PSA 710 Quiz: Auditor's Responsibilities on Comparative Information Flashcards

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What does the Philippine Standard on Auditing (PSA) discussed in the text primarily focus on?

Investment strategies in the Philippine market

Taxation laws in the Philippines

Auditor's responsibilities regarding comparative information in financial statements (correct)

Corporate governance practices in Philippine companies

How does the nature of comparative information in an entity's financial statements vary?

Based on the auditor's personal preferences

Based on the country's GDP growth rate

Based on the requirements of the applicable financial reporting framework (correct)

Based on the company's marketing strategy

What is included as an integral part of the current period financial statements?

Completely new financial data unrelated to prior periods

Corresponding figures from one or more prior periods (correct)

Historical data from a different industry sector

Future projections of financial performance

What dictates the level of detail presented in the comparative information?

Relevance to the current period figures Signup and view all the answers

If an auditor identifies a possible material misstatement in the comparative information, what must they do?

Perform additional audit procedures to determine if a material misstatement exists Signup and view all the answers

According to PSA 580, what is required regarding written representations for all periods referred to in the auditor's opinion?

The auditor shall obtain written representations Signup and view all the answers

What is the primary purpose of audit procedures?

To evaluate accounting policies Signup and view all the answers

In the given text, who is responsible for the preparation and fair presentation of financial statements?

Management Signup and view all the answers

What did the other auditor express about the financial statements of ABC Company for the year ended December 31, 20X0?

Unmodified opinion Signup and view all the answers

Which auditing standard were the audits conducted in accordance with?

Philippine Standards on Auditing Signup and view all the answers

What was a basis for a qualified opinion mentioned in the text?

Departure from Philippine Financial Reporting Standards Signup and view all the answers

Why are audit procedures selected based on the auditor's judgment?

To tailor procedures to specific risks Signup and view all the answers

Why does the auditor request written representations for all periods referred to in the auditor's opinion?

To ensure the written representations made for prior periods are still appropriate. Signup and view all the answers

In what scenario does the auditor's report on current period financial statements include an Emphasis of Matter paragraph?

When prior period financial statements were misstated, but corresponding figures have been properly restated. Signup and view all the answers

When does the auditor's opinion on the current period need to refer to a modification in the opinion on the prior period?

If the modification in the prior period's opinion affects the comparability of the current and corresponding figures. Signup and view all the answers

What options does an auditor have when expressing an opinion on comparative financial statements?

Express a qualified opinion, an adverse opinion, disclaim an opinion, or include an Emphasis of Matter paragraph. Signup and view all the answers

Under what circumstances may the opinion expressed on prior period financial statements change during the current period's audit?

If events or circumstances materially affect the prior period financial statements during the current period's audit. Signup and view all the answers

When is it necessary for an auditor to express a qualified opinion on financial statements?

If there are unresolved matters affecting comparability or disclosure of financial statements. Signup and view all the answers

In the context of the text provided, what is the auditor's responsibility?

Ensure the financial statements are free from material misstatement Signup and view all the answers

What is the major difference between PSA 710 (Redrafted) and ISA 710 (Redrafted)?

Deletion of 'give a true and fair view' Signup and view all the answers

Why did the auditor qualify their opinion on the financial statements?

Failure to provide depreciation in the financial statements Signup and view all the answers

What is the primary responsibility of management as stated in the text?

Preparing and presenting the financial statements fairly Signup and view all the answers

What action might an auditor take if the predecessor auditor is unwilling to reissue the report on prior period financial statements?

Include a paragraph in their report indicating review of adjustments Signup and view all the answers

Based on the text, what is the auditor's responsibility?

Conducting an audit in accordance with standards Signup and view all the answers

Which standard emphasizes management's responsibility for the preparation of financial statements?

PSA 710 Signup and view all the answers

Why was the audit opinion modified to a Qualified Opinion in this case?

Because of issues with physical inventory counting Signup and view all the answers

What aspect did the auditor evaluate as part of their audit procedures?

Appropriateness of accounting policies and reasonableness of estimates Signup and view all the answers

What was the main challenge faced by the auditors regarding physical inventories?

They couldn't observe the physical inventory count Signup and view all the answers

In this scenario, what does a Qualified Opinion mean for the financial statements?

They may not fully reflect the company's financial position Signup and view all the answers

What aspect of internal control is highlighted as management's responsibility in the text?

All of the above Signup and view all the answers

Study Notes

Comparative Information in Financial Statements

Comparative information includes amounts and disclosures for one or more prior periods in accordance with the applicable financial reporting framework.
Corresponding figures are included as an integral part of the current period financial statements, and the level of detail presented is dictated primarily by its relevance to the current period figures.

Auditor's Responsibilities

The auditor shall determine whether the financial statements include the comparative information required by the applicable financial reporting framework and whether such information is appropriately classified.
If the auditor becomes aware of a possible material misstatement in the comparative information, the auditor must perform additional audit procedures to determine if a material misstatement exists.

Written Representations

The auditor shall obtain written representations for all periods referred to in the auditor's opinion.
The auditor requests written representations for all periods referred to in the auditor's opinion, even if the prior period financial statements were not audited, because the auditor needs to reaffirm that the written representations it previously made with respect to the prior period remain appropriate.

Audit Procedures

Audit procedures are designed to obtain audit evidence about the amounts and disclosures in the financial statements, and to evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management.
The procedures are selected based on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

Reporting Modifications

If the prior period financial statements are misstated, the auditor's report may include an Emphasis of Matter paragraph describing the circumstances.
The auditor may express a qualified opinion, an adverse opinion, disclaim an opinion, or include an Emphasis of Matter paragraph in his/her report on comparative financial statements if the matter giving rise to the opinion modification is unresolved.
The opinion expressed on the prior period financial statements may change if the auditor becomes aware of circumstances or events that materially affect the prior period financial statements during the current period's audit.

Philippine Standard on Auditing (PSA) 710

There are no significant differences between PSA 710 (Redrafted) and ISA 710 (Redrafted), except for the deletion of the phrase "give a true and fair view".
PSA 710 deals with the auditor's responsibilities regarding comparative information in an audit of financial statements.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the auditor's responsibilities regarding comparative information in an audit of financial statements as outlined in Philippine Standard on Auditing (PSA) 710. It discusses the nature of comparative information in financial statements and the auditor's reporting responsibilities.

PSA-710 Redrafted: Auditor's Responsibilities on Comparative Information

Choose a study mode