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Correct Opinions on Financial Statements Not in Accordance with GAAP

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Correct Opinions on Financial Statements Not in Accordance with GAAP

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Questions and Answers

There are 3 opinions that may be appropriate when a client's financial statements are not in accordance with GAAP. Which of the following 3 opinions are correct ?

disclaimer, qualified opinion, & adverse opinion

unmodified opinion, disclaimer, & adverse opinion

unmodified opinion, qualified opinion, & disclaimer

unmodified opinion, qualified opinion, & adverse opinion (correct)

Select the option that would not protect an auditor when a material misstatement has been detected in a financial statement audit. The audit was conducted

financial statements not prepared in accordance with GAAP

financial statements are presented in accordance with GAAP (correct)

the auditor is not independent

scope of audit has been restricted

What are the 3 opinions that are appropriate when a client's financial statements are not in accordance with GAAP?

disclaimer opinion, qualified opinion, adverse opinion

unmodified opinion, qualified opinion, disclaimer

unmodified opinion, qualified opinion, adverse opinion (correct)

unmodified opinion, disclaimer, adverse opinion

Select the best option to protect an auditor when a material misstatement has not been detected in a financial statement audit. The audit was conducted

in accordance with GAAP Signup and view all the answers

An auditor must perform an audit by having an attitude of professional skepticism. This consists of several components. Select the one that applies.

a questioning mind, a critical assessment of the audit evidence Signup and view all the answers

The management assertion related to account balances at period end for the assertion of existence is that

Assets, liabilities, and equity interests exist. Signup and view all the answers

The management assertion related to account balances at period end for the assertion of completeness is that

All assets, liabilities, and equity interests that should have been recorded have been recorded. Signup and view all the answers

The management assertion related to account balances at period end for the assertion of valuation and allocation is that

Assets, liabilities, and equity interests are included in the financial statements at appropriate amounts and any resulting valuation adjustments are appropriately recorded. Signup and view all the answers

The management assertion related to account balances at period end for the assertion of rights and obligations is that

The entity holds or controls the rights to assets and the liabilities are the obligation of the entity. Signup and view all the answers

The management assertion of occurrence, related to classes of transactions and events for the period under audit, is defined as

Transactions and events that have been recorded have occurred and pertain to the entity. Signup and view all the answers

Study Notes

Audit Opinions

There are three opinions that may be appropriate when a client's financial statements are not in accordance with GAAP.

Professional Skepticism

An auditor must perform an audit with an attitude of professional skepticism.
Professional skepticism consists of several components.

Management Assertions

Account Balances

Existence: assets, liabilities, and equity exist at period end.
Completeness: all transactions and events that should be recorded have been recorded.
Valuation and Allocation: assets, liabilities, and equity are included in the financial statements at appropriate amounts, and any resulting valuation or allocation adjustments are appropriately recorded.
Rights and Obligations: the entity has a right to the assets, and the liabilities are the obligations of the entity.

Transactions and Events

Occurrence: transactions and events have occurred during the period under audit.

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Description

Test your knowledge on the appropriate opinions to give when a client's financial statements do not comply with GAAP. Choose the correct opinions out of the options provided.