Consider the following statements:

I. An Other Matter paragraph refers to something that has been appropriately presented or disclosed in the financial statements.

II. The audit report is modified to five paragraphs as a result of another audit firm performing part of the financial statement audit (Refer to Shared Report topic).

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

2. Consider the following statements:

I. Inconsistent application of accounting principles (i.e. a change in accounting principle, which the auditor agrees is acceptable) would result in a qualified audit opinion.

II. For a change in accounting principles that management does not justify to the auditor, the auditor will likely choose between an unqualified or a disclaimer of opinion. a. I is true; II is true

b. I is true; II is false c. I is false; II is true

d. I is false; II is false

3. Consider the following statements:

I. The failure of a client to include a Statement of Cash Flows will result in the issuance of a qualified opinion by the auditor.

II. If the CPA firm is not independent of the entity being audited, the CPA firm is required to issue a [one-paragraph] disclaimer of opinion.

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

4. In which of the following instances would an auditor most likely issue a standard unqualified opinion WITH an explanatory paragraph?

a. Management disclosures are missing or inadequate.

b. There is substantial doubt about the entitys ability to continue as a going-concern.

c. Due to staffing issues, the audit report was issued later than in previous years.

d. There is an material deviation from GAAP related to capitalizing repairs.

5. Which one of the following is an example of the contents of an opinion paragraph found in an audit report?

a. We have audited

b. Nothing came to our attention

c. The financial statements referred to above present fairly

d. An audit includes examining, on a test basis