Question 1

Whenever an auditor issues a standard unmodified opinion, the implication is that the auditor:

Accepted Answer

A standard unmodified opinion means that the auditor is satisfied that the report is prepared and presented fairly in all material respects in accordance with an applicable accounting framework. This is the highest level of assurance that an auditor can provide.

Question 2

Which of the following is NOT a category of audit or attestation report?

Accepted Answer

A

Question 3

The audit report date indicates the:

Accepted Answer

The audit report date indicates the last day of the auditor's responsibility for the review of significant events that occurred after the date of the financial report. This means that the auditor is responsible for reviewing significant events up until this date, and any events that occur after this date are not the auditor's responsibility. This is important because it ensures that the auditor is not held responsible for events that occur after they have completed their review of the financial report.

Question 4

The appropriate date for the audit report is the one on which the:

Accepted Answer

The appropriate date for the audit report is the one on which the auditor signs the report because it represents that the auditor has completed all necessary procedures, obtained sufficient audit evidence, and arrived at their opinion on the financial statements. The other options, such as the client's financial year end or the date the report is typed and delivered, are not necessarily indicative of the completion of the audit. Similarly, the date of the contract between the auditor and client is not relevant to the date of the audit report.

Question 5

In the auditor's responsibility paragraph of the audit report, the use of the term 'reasonable assurance' is intended to indicate that:

Accepted Answer

The use of the term 'reasonable assurance' in the auditor's responsibility paragraph indicates that there is a possibility that material misstatements still exist in the financial statements, but the auditor has conducted the audit in accordance with the auditing standards and obtained sufficient evidence to provide reasonable assurance that the financial statements are free from material misstatements. Therefore, the realistic expectation is that there may still be material misstatements in the financial statements even after the audit has been conducted.

Question 6

ASA 700 requires that the title of the audit report:

Accepted Answer

ASA 700 requires that the title of the audit report must include the word 'independent' to emphasize the independence of the auditor in providing an unbiased opinion on the financial statements. Option A, B, and C are not specifically required by the standard.

Question 7

Auditing standards require that an audit report be issued whenever a public accounting firm:

Accepted Answer

An audit report is required whenever a public accounting firm is associated with financial reports.

Question 8

The most common type of audit report is the 'standard unmodified audit report'.It is used when which three of the following conditions have been met?
1)The financial report is presented fairly, in all material respects, in accordance with the applicable financial reporting framework (usually Australian accounting standards).
2)The financial report is presented fairly, in all material respects, in accordance with the relevant statutory requirements (usually the Corporations Act).
3)The financial information complies with relevant statutory and other requirements.
4)The view presented by the financial report is consistent with the auditor's understanding of the entity and its environment.

Accepted Answer

The answer of The most common type of audit report...

Question 9

Under certain circumstances, the auditor is required to provide additional information regarding the financial report even though he or she intends to express an unmodified opinion.Normally, such explanatory information should be included in:

Accepted Answer

Explanatory information that needs to be disclosed in the audit report but does not affect the auditor's opinion should be presented in an emphasis of matter paragraph. This allows the auditor to draw attention to the particular matter without compromising the unmodified opinion. Hence, the best choice is D - an emphasis of matter paragraph.

Question 10

What condition requires departure from an unmodified report?

Accepted Answer

Departure from an unmodified report is required when the financial report is materially misstated or when the auditor is unable to obtain sufficient appropriate audit evidence. Therefore, both options A and B are correct.

Question 11

The introductory paragraph of the standard unmodified audit report states that the financial report:

Accepted Answer

The answer of The introductory paragraph of the standard unmodified...

Question 12

Which auditing standard requires an expression of an opinion about the overall financial report?

Accepted Answer

ASA 700 requires an expression of an opinion about the overall financial report, while ASA 705 provides guidance on the auditor's responsibilities when modifying the opinion.

Question 13

The auditor's conclusions are stated as opinion rather than a statement of fact:

Accepted Answer

The auditor's conclusions are stated as opinion because they are based on professional judgement, which involves interpreting evidence and making informed decisions.

Question 14

If the balance sheet of a company is dated 30 June 2012, the audit report is dated 6 September 2012, and both are released to the public on 15 September 2012, this indicates that the auditor has searched for material unrecorded transactions and events that occurred up to:

Accepted Answer

The audit report date, 6 September 2012, indicates the auditor's responsibility to search for material unrecorded transactions and events up to this date, as it represents the point at which the auditor has concluded their work and is ready to issue their opinion on the financial statements.

Question 15

The Corporations Act 2001 requires the auditor of a financial report to form an opinion about whether the:

Accepted Answer

The Corporations Act 2001 mandates that the auditor must form an opinion on whether they have received all necessary information, if the financial report complies with accounting standards and presents a true and fair view, and if the entity has kept sufficient records for the preparation and audit of the financial report.

Question 16

The auditor's responsibility section of the standard unmodified report does NOT include:

Accepted Answer

The auditor's responsibility for designing, implementing, and maintaining relevant internal controls is the responsibility of management, not the auditor.

Question 17

The accounting profession recognises the need for uniformity in reporting:

Accepted Answer

Uniformity in reporting is necessary to avoid confusion among users of financial reports. In addition, the auditing standards (ASA 700 and ASA 705) in Australia have defined and enumerated the types of audit reports that should be included with general-purpose financial reports, further emphasizing the need for uniformity. If each auditor's report were an original creation, users would have considerable difficulty interpreting the meaning of the report. Therefore, all the given options are correct.

Question 18

A public accounting firm is associated with the financial report of its client:

Accepted Answer

A public accounting firm is associated with the financial report of its client even if it only assists in preparing the financial report but does not conduct an audit. This is because the firm's involvement can lend credibility to the financial statements, regardless of whether an audit has been performed.

Question 19

Which of the following representations does an auditor make when he or she issues an unmodified audit opinion?

Accepted Answer

An auditor making an unmodified audit opinion represents that the financial report has been prepared in accordance with applicable accounting standards. This means that the financial report is free from material misstatement and is fairly presented in accordance with the financial reporting framework. Therefore, option A is correct. Option B is incorrect because the auditor is required to comply with Australian auditing standards, but this does not imply a representation. Option C is incorrect because compliance with Australian Securities Exchange listing requirements does not guarantee that the financial report is free from material misstatement or fairly presented. Option D is incorrect because materiality level is a judgment made by the auditor but does not imply a representation.

Question 20

An audit report is appropriate:

Accepted Answer

An audit report is specifically prepared and issued following the completion of an audit, which involves an independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon.

Quiz 18: Audit reporting