All of the above.In connection with the examination of the consolidated financial statements ofMott Industries, Frazier, CPA, plans to refer to another CPA's examination of thefinancial statements of a subsidiary company. Under these circumstances,Frazier's report must disclose: *In a footnote the portions of the financial statements that were covered by theexaminations of both auditors.The nature of Frazier's review of the other CPA's work.The name of the other CPA and the type of report issued by the other CPA.O The portion of the financial statements examined by the other CPA.Perisic Investments is an entity in the mutual funds industry, which provides a

Auditor's report should be clear having opening , scope and opinion paragraphs. Opinion of auditor…

In connection with the examination of the consolidated financial statements Mott Industries, Frazier, CPA, plans to refer to another CPA's examination of financial statements of a subsidiary company. Under these circumstances, Frazier's report must disclose: * In a footnote the portions of tho financial ottomant.

In connection with the examination of the consolidated financial statements Mott Industries, Frazier, CPA, plans to refer to another CPA's examination of financial statements of a subsidiary company. Under these circumstances, Frazier's report must disclose: * In a footnote the portions of tho financial ottomant.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter14: Activities Required In Completing A Quality Audit

Section: Chapter Questions

Problem 42MCQ

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The auditor’s report contains the following: “We did not audit the financial statementsof EZ, Inc., a wholly owned subsidiary, which statements reflect total assets and revenuesconstituting 27 percent and 29 percent, respectively, of the consolidated totals. Thosestatements were audited by other auditors whose report has been furnished to us, andour opinion, insofar as it relates to the amounts included for EZ, Inc., is based solely onthe report of the other auditors.” These sentences(1) indicate a division of responsibility.(2) assume responsibility for the other auditor.(3) require a departure from an unqualified opinion.(4) are an improper form of reporting.
Common Law Liability to Third Parties. Flacco, CPA, conducted the audit of RavenCompany and issued an unmodified opinion that concluded that the financial statementspresented its financial condition, results of operations, and cash flows according to GAAP.As part of the preaudit conference, Flacco was informed by Raven’s management that itsaudited financial statements would be presented to Baltimore National Bank to securefinancing for a significant expansion opportunity.Using these financial statements, as well as Flacco’s opinion on those statements, Ravenobtained financing from the following parties: (1) Baltimore National Bank, (2) RegionalState Bank, and (3) Maryland Equity Partners (a private equity firm). Each of these partiesspecifically requested audited financial statements and relied on these statements in providing financing to Raven. Six months after obtaining financing, Raven’s financial conditionworsened, and it declared bankruptcy, forcing Raven to default on its…
Independent Auditor's ReportWe have audited the consolidated financial statements of Concord, Inc., and subsidiaries as of September 30, 2019,and the related consolidated statements of income, changes in stockholder's equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Biotherm, Inc., a wholly-owned subsidiary, which statements reflect total assets and revenues constituting 22%and 20% respectively at September 30, 2019 of the consolidated totals. Those statements were audited by Ball &Brown, CPAs, whose reports have been furnished to us, and our opinion, insofar as it relates to the amountsincluded for Biotherm, Inc. is based solely on their report.We conducted our audit in accordance with generally accepted auditing standards. Those standards require thatwe plan and…
Which of the following information would be included in the introductory paragraph of the auditors’ report on internal control over financial reporting if the report is presented separately from the auditors’ report on the entity’s financial statements?a. The fact that the auditors conducted an audit of the entity’s financial statements.b. The definition of a material weakness in internal control over financial reporting.c. Statements identifying the responsibility of the auditors and management for internal control over financial reporting.d. A reference to the auditors’ report and opinion on the entity’s financial statements.
Which of the following topics is not addressed in the auditors’ report for a public entity?a. Responsibilities of the auditor and management in the financial reporting process.b. Absolute assurance regarding the fairness of the entity’s financial statements in accordance with GAAP.c. A description of an audit engagement.d. A summary of the auditors’ opinion on the effectiveness of the entity’s internal controlover financial reporting.
Which of the following best describes the general contents of the introductory paragraph of the auditors’ report?a. A description of an audit examination, including the fact that the audit was conducted under standards established by the PCAOB.b. The auditors’ conclusion with respect to the fairness of the entity’s financial statements.c. Statements identifying the responsibility of auditors and management in the financial reporting process.d. The auditors’ conclusion with respect to the effectiveness of the entity’s internal control over financial reporting.
The auditors include an emphasis-of-matter paragraph in an otherwise unmodified report on the entity's financial statements to emphasize that the entity being reported on had significant transactions with related parties. The inclusifis considered a qualification of the opinion.on of this separate paragraph
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Audit of Group Financial Statements. Lando Corporation is a domestic company with two wholly owned subsidiaries. Michaels, CPA, has been engaged to audit the financial statements of the parent company and one of its subsidiaries and to serve as the group auditor. Thomas, CPA, has audited the financial statements of the other subsidiary whose operations are material in relation to the consolidated financial statements.The work performed by Michaels is sufficient for serving as the group auditor and to report as such on the financial statements. Michaels has not yet decided whether to refer to the part of the audit performed by Thomas.Required:a. What responsibilities does Michaels have with respect to Thomas when deciding whether to rely on the work of Thomas?b. What are the reporting requirements with which Michaels must comply in naming Thomas and referring to the work done by Thomas?c. What report should be issued if Michaels does not wish to assume responsibility for Thomas’s work…
Sorrell, CPA, is auditing the financial statements of Van Dyke as of December 31, 2017. Sorrell’s substantive procedures and other tests indicated that Van Dyke’s financial statements were prepared in accordance with generally accepted accounting principles and, accordingly, Sorrell expressed an unqualified opinion on those financial statements. Because Van Dyke’s securities are registered with the Securities and Exchange Commission, Van Dyke is subject to the reporting requirements of AS 2201. During its assessment of internal control over financial reporting, Van Dyke’s management identified material weaknesses relatedto (1) the method of accounting for sales commissions and (2) separation of duties related to purchase transactions. Sorrell was able to gather sufficient evidence and did not encounter limitations with respect to the evaluation of Van Dyke’s internal control over financial reporting. Sorrell prepared the following draft report on Van Dyke’s internal control…
Which of the following statements about the auditor's responsibilities in public company audits is true as covered by the PCAOB? A. The auditor issues an opinion on the financial statements and management issues the opinion on internal control over financial reporting. B. The auditor issues an opinion on the financial statements only if internal control over financial reporting is found to be effective. C. The auditor issues an opinion on the financial statements; if those are found to be fairly stated, the auditor proceeds to issue an opinion on internal control over financial reporting. D. The auditor issues opinions on the financial statements and internal control over financial reporting.
"Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters." The preceding statement may indicate that * a. The audit was performed on consolidated financial statements b.The auditor's opinion on the financial statements is unmodified c. The audit was performed on the financial statements of a listed entity d. There are no key audit matters noted by the auditor