Consider the following statements:

I. The auditor should only provide an opinion on the financial statements if the opinion indicates

that the financial statements are fairly stated in all material respects.

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. After the balance-sheet date but prior to the audit report date, the client decides to acquire

Bargain Company to obtain a significant increase in revenues. The auditor would probably give a

report that includes the statement: except for the acquisition of Bargain Company

II. For a change in accounting principles that management does not justify to the auditor, the

auditor will likely choose between a qualified and an adverse 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

disclaimer of opinion by the auditor.

II. The auditor will issue an unqualified opinion on Internal Controls over Financial Reporting (ICFR)

if the auditor has identified only one material weakness in ICFR.

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