1.When the auditor's report on the prior period, as previously issued included a modified opinion, the auditor'sreport should refer to the corresponding figures:a.Though the matter which gave rise to the modification of the audit report had been subsequently resolvedb.If the matter that gave rise to the modification of the previous auditor's report is unresolved and results in a modification of the auditor's report regarding the current figuresc.Only when the matterthat gave rise to the modification is unresolved and results to a modification of the auditor's report regarding the current figuresd.In all cases where thematter which gave rise to the modification of the previous audit report is satisfactorily resolved and properly dealt with in the financial statements, the current report would not refer to the previous modification2.In which of the following circumstances would a modification of the auditor's report on the current period not necessary?a.If the prior period financial statements have been revised and reissued with a new auditor's reportb.If the prior period financial statements have not been revised and reissued but the matter that gave rise to the modification, though material to the current period, is resolvedc.If the matter that gave rise to the modification of the previous audit report is related to unresolved beginning balances of property accountsd.The audit report of the prior period was issued by a continuing auditor.3.An auditor expressed a qualified opinion on the prior year's financial statements because of a lack of adequate disclosure. These financial statements are properly restated in the current year and presentedin comparative form with the current year's financial statements. The auditor's updated report on the prior year's financial statements shoulda.Make no reference to the type of opinion expressed on the prior year's financial statements.b.Express an unmodified opinion on the restated financial statements of the prior year.c.Be accomplished by the auditor's original report on the prior year's financial statements.d.Continue to express a qualified opinion on the prior year's financial statements.4.When comparative financial statements are presented, the auditor's opinion on the financial statements "taken as a whole" should be considered to apply to the financial statements of thea.Current period only.College of Accounting Education3F Facundo Hall, Business and Engineering BuildingMatina Campus, Davao City13b.Current and immediately preceding period only.c.Current period and those of the other periods presented.d.Periods presented plus one preceding period.5.Comparative financial statements include the prior year's statement that were audited by a predecessor auditor whose report is not presented. If the predecessor's report was unmodified, the successor auditor shoulda.Express an opinion on the current year's statements alone and make no reference to the prior year's statements.b.Indicate in the auditor's report that the predecessor auditor expressed an unmodified opinion.c.Obtain a letter of representationsfrom the predecessor concerning any matters that might affect the successor's opinion.d.Request the predecessor auditor to reissue the prior year's report.6.The following statements relate to unaudited prior year financial statements that are presented in comparative form with audited current year financial statements. Which is incorrect?a.The incoming auditor should state in the auditor's report that the comparative financial statements are unaudited.b.The incoming auditor need not perform audit procedures regarding opening balances of the current period.c.Clear disclosure in the financial statements that the comparative financial statements are unaudited is encouraged.d.In situations where the incoming auditor identifies that the prior year unaudited figures are materially misstated, the auditor should request management to revise the prior year's figures or if management refuses to do so, appropriately modify the report.7.When the auditor's report on the prior period, as previously issued, included a modified opinion and the matter which gave rise to the modification is unresolved, and results in a modification of the auditor's regarding the current period figures:a.The auditor's report should beunmodified regarding the corresponding figuresb.The auditor's report should also be modified regarding the corresponding figuresc.The auditor's report does not refer to the previous modificationd.The auditor should omit the comparatives as corresponding figures8.In relation to comparatives as corresponding figures, which of the following is incorrect?a.When the prior financial statements are not audited, the incoming auditor should state in the auditor's report that the corresponding figures are unauditedb.The incoming auditor must refer to the predecessor auditor's report on the corresponding figures in the incoming auditor's report for the current periodc.When the financial statements of the prior period were audited by another auditor, the incoming auditor's report should state that the prior period was audited by another auditord.In situations were the incoming auditor identified that the corresponding figures are materially misstated, the auditor should request man agent to revise the corresponding figures or if management refuses to do so, appropriately modify the report.9.When the comparatives in which the prior audit report is unmodified are used as corresponding figures, the auditor should issue an audit report in which:a.The comparatives are specifically identified in the opening paragraph but not referred to in opinion paragraph of the auditor's report.College of Accounting Education3F Facundo Hall, Business and Engineering BuildingMatina Campus, Davao City14b.The comparatives are specifically identified in the opening paragraph and are referred to in opening paragraphc.The comparatives are not specifically identified in the audit reportd.The comparatives are described in the emphasis-of-matter paragraph on the auditor's report.10.When the audited financial statements of the prior year are presented together with those of the current year, the continuing auditor's report should coverA.Only the current year, but the prior year's report should be referred to.B.Only the current year, but the prior year's report should be presented.C.Only the current year.D.Both years.11.Which of the following is a true statement about the auditor's report on comparative financial statements?a.If the financial statements of the prior period have been audited but those of the current period have not, the auditor should update the report on the prior period and include as a separate paragraph in the report a disclaimer of opinion on the unaudited financial statements.b.A predecessor auditor may issue the report on the financial statements of a prior period provided (s)he performs certain procedures, including obtaining representation letters from thesuccessor auditor and from management, and provided (s)he refers in the reissued report to the work of the successor auditor.c.The report should not express an opinion different from that previously expressed on the statements of a prior period because thedifferences would lessen the public's confidence in the integrity of the auditor's report.d.A continuing auditor may under certain circumstances express an opinion different from the previous opinion.12.An auditor expressed a qualified opinion on the prior year's financial statements because of a lack of adequate disclosure. These financial statements are properly restated in the current year and presented in comparative form with the current year's financial statements. The auditor's updated report on theprior year's financial statements shoulda.Express an unmodified opinion on the restated financial statements of the prior year.b.Be accompanied by the auditor's original report on the prior year's financial statements.c.Continue to express a qualified opinion on the prior year's financial statements.d.Make no reference to the type of opinion expressed on the prior year's financial statements.13.If comparative financial statements are presented and the present auditor has audited both years, the auditor should:a. Reissue the report c. Redate the reportb. Dual date the report d. Update the report14.The auditor issued a qualified opinion covering the financial statements of Client A for the year ended December 31, 2014. The reason for the qualification was adeparture from GAAP. In presenting comparative statements for the years ended December 31, 2014 and 2015, the client revised the 204 financial statements to correct the previous departure from the applicable accounting framework. The auditor's 2015 reporton the December 31, 2014 and 2015 comparative financial statements willa.Express unqualified opinions on both the 2014 and 2015 financial statements.College of Accounting Education3F Facundo Hall, Business and Engineering BuildingMatina Campus, Davao City15b.Express a qualified opinion on the 2014 financial statements and an unqualified opinion on the 2015 statements.b.Retain the qualified opinion covering the 2014 statements, but add an explanatory paragraph describing the correction of the prior departure from the applicable accounting framework.c.Render qualified audit opinions for both 2014 and 2015 financial statements given the 2015 carryover effect of the 2014 error.15.Which of the following best describes the reference to the expression "taken as a whole" in the Philippine Standards on Auditing?a.It applies equally to a complete set of financial statementsand to an individual financial statement.b.It applies only to a complete set of financial statements.c.It applies equally to each item in each financial statement.d.It applies equally to each material item in each financial statement.16.An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. The auditor believes that the financial statements do not require revision, but the client is unwilling to revise or eliminate the material inconsistency in the other information. Under these circumstances, what action would the auditor most likely take?a.Consider the situation closed because the other information is not in the audited financial statements.b.Issue an "except for" qualified opinion after discussing the matter with the client's audit committee.c.Disclaim an opinion on the financial statements after explaining the material inconsistency in a separate "Other Information" section following the Basisfor Opinion Section.d.Revise the auditor's report to include a separate section with a heading "other information" describing the uncorrected material misstatement of the other information.17.The auditor's best course of action with respect to "other financial information" included in an annual report containing the auditor's report is toa.Indicate in the auditor's report that the "other financial information" is unaudited.b.Consider whether the "other financial information" is accurate by performing a limitedreview.c.Obtain written representation from management as to the materiality accuracy of the "other financial information."d.Read and consider the manner of presentation of the "other financial information."18.Which of the following best describes the auditor's responsibility for "other information" included in the annual report to stockholders which contains financial statements and the auditor's report?a.The auditor has no obligation to read the "other information."b.The auditor has no obligation to corroborate the "other information," but should read the "other information" to determine whether it is material inconsistent with the financial statements.c.The auditor should extend the examination to the extent necessary to verify the "other information."d.The auditor must modify the auditor's report to state that the "other information is unaudited" or "not covered by the auditor's report."19.If an amendment to other information in a document containing audited financial statements is necessaryand the entity refuses to make the amendment, the auditor would consider issuingCollege of Accounting Education3F Facundo Hall, Business and Engineering BuildingMatina Campus, Davao City16a.Qualified or adverse opinion.b.Qualified opinion or disclaimer opinion.c.Unmodified opinion with an Other Matter paragraph.d.Unmodified opinion with an Emphasis of Matter paragraph.20.If an amendment to other information in a document containing audited financial statements is necessaryand the entity refuses to make the amendment, the auditor would consider issuing:a.Qualified or adverse opinion c. Unqualified opinion with explanatory paragraphb.Qualified or disclaimer of opinion d. Unqualified opinion.21.When management does not amend the financial statements in circumstances where the auditor believesthey need to be amended and the auditor's report has not been released to the entity, the auditor should expressa.Qualified or adverse opinion c. Unqualified opinion with explanatory paragraphb.Qualified or disclaimer of opinion d. Unqualified opinion.22.If subsequent to the issuance of the audited financial statements, the auditor becomes aware of materialmisstatements in the financial statements that exist prior to the date of the audit report, the auditor shoulda.Notify the parties who currently relyingon the financial statements.b.Discuss the matter with management, and should take the action appropriate in thecircumstances.b.Document such information in the audit plan for succeeding audit.c.Submit revised copies of the financial statements and audit report to the stockholders.23.It existswhen other information contradicts information contained in the audited financial statements.a.Material misstatement of fact c. Material inconsistencyb.Material error d. Material deviation24.Whichof the following best describes the auditor's responsibility for "other information" include in the annual report to stockholders which contains financial statements and the auditor's report?a.The auditor has no obligation to read the "other information."b.The auditor has no obligation to corroborate the "other information," but should read the "other information" to determine whether it is materially inconsistent with the financial statements.b.The auditor should extend the examination to the extent necessary to verify the "other information."c.The auditor must modify the auditor's report to state that the "other information is unaudited"or "not covered by the auditor's report."25.When auditedfinancial statements are presented in a client's document containing other information, the auditor shoulda.Perform inquiry and analytical procedures to ascertain whether the other information is reasonable.b.Add an explanatory paragraph to the auditor's report without changing the opinion on the financial statements.c.Perform the appropriate substantive auditing procedures to corroborate the other information.