Situation 1 The accounting firm of Aschari and Di Tomaso was engaged to perform an audit of the financial statements of Pammenter Inc. During the audit, Pammenter's senior managers refused to give the auditors the information they needed to confirm any of the accounts receivable. As a result, Aschari and Di Tomaso were not able to confirm the accounts receivable balance. However, they did not encounter any other problems during the audit. Using Situation 1, what type of audit opinion could be issued? (Choose any and all correct answers) Qualified due to a scope limitation Adverse opinion Unqualified Disclaimer of opinion Qualified due to a GAAP departure Unqualified with emphasis of matter paragraph regarding the confirmation of accounts receivable You have recently graduated from university and have started work with an audit firm. You meet an old school friend, Kim, for dinner-you haven't seen each other for several years. Kim is surprised that you are now working as an auditor, because your childhood dream was to be a ballet dancer. Unfortunately, your knees were damaged in a fall and you can no longer dance. The conversation turns to your work and Kim wants to know how you do your job. Kim asks about the purpose of an audit and wants to know if as an auditor, you would have to assume that you cannot believe anything a company manager says to you. Which of the following accurately explains the concept of an audit and the assurance it provides? (Choose any and all correct answers) Reviews every transaction to determine if information is accurate Enhances the reliability and credibility of the information Provides a guarantee that the financial statements are free from error and fraud A high level of assurance is provided that the financial statements are free of material misstatement. Uses sampling so some risk is involved that the sample is not representative of the population Provides assurance about the appropriateness of the accounting method selection Reasonable assurance is provided that the financial statements are reliable Kenno Power Systems is an electronics retailer that operates out of an outlet mall in Richmond, BC. As required by the landlord, Kenno Power Systems has hired Sandi Mey, CPA, to provide an auditor's report to the landlord indicating whether Kenno Power Systems has met the requirements of its lease agreement in terms of reporting the store's sales information. Which of the following are true for Kenno Power Systems? (Choose any and all correct answers) The auditor could issue a Notice to Reader and meet the landlord's objectives. An auditor could not perform this engagement as they would not have the expertise. Sandi Mey does not need to be independent of Kenno Power Systems since the report will not be issued to shareholders. This is an example of a compilation engagement. The landlord would like to enhance the reliability of the sales figures reported. No assurance can be provided because the requirements of an assurance engagement are not met. Remoteness is why the landlord may be requesting a report on the store sales information. This is not a financial statement audit, and only financial statements can be audited. The auditor would express negative assurance in her auditor's report. You have recently graduated from university and have started work with an audit firm. You meet an old school friend, Kim, for dinner-you haven't seen each other for several years. Kim is surprised that you are now working as an auditor, because your childhood dream was to be a ballet dancer. Unfortunately, your knees were damaged in a fall and you can no longer dance. The conversation turns to your work and Kim wants to know how you do your job. Kim asks about the purpose of an audit and wants to know if as an auditor, you would have to assume that you cannot believe anything a company manager says to you. Which of the following describes the concept of professional scepticisim as it relates to the auditors? (Choose any and all correct answers) Support management statements with corroborating evidence The client should exercise due care. Assume management is always trying to deceive auditors Questioning mind that investigates information presented by the client Attitude of dependence Take the client's word without trying to support their statements Be alert to the fact that some managers will try to deceive Question 8 1 pts There is a GAAP departure concerning a highly material item. Unmodified opinion with emphasis of matter Qualified opinion Either a disclaimer of opinion or a qualified opinion Either an adverse opinion or a qualified opinion Disclaimer of opinion None of the listed choices are correct. Question 9 1 pts The client will not allow the auditor to contact the client's legal counsel. None of the listed choices are correct. Unmodified opinion with emphasis of matter Either an adverse opinion or a qualified opinion Disclaimer of opinion Either a disclaimer of opinion or a qualified opinion Qualified opinion Question 11 1 pts The client's accounting records have been destroyed. Either an adverse opinion or a qualified opinion Disclaimer of opinion Qualified opinion Unmodified opinion with emphasis of matter Either a disclaimer of opinion or a qualified opinion None of the listed choices are correct
