Audit Reports (CPA Excel) questions with correct answers

How is the audit report affected when an audit has been conducted in accordance with Public Company Accounting Oversight Board (PCAOB) standards, but the audit is not within the jurisdiction of the PCAOB? CORRECT ANSWER The audit report should follow the PCAOB's format, amended to state that the audit was also conducted in accordance with generally accepted accounting standards. What two topics of responsibility are addressed in the "Management's Responsibility" section of the auditor's report? CORRECT ANSWER 1. Management’s responsibility for the fair presentation of the financial statements 2.Management's responsibility for the design, implementation, and maintenance of internal controls related to financial reporting What is the meaning of an unmodified audit report? CORRECT ANSWER The financial statements are fairly stated according to generally accepted accounting principles (GAAP) (or other applicable accounting framework), and the auditor expresses no reservations. What basic responsibility does the Reporting Principle under the AICPA's clarified auditing standards impose on an auditor? CORRECT ANSWER Based on an evaluation of the audit evidence obtained, the auditor expresses, in the form of a written report, an opinion in accordance with the auditor's findings or states that an opinion cannot be expressed. If the prior period's financial statements have been audited by a predecessor auditor whose report is not issued, the auditor should add an other-matter paragraph. What specific matters should that other-matter paragraph address? CORRECT ANSWER •That the prior period financial statements were audited by a predecessor auditor •The type of opinion expressed (and the reason for any modification) •The nature of any emphasis-of-matter or other-matter paragraph •The date of the predecessor's report List the three alternatives to the unmodified audit report. CORRECT