MULTIPLE-CHOICE QUESTIONS
1. Which of the following statements is false regarding audit reporting?
a. The auditor's opinion should be expressed in a written report.
b. The auditor should provide an opinion in accordance with the auditor's findings or state that an opinion cannot be expressed.
c. The opinion should state whether the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework.
d. None of the above statements are false.

2. Which of the following statements is true regarding the auditor's responsibilities related to reporting?
a. Sufficient appropriate evidence should be obtained to afford a reasonable basis for the opinion regarding the financial statements under audit.
b. The audit opinion relates only to the client's financial statements, and does not relate to the required footnote disclosures.
c. If the auditor has reservations about the fairness of presentation of the financial statements, the auditor does not need to provide the reason for this reservation, but needs to only state that the financial statements are not fairly presented.
d. All of the above statements are true.

3. In which of the following situations would an auditor ordinarily issue an unqualified audit opinion without an explanatory paragraph?
a. The auditor wishes to emphasize that the entity had significant related-party transactions.
b. The auditor decides to refer to the report of another auditor as a basis, in part, for the auditor's opinion.
c. The entity issues financial statements that present financial position and results of operations but omits the statement of cash flows.
d. The auditor has substantial doubt about the entity's ability to continue as a going concern, but the circumstances are fully disclosed in the financial statements.

4. Which of the following describes a situation when an auditor cannot typically issue a standard unqualified audit opinion?
a. The client has prepared its financial statements using IFRS as the financial reporting framework.
b. The auditor has complied with the auditing standards of both the AICPA and the IAASB.
c. The auditor is not independent.
d. The auditor believes that the client will remain a going concern for a reasonable period of time.

5. In which of the following situations would an auditor typically issue an unqualified opinion, but include explanatory language?
a. The client has changed an accounting principle, has reasonable justification for the change, and has followed GAAP in accounting for and disclosing the change.
b. The auditor has substantial doubt about the client being a going concern.
c. The client has had significant transactions with related entities that the auditor wants to emphasize.
d. An auditor would typically issue an unqualified opinion, but include explanatory language, in all of the above situations.

6. Eagle Company's financial statements contain a departure from GAAP because, due to unusual circumstances, the statements would otherwise be misleading. Which of the following audit opinions should the auditor provide?
a. Unqualified, but not mention the departure in the auditor's report.
b. Unqualified, and describe the departure in a separate paragraph of the audit report.
c. Qualified, and describe the departure in a separate paragraph of the audit report.
d. Qualified or adverse, depending on materiality, and describe the departure in a separate paragraph of the audit report.

7. Tech Company has an uncertainty because of pending litigation.
The auditor's decision to issue a qualified opinion rather than an unqualified opinion most likely would be determined by which of the following?
a. Lack of sufficient evidence.
b. Inability to estimate the amount of loss.
c. The client's lack of experience with such litigation.
d. Adequacy of the disclosures.

8. Which of the following phrases should not be used when the auditor is qualifying the audit opinion?
a. With the exception of
b. Except for
c. Subject to
d. Any of the above phrases would be appropriate.