Day 2 - Chapter 1: INTRODUCTION AND OVERVIEW OF AUDIT AND ASSURANCE-CONTO Under which of the following circumstances should an auditor issue an adverse opinion? a) The financial statements have a material misstatement which is not considered pervasive (b) The financial statements contain material accounting errors which the auditors believe are significant enough to ruin the entire financial statements c) The client does not allow the auditor to attend the year-end inventory count and the inventory is material d) The auditors are appointed after year-end and therefore were unable to count the cash on hand at year-end. 6) Which of the following is an example of a scope limitation imposed by the client? a) The client has recorded a capital lease as an operating lease b) The financial statement presentation is not consistent with the previous year (C) The auditors were hired after year-end as the previous auditor had to resign due to independence issues d) The client informed the auditor about the year-end inventory count but the auditor missed the year-end count as they wrote down the wrong date tonopbulinio 7) An auditor will express an "except for opinion if? bnissbalvon a) Client refuses to record an income tax liability that is material and pervasive b) The client is likely to go bankrupt and a disclosure has not been made in the financial statements c) The auditor is relying on secondary auditors to audit the company's subsidiary in another country a) The auditor was unable to audit the inventory account at year-end which was material but not significant to the overall financial statements as the company is a consulting firm. None of the above 10 FMGT 3310 - AUDIT 1 Day 2 - Chapter 1: INTRODUCTION AND OVERVIEW OF AUDIT AND ASSURANCE CONTO CHECK IN QUESTIONS: 1) An audit engagement provides a) moderate assurance. b) negative assurance. c) absolute assurance. d) reasonable assurance. 2) A compilation engagement provides which type of assurance? a) moderate assurance. b) no assurance. c) absolute assurance. d) reasonable assurance. 3) An audit report is generally addressed to the @ shareholders. b) management. c) company. d) none of the above. 4) During an audit, which of the following is false with regards to materiality ) Professional judgment is very important when determining materiality (b) If an auditor finds accounting errors that are not material, they do not need to track them c) If an accounting error is immaterial but is due to fraud, the auditor must investigate further d) Immaterial errors identified in the previous year audit should be tracked and considered when performing the current year audit e) None of the above 5) Which of the following engagements would involve audit procedures such as confirmations and inspections? a) review engagement en congo b) compilation engagement of o nobb audit engagements d) All of them 10 FMGT3310 - AUDIT 1