1. What is the auditor\'s responsibility when there is a substantial going conce
ID: 1224735 • Letter: 1
Question
1. What is the auditor's responsibility when there is a substantial going concern issue?
a. Determining the adequacy of disclosure about the going concern issue
b. Issuing an adverse opinion due to the going concern effect on financial statements
c. Preparing a prospective financial statement to determine the company's ability to survive
d. Projecting market conditions after the balance sheet date to determine the effects on the company
2. Which of the following statements is omitted from nonpublic company audit reports?
a. An audit includes assessing the accounting principles used.
b. The audit was conducted in accordance with U.S. GAAP.
c. The auditors believe the audit provided a reasonable basis for their opinion.
d. The financial statements are the responsibility of company management.
3. When is the phrase "except for" used in an audit report?
a. Adverse opinion
b. Qualified opinion
c. Unmodified opinion
d. Used in all audit reports
Explanation / Answer
1. What is the auditor's responsibility when there is a substantial going concern issue?
a. Determining the adequacy of disclosure about the going concern issue
b. Issuing an adverse opinion due to the going concern effect on financial statements
c. Preparing a prospective financial statement to determine the company's ability to survive
d. Projecting market conditions after the balance sheet date to determine the effects on the company
Solution: A Determining the adequacy of disclosure about the going concern issue
Explanation: When an auditor has concluded that there is a substantial doubt about entity's possible inability to continue as a going concern, the auditor's responsibility includes determining the adequacy of disclosure about the going concern issue.
2. Which of the following statements is omitted from nonpublic company audit reports?
a. An audit includes assessing the accounting principles used.
b. The audit was conducted in accordance with U.S. GAAP.
c. The auditors believe the audit provided a reasonable basis for their opinion.
d. The financial statements are the responsibility of company management.
Solution: C The auditors believe the audit provided a reasonable basis for their opinion.
Explanation: A statement in the audit that auditor believes would provide a reasonable basis for expressing negative assurance is not included from non-public company audit reports.
3. When is the phrase "except for" used in an audit report?
a. Adverse opinion
b. Qualified opinion
c. Unmodified opinion
d. Used in all audit reports
Solution: B Qualified opinion
Explanation: When financial statements are affected for the departure from generally accepted accounting principles, the auditors should issue an "except for" qualification.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.