10 Questions
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 ?
unmodified opinion, qualified opinion, & adverse opinion
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 are presented in accordance with GAAP
What are the 3 opinions that are appropriate when a client's financial statements are not in accordance with GAAP?
unmodified opinion, qualified opinion, 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
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
The management assertion related to account balances at period end for the assertion of existence is that
Assets, liabilities, and equity interests exist.
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.
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.
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.
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.
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.
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.
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