In which of the following situations would a disclaimer of opinion not be appropriate?

In which of the following situations would a disclaimer of opinion not be appropriate?

a. The auditor is not independent.
b. The client imposed a substantial restriction on the scope of the audit.
c. The financial statements have a departure from GAAP that is not justified.
d. A disclaimer of opinion would be appropriate in all of the above situations.






Answer: C

When disclaiming an opinion because of a client-imposed scope limitation, which of the following is false regarding changes that would be made to the audit report?

When disclaiming an opinion because of a client-imposed scope limitation, which of the following is false regarding changes that would be made to the audit report?

a. The auditor would indicate in a separate paragraph why the audit did not comply with professional auditing standards.
b. The auditor would omit the scope paragraph.
c. The auditor would modify the introductory paragraph.
d. The auditor would omit the opinion paragraph.








Answer: D

When an auditor issues an adverse opinion, which of the following should be included in the opinion paragraph?

When an auditor issues an adverse opinion, which of the following should be included in the opinion paragraph?

a. The reasons that the financial statements are misleading.
b. A reference to a separate paragraph that describes the reason for the adverse opinion.
c. A statement that indicates that the financial statements are fairly stated except for a reason that is described in the separate paragraph.
d. The financial statement effects of the departure from GAAP.








Answer: B

In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?

In which of the following circumstances would an auditor be most likely to express an adverse opinion on a company's financial statements?

a. Information comes to the auditor's attention that raises substantial doubt about the company's ability to continue as a going concern.
b. The auditor is denied access to minutes of board of directors' meetings by the client.
c. Tests of controls indicate that the organization's ICFR is ineffective.
d. The financial statements are not in conformity with FASB requirements regarding the capitalization of leases.








Answer: D

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?

Which of the following phrases should not be used when the auditor is qualifying the audit opinion?

a. With the exception of
b. Except for
c. Subject to
d. Any of the above phrases would be appropriate.








Answer: C

Tech Company has an uncertainty because of pending litigation. The auditor's decision to issue a qualified opinion rather than an unqualified opinion most likely would be determined by which of the following?

Tech Company has an uncertainty because of pending litigation. The auditor's decision to issue a qualified opinion rather than an unqualified opinion most likely would be determined by which of the following?

a. Lack of sufficient evidence.
b. Inability to estimate the amount of loss.
c. The client's lack of experience with such litigation.
d. Adequacy of the disclosures.








Answer: D

Eagle Company's financial statements contain a departure from GAAP because, due to unusual circumstances, the statements would otherwise be misleading. Which of the following audit opinions should the auditor provide?

Eagle Company's financial statements contain a departure from GAAP because, due to unusual circumstances, the statements would otherwise be misleading. Which of the following audit opinions should the auditor provide?

a. Unqualified, but not mention the departure in the auditor's report.
b. Unqualified, and describe the departure in a separate paragraph of the audit report.
c. Qualified, and describe the departure in a separate paragraph of the audit report.
d. Qualified or adverse, depending on materiality, and describe the departure in a separate paragraph of the audit report.










Answer: B