Which of the following statements is true regarding correcting errors in previously issued financial statements prepared in accordance with International Financial Reporting Standards? a. The error can be reported in the current period if it’s not considered practicable to report it retrospectively. b. The error can be reported in the current period if it’s not considered practicable to report it prospectively. c. The error can be reported prospectively if it’s not considered practicable to report it retrospectively. d. Retrospective application is required with no exception.

Which of the following statements is true regarding correcting errors in previously issued financial statements prepared in accordance with International Financial Reporting Standards? a. The error can be reported in the current period if it’s not considered practicable to report it retrospectively. b. The error can be reported in the current period if it’s not considered practicable to report it prospectively. c. The error can be reported prospectively if it’s not considered practicable to report it retrospectively. d. Retrospective application is required with no exception.

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

Chapter17: Other Services Provided By Audit Firms

Section: Chapter Questions

Problem 20MCQ

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A careful reading of an unqualified report indicates severalimportant phrases. Explain why each of the following phrases or clauses is used ratherthan the alternative provided:a. “The financial statements referred to above present fairly, in all material respects,the financial position” rather than “The financial statements mentioned above arecorrectly stated.”b. “In conformity with accounting principles generally accepted in the United States ofAmerica” rather than “are properly stated to represent the true economic conditions.”c. “In our opinion, the financial statements present fairly” rather than “The financialstatements present fairly.”d. “Brown & Phillips, CPAs (firm name),” rather than “James E. Brown, CPA (individualpartner’s name).”e. “We conducted our audit in accordance with auditing standards generally acceptedin the United States of America” rather than “Our audit was performed to detectmaterial misstatements in the financial statements.”
What are some of the differences between International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP)? What are some advantages and disadvantages of adopting IFRS in the US?
If the statement of financial position error is discovered in a subsequent accounting period, what action is to be done by the entity? A. Reclassify the item to its proper real account but do not restate the statement of financial position of the prior year affected by the error. B. Reclassify the item to its proper real account. C. Restate the statement of financial position of the prior year affected by the error. D. Reclassify the item to its proper real account and restate the statement of financial position of the prior year affected by the error
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According to IAS 8, how should prior period errors that are discovered in a subsequent reporting period be recognized in the financial statements? a. As an adjustment to beginning retained earnings for the reporting period in which the error was discovered. b. As a note in the financial statements that the error was previously made but has since been corrected. c. In the statement of comprehensive income. d. Retroactively for all periods presented.
For all financial instruments within the scope of PFRS 7, but to which the impairment requirements in PFRS 9 are not applied, an entity shall disclose by class of financial instrument: * The amount that best represents its weighted average exposure to credit risk at the end of the reporting period without taking account of any collateral held or other credit enhancements The amount that best represents its maximum exposure to credit risk at the end of the reporting period taking into account any collateral held or other credit enhancements A description of collateral held as security including other credit enhancements, and their financial effect None of the choices
According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, an entity must select and apply its accounting policies consistently from one period to the next and among various items in the financial statements. However, an entity may change its accounting policies under certain conditions. Required: Identify the circumstances under which it may be appropriate to change accounting policy in accordance with the guidance given in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
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