EBK AUDITING+ASSURANCE SERVICES
17th Edition
ISBN: 9780135171219
Author: ARENS
Publisher: PEARSON CO
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Question
Chapter 8, Problem 25.3MCQ
To determine
Identify the statement that is correct regarding the financial statement presentation.
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Students have asked these similar questions
When financial statements are affected by a material departure from generally accepted accounting principles, the auditors should:
Withdraw from the engagement.
Issue an unmodified opinion with a basis for modification paragraph.
Issue an "except for" qualification or a disclaimer of opinion.
Issue an "except for" qualification or an adverse opinion.
Misstatements in the financial statements can result from errors or fraud and may consist of any of the following:
An inaccuracy in gathering or processing data from which financial statements are prepared.
A difference between the amount, classification, or presentation of a reported financial statement element, account, or item and the way that it should have been reflected under GAAP.
The omission of a financial statement element, account, or item.
A financial statement disclosure that is not presented in conformity with GAAP.
The omission of information required to be disclosed in conformity with GAAP.
An incorrect accounting estimate due to oversight, misrepresentation of facts, or fraud.
Management’s judgments concerning an accounting estimate or the selection or application of accounting policies that the auditor may consider unreasonable or inappropriate.
What steps would you take if you discover 1 of the above issues in a routine audit?
Would you take…
1) Using the categories included in the professional standards, inappropriately and intentionally failing to expense expired amounts of the prepaid insurance is an example of a)misappropriation of assets. b)other illegal acts. c)fraudulent financial reporting. d)direct effect illegal act
2)A financial statement audit should be designed to obtain reasonable assurance that the financial statements are free of material misstatement due to: a)misappropriation of assets only. b)fraudulent financial reporting only.c)neither fraudulent financial reporting nor misappropriation of assets. d)both fraudulent financial reporting and misappropriation of assets
Chapter 8 Solutions
EBK AUDITING+ASSURANCE SERVICES
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQCh. 8 - Prob. 11RQ
Ch. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Your client, Harper Company, has a contractual...Ch. 8 - Prob. 15RQCh. 8 - Prob. 16RQCh. 8 - Prob. 17RQCh. 8 - Prob. 18RQCh. 8 - Prob. 19RQCh. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23.1MCQCh. 8 - Prob. 23.2MCQCh. 8 - Prob. 23.3MCQCh. 8 - Prob. 24.1MCQCh. 8 - Prob. 24.2MCQCh. 8 - Prob. 24.3MCQCh. 8 - Which one of the following statements is correct...Ch. 8 - Prob. 25.2MCQCh. 8 - Prob. 25.3MCQCh. 8 - Prob. 26.1MCQCh. 8 - Prob. 26.2MCQCh. 8 - Prob. 26.3MCQCh. 8 - Prob. 27DQPCh. 8 - Prob. 28DQPCh. 8 - Prob. 32DQPCh. 8 - Prob. 33DQPCh. 8 - Prob. 34DQPCh. 8 - Prob. 35DQP
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Similar questions
- If in the auditor’s judgment, management’s use of the going concern basis of accounting in the preparation of the financial statements is inappropriate: A. The auditor will give a disclaimed of opinion. B. The auditor shall express an adverse opinion. C. The auditor shall express an unmodified opinion with a separate section. D. The auditor shall express a qualified opinion.arrow_forwardwould you say that material mistakes found in a financial statement could lead to the auditors being held liable?arrow_forwardWhich of the following statements is invalid relating to confirmation of accounts receivable? a. A negative form of confirmation is preferable to use when individual account balances of customers are relatively smallb. A positive confirmation provides more reliable evidence than the negative confirmation because the auditor can perform follow-up procedures if no response is received from the debtorc. An auditor must consider using the negative form of confirmation when there is reason to believe that there may be a substantial number of accounts in dispute or with inaccuracies or irregularitiesd. In negative confirmation, failure to reply must be regarded as a correct response, even though the debtor may have ignored the confirmation requeste. None of the abovearrow_forward
- What type of opinion is issued by the auditor on the financial statements when there is some limitation on the scope of the audit or when one or more items in the financial statements are not presented in accordance with applicable accounting principles?arrow_forwardIf the auditor expresses an adverse or disclaimer of opinion on the complete set of financialstatements, she or he is not permitted to:a. Express an unmodified opinion on a single financial statement.b. Express an unmodified opinion on an element of the financial statements.c. Express a similar opinion on a single financial statement.d. Perform any of the abovearrow_forwardIn the auditor’s judgment which misstatements below are NOT one the pervasive effects on the financial statements: A. Misstatements widespread to several accounts of the financial statements B. Misstatements that represent a substantial proportion of the financial statements C. Misstatements related to legal regulations D. Misstatements effecting understanding of users of the financial statements, related to fundamental disclosuresarrow_forward
- When an event impacts a financial statement element, it should be recognized in the accounting records even if reliability of the amount is questionable. True Falsearrow_forwardWhich of the following are financial statement frauds? Select which three options are correct. A. Intentional misapplication of accounting principles related to amounts. B. Forging of accounting records C. Intentional misapplication of accounting principles related to disclosure. D. Unintentional omission from the financial statements of transactionsarrow_forwardChoose the one correct answer. Which of the following statements is invalid relating to confirmation of accounts receivable? a. A negative form of confirmation is preferable to use when individual account balances of customers are relatively smallb. A positive confirmation provides more reliable evidence than the negative confirmation because the auditor can perform follow-up procedures if no response is received from the debtorc. An auditor must consider using the negative form of confirmation when there is reason to believe that there may be a substantial number of accounts in dispute or with inaccuracies or irregularitiesd. In negative confirmation, failure to reply must be regarded as a correct response, even though the debtor may have ignored the confirmation requeste. None of the abovearrow_forward
- if an auditor's report does not make a statement regarding the adequacy of informative disclosure in the financial statements with which he is associated, the reader can conclude that the A. Financial statements are presented fairly, in all material respects in comformity with generally accepted accounting principles provided all other requirements have been metB. Auditor has not followd generally accepted auditing standardsC. Auditor is expressing a qualified opinionD. Auditor is expressing an adverse opinionarrow_forwardWhich of the following best describes the reason why an independent auditorreports on financial statements?(1) A misappropriation of assets may exist, and it is more likely to be detected byindependent auditors.(2) Different interests may exist between the company preparing the statementsand the persons using the statements.(3) A misstatement of account balances may exist and is generally corrected as theresult of the independent auditor’s work.(4) Poorly designed internal controls may be in existencearrow_forward
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