Question
Modified Auditor's ReportModified Opinion Modified Auditor's ReportModified Opinion 51. In cases where the auditor expressed a modified opinion, which section of the auditor's report is
Modified Auditor's ReportModified Opinion
Modified Auditor's ReportModified Opinion
51. In cases where the auditor expressed a modified opinion, which section of the auditor's report is not modified?
a. Auditor's opinion
b. Basis for opinion
c. Description of auditor's responsibilities
d. Responsibilities for the financial statements
52. When the auditor modifies the opinion on the financial statements, the auditor shall, in addition to the specific elements required by PSA 700, do the following in the Basis for Opinion section
a. b. c. d.
Amend the heading "Basis for Opinion".
Yes
Yes
Yes
Yes
Describe the matter giving rise to the modification.
Yes
Yes
Yes
No
Quantify the financial effects of the material misstatement, unless impracticable.
Yes
Yes
No
Yes
State if it is not practicable to quantify the financial effects.
Yes
No
No
Yes
Explain how disclosures are misstated.
Yes
No
No
Yes
Disclose reasons for inability to obtain sufficient appropriate audit evidence.
Yes
Yes
No
Yes
Amend the phrase to provide a basis for the auditor's opinion to include the word "qualified" or "adverse".
Yes
Yes
No
Yes
When the auditor disclaims an opinion, the auditor's report shall not include the elements required by paragraphs 28(b) and 28(d) of PSA 700.
Yes
Yes
No
Yes
53. When an auditor expresses an adverse opinion he/she should disclose the substantive reasons for such an opinion in an explanatory paragraph.
a. Within the notes to the financial statements
b. Preceding the opinion paragraph
c. Following the opinion paragraph
d. Preceding the introductory paragraph
54. If the auditor expresses disclaimer of opinion in the auditor's report, which section should be omitted?
a. KAM
b. Auditor's responsibilities
c. Management's responsibilities
d. Other reporting responsibility
Modified Auditor's ReportEmphasis of Matter (EOM) and Other Matter (OM) paragraphs
55. Statement 1: The inclusion of an Emphasis of Matter paragraph in the auditor's report does not affect the auditor's opinion on the financial statements in respect of the matter emphasized.
Statement 2: An Emphasis of Matter paragraph is not used when the issue has been covered as a key audit matter.
a. True, true c. False, true
b. True, false d. False, false
56. An additional paragraph reads as follows:
On October 15, 2018, the Company emerged from bankruptcy. As discussed in the Note 25 to the financial statements, the Company accounted for the reorganization using "fresh accounting" and, as a result, the post-reorganization financial statements are not comparable to the pre-organization financial statements. Our opinion is not modified in respect of this matter.
The paragraph likely is intended to:
a. Qualify an opinion
b. Emphasize a matter
c. Report an inconsistency
d. Indicate a departure from PFRS
57. Which of the following statements is correct relating to Other Matter paragraph in the financial statements?
a. A paragraph that refers to a matter other in the financial statements that is relevant to understanding of the audit, the auditor's responsibilities or the auditor's report.
b. The auditor shall include this paragraph immediately after the Opinion paragraph.
c. The auditor shall include this paragraph immediately after any Emphasis of Matter paragraph
d. The auditor shall provide a modified opinion as a result of adding Other Matter paragraph.
58. Which of the following is not one of the requirements in including an Other Matter paragraph?
a. The inclusion is not prohibited by law or regulation.
b. The matter has not been determined to be a key audit matter to be communicated in the auditor's report.
c. The auditor would not be required to modify the opinion result of the matter.
d. All of the above.
59. Which of the following circumstances will the auditor least likely add an Other Matter paragraph?
a. The auditor is unable to resign from an engagement even though the possible effect of an inability to obtain sufficient appropriate audit evidence due to a limitation on the scope of the audit imposed by management is pervasive.
b. Restriction on distribution of the auditor's report.
c. Reporting on comparative information, and such information had not been audited or was audited by a different auditor.
d. Report on the pervasiveness of related party transactions that have been disclosed in the financial statements.
60. Maffle Corporation presents comparative financial statements ended December 31, 2019 and 2018. ABC and Co., CPAs is the newly appointed auditor for the year 2019. The prior year financial statements were audited by another auditor who expressed an unmodified opinion. After the audit ended on March 31, 2020, the auditor's findings include:
The Accounts Receivable as of December 31, 2019, though not pervasive, is materially misstated.
The client's production facilities were razed by fire on February 10, 2020. This event has been adequately disclosed in the notes to financial statements.
In the auditor's report, the auditor most likely should include a(an)
a. Unmodified opinion and an emphasis of matter paragraph.
b. Qualified opinion and an emphasis of matter paragraph.
c. Unmodified opinion, an emphasis of matter paragraph, and an other matter paragraph.
d. Qualified opinion, an emphasis of matter paragraph, and an other matter paragraph.
CORRECT ANSWERS ONLY WILL BE RATED
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started