on in reducing the extent of substantivetesting.

Reporting standards for financial audits under GovernmentAuditing Standards differ from reporting standards undergenerally accepted auditing standards in that GovernmentAuditing Standards require the auditor to

Present the results of the auditor’s tests of economy andefficiency regarding the use of the entity’s resources.

Describe the scope of the auditor’s tests of compliance withlaws and regulations.

Provide negative assurance that the auditor discoveredno transactions that were indicative of illegalacts.

Provide positive assurance that the entity’s audit committee isadequately informed about the effects of any illegal acts.

An auditor determines that a client who received a federal grantfraudulently reported information to the federal government. Theclient’s management refuses to acknowledge the fraud. Which of thefollowing parties should the auditor contact first?

The recipients of the client’s services.

The state attorney general’s office.

The agency that provided the grant.

The state accountancy board.

MICROSOFT CORPORATION

7372 - SERVICES-PREPACKAGED SOFTWARE

10-k report- http://www.sec.gov/Archives/edgar/data/789019/000119312513310206/0001193125-13-310206-index.htm

Using this information answer the following question:

a. Are your company's financial statements audited by an independent public accounting firm? Find and read the "Report of Independent Registered Public Accounting Firm" (or similarly titled report) in the 10-K. What is the name of your company's audit firm and what type of opinion did it issue? (unqualified, unqualified with modified wording, qualified, adverse or disclaimer). Summarize the responsibilities the auditor assumed regarding the financial statements and internal controls based on their report.

b. Find and read the "Report of Management Responsibilities" or "Certification of Chief Executive Officer/Chief Financial Officer" (or similar titled report) found in the company's 10-K. These reports are required by the Sarbanes-Oxley Act. Who signed it? Summarize the responsibilities the management assumed regarding the financial statements and internal controls based on their report

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