Auditing 11/e - Unmodified Opinion Audit Report with Emphasis-of-Matter Explanatory Paragraph

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When might a CPA want to emphasize specific matters regarding financial statements?

When auditing major customers

When encountering legal proceedings

When expressing an unqualified opinion (correct)

When facing uninsured catastrophes

In what situation must the auditor state that adhering to a principle would have produced a misleading result?

When adhering to the principle would be misleading (correct)

Uninsured catastrophes

Facing legal proceedings

Loss of major customers

What must the auditor do when agreeing with a departure from a promulgated principle?

Omit it from the audit report

Discuss it with the entity's major customers

Express an unqualified opinion regardless

Include it in the audit report (correct)

Under what circumstances might legislation jeopardize an entity's ability to operate?

When legal proceedings occur Signup and view all the answers

Why might the CPA want to emphasize specific matters regarding the financial statements?

To provide additional clarity Signup and view all the answers

When would an auditor issue an adverse opinion?

When the financial statements are so materially misstated Signup and view all the answers

In what situation would an auditor issue a disclaimer of opinion?

Auditor is unable to be satisfied about the fairness of the financial statements Signup and view all the answers

What may trigger the need for a disclaimer of opinion even if audit procedures were conducted?

Lack of independence as per AICPA Code of Professional Conduct Signup and view all the answers

What is the primary reason for issuing an adverse opinion?

To highlight significant misstatements in the financial statements Signup and view all the answers

Which scenario would most likely lead to an auditor issuing a disclaimer of opinion?

Inability to verify certain transactions in the financial records Signup and view all the answers

Why is it crucial for an auditor to be independent as per professional codes?

To ensure fairness and objectivity in their assessment Signup and view all the answers

What are examples of matters that may lead to an emphasis-of-matter explanatory paragraph in an audit report?

Material related party transactions Signup and view all the answers

When might a qualified opinion be issued?

When there is a limitation on the scope of the audit Signup and view all the answers

Which of the following is NOT a reason for issuing a qualified opinion?

Existence of material related party transactions Signup and view all the answers

What might lead to the inclusion of an emphasis-of-matter explanatory paragraph in an audit report?

The presence of material uncertainties disclosed in footnotes Signup and view all the answers

Which type of opinion report can result from a limitation on the scope of the audit?

Qualified opinion Signup and view all the answers

In what situation might an emphasis-of-matter explanatory paragraph be included in an audit report?

For material uncertainties disclosed in the footnotes Signup and view all the answers

What are the four categories of audit reports mentioned in the text?

Unqualified, Unqualified with explanatory paragraph, Qualified, Adverse or disclaimer Signup and view all the answers

In what circumstance would an auditor issue an unqualified report with an explanatory paragraph?

To emphasize a specific matter in the financial statements Signup and view all the answers

What criteria does the unmodified opinion audit report with emphasis-of-matter paragraph meet?

Complete audit with financial statements that are fairly presented Signup and view all the answers

Which situation would lead to an auditor issuing a report with substantial doubt about going concern?

Inability to pay company obligations Signup and view all the answers

What is emphasized in an unqualified report with an explanatory paragraph?

Certain matters or additional information Signup and view all the answers

Which of the following is NOT one of the four categories of audit reports mentioned in the text?

Emphasis-of-matter Signup and view all the answers

What type of report is issued when the auditor is not independent?

Disclaimer of opinion Signup and view all the answers

In what scenario would an unqualified report include an additional paragraph and a qualified opinion?

Statements not prepared in accordance with GAAP Signup and view all the answers

What does an unqualified shared report with other auditors indicate?

Materiality is material Signup and view all the answers

Under what condition would an adverse opinion be issued?

Scope limited by the client Signup and view all the answers

When would a qualified report include both scope and opinion qualifications?