An adverse opinion in an audit report refers to when there is a departure from GAAP that is material.
True
False
True
A denial of opinion in an audit report refers to when there is a departure from GAAP that is material.
True
False
False
A qualified audit opinion refers to when qualified public accountants perform the audit in accordance with generally accepted auditing standards.
True
False
False
When independence in an audit is lacking, an auditor should not accept the engagement.
True
False
True
An auditor will provide an audit opinion with the words "except for" when a scope limitation exists of a greater materiality.
True
False
False
associated with financial statements:
circumstance in which a PA's name is used in connection with financial statements, or a PA has prepared the statements, even if the PA's name is not used in any written report.
disclaimer of opinion:
lowest level of assurance; "no assurance." Auditors explicitly state that they give no opinion and no assurance, thus taking no responsibility for a report on the fair presentation of financial statements in conformity with GAAP.
levels of assurance:
standard unqualified report with opinion on financial statements, review report with negative assurance and compilation report with no expression of opinion or assurance.
mitigating factors:
elements of financial flexibility (salability of assets, lines of credit, debt extension, dividend elimination) available as survival strategies in circumstances of going concern uncertainty which may reduce the financial difficulty problems.
negative assurance:
"Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles;" permitted in reviews of unaudited financial statements, letters to underwriters and reviews of interim financial information.
qualified audit report:
audit report other than the standard unqualified audit report; contains an opinion paragraph that does not give the positive assurance that everything in the financial statements is in conformity with GAAP.
scope limitation:
condition in which the auditors are unable to obtain sufficient competent evidence.
