In an audit of an issuer, the auditor identifies a material weakness in internal control over financial reporting (ICFR). The auditor also determines that the financial statements are materially correct and issues an unqualified opinion on the financial statements. Which of the following describes the appropriate reporting on ICFR?
An auditor is reviewing the financial statements of a nonissuer and notes that the entity has changed its method of accounting for inventory from LIFO to FIFO. Management has justified the change as preferable. The auditor agrees with the change and the change is properly accounted for and disclosed. How should this be reflected in the auditor's report?
An accountant is engaged to perform a compilation of a nonissuer's financial statements. The entity omits substantially all disclosures required by GAAP. The accountant decides to accept the engagement. Which of the following statements must be included in the compilation report?
An auditor is engaged to report on summary financial statements derived from the audited financial statements of a nonissuer. The auditor issued an unmodified opinion on the full financial statements. Which of the following is a requirement for the auditor to accept the engagement to report on the summary financial statements?
An auditor is performing a review of a nonissuer's interim financial information. The entity is also subject to an annual audit. During the review, the auditor inquires about the entity's internal control. Which of the following statements is TRUE regarding the auditor's responsibility for internal control in an interim review?
An auditor is performing a compliance audit of a government entity. The auditor identifies a material instance of noncompliance with a grant requirement. The entity has corrected the noncompliance and the grantor agency has waived any penalties. How should the auditor report this finding?
An auditor is engaged to examine the prospective financial statements (financial forecast) of a nonissuer. Which of the following is a requirement for the accountant's report?
An auditor is performing a review of a nonissuer's financial statements under SSARS. The auditor becomes aware of a material departure from GAAP. Management refuses to correct the departure. The auditor determines that the departure is so pervasive that a modification to the conclusion is not adequate to communicate the deficiencies. What should the auditor do?
An auditor is auditing the financial statements of an issuer. The auditor discovers that the client has not disclosed a significant related party transaction in the footnotes. The transaction is material. Management refuses to correct the omission. Which of the following opinions should the auditor issue?
An auditor is performing an audit of an issuer. The auditor identifies a material weakness in internal control. The client remediates the weakness one month before year-end. The auditor tests the remediated control and finds it effective. What is the appropriate reporting conclusion?
An auditor is performing an agreed-upon procedures engagement regarding a client's compliance with a specific lease agreement. Which of the following statements is TRUE regarding the practitioner's report?
An auditor is auditing the financial statements of a nonissuer. The auditor uses a specialist to value the pension liability. The auditor concludes that the specialist's findings support the financial statement assertions. However, the auditor decides to modify the opinion due to a separate material misstatement in inventory. Can the auditor reference the specialist in the audit report?
An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material misstatement in the prior year's financial statements that was not corrected. The current year's financial statements are presented in comparative form. Management has restated the prior year statements to correct the error. How should the auditor report on the prior year statements?
An auditor is performing a review of a nonissuer's financial statements. The auditor notes that the gross profit percentage has declined significantly. Management explains that this is due to a new product line with lower margins. Which of the following procedures is MOST appropriate to corroborate this explanation?
An auditor is performing an audit of a nonissuer. The auditor is unable to obtain the audited financial statements of a significant equity method investee. The investment is material to the auditor's client. Which of the following is the MOST likely effect on the auditor's report?
An auditor is performing a review of a nonissuer's financial statements. The auditor discovers that the entity has not accrued for a material vacation pay liability. Management refuses to correct the error. The error is material but not pervasive. Which of the following conclusions should the auditor express?
An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material inconsistency between the audited financial statements and the other information included in the annual report. The financial statements are correct, but the other information is incorrect. Management refuses to correct the other information. What should the auditor do?
An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material related party transaction that was properly authorized and disclosed. The auditor wants to draw attention to this transaction in the audit report. What should the auditor do?
An auditor is performing a review engagement under SSARS (AR-C 90) for a nonissuer. The auditor becomes aware of a material departure from the applicable financial reporting framework. Management refuses to correct the departure. The auditor determines that the departure is material but NOT pervasive. Which of the following is the MOST appropriate report modification?
An auditor is engaged to report on summary financial statements derived from the audited financial statements of a nonissuer. The auditor issued an unmodified opinion on the audited financial statements. The auditor concludes that the summary financial statements are consistent, in all material respects, with the audited financial statements. Which of the following statements is TRUE regarding the auditor's report on the summary financial statements?
An auditor is performing an integrated audit of an issuer. The auditor identifies a material weakness in internal control over financial reporting (ICFR). Management corrects the material weakness two months before year-end. The auditor tests the corrected control and finds it operating effectively. Which of the following is the auditor's MOST appropriate course of action regarding the opinion on ICFR?
An auditor is reviewing the minutes of the board of directors meetings of a nonissuer. The auditor discovers that the board authorized a significant guarantee of a loan for a related party. This guarantee was not disclosed in the financial statements. The auditor considers this omission to be material. Management refuses to amend the financial statements. What is the appropriate audit opinion?
An auditor is performing a compilation engagement for a nonissuer under SSARS. The client has omitted substantially all disclosures required by GAAP. The auditor decides to issue the compilation report. Which of the following statements MUST be included in the report?
An auditor is engaged to perform an agreed-upon procedures (AUP) engagement regarding a client's compliance with a specific lease agreement. Which of the following is a REQUIRED condition for this engagement?
An auditor is preparing the audit report for a nonissuer. The auditor decides to emphasize that the entity has significant related party transactions. Which of the following is the correct presentation?
Which of the following statements is TRUE regarding the auditor's responsibility for 'Other Information' included in an annual report containing audited financial statements (e.g., the President's Letter)?
Which of the following is a required procedure in a review engagement of a nonissuer under SSARS?
Scenario: An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material weakness in internal control. The auditor's report on the financial statements is unmodified. The auditor has not been engaged to audit internal control. <br/><br/>How should the material weakness be handled in the auditor's report on the financial statements?
An auditor is performing a review of a nonissuer's interim financial information. The entity is also subject to an annual audit. Which of the following procedures is REQUIRED for the interim review?
An auditor is preparing a report on compliance with aspects of a contractual agreement (e.g., debt covenants) in connection with the audit of financial statements. Which of the following is a requirement for this report?
Scenario: An auditor is auditing the financial statements of a nonissuer. The auditor concludes that there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. Management has adequate plans to alleviate this doubt, and the plans are properly disclosed in the notes. <br/><br/>What is the appropriate audit opinion?
An auditor is performing a compilation of a nonissuer's financial statements. The auditor is NOT independent. Which of the following is the correct reporting requirement?
An auditor is performing a 'review' of the Management's Discussion and Analysis (MD&A) of a nonissuer. Which of the following is a requirement for this engagement?
An auditor is auditing the financial statements of a nonissuer. The auditor is unable to obtain the audited financial statements of a significant equity method investee. The investment is material to the client's financial statements. Management is unable to provide other sufficient appropriate evidence regarding the investment's value. <br/><br/>What is the appropriate audit opinion?
Scenario: An auditor is auditing the financial statements of a nonissuer. The auditor identifies a material misstatement in the opening balances that affects the current period's financial statements. The prior period was audited by another auditor, and the predecessor's report is not reissued. Management refuses to adjust the opening balances. <br/><br/>What is the appropriate audit opinion on the current period financial statements?
An auditor is performing a 'preparation' engagement under SSARS. Which of the following is TRUE?
An auditor is performing a Single Audit. The auditor identifies $20,000 of questioned costs in a major program. The total expenditures for that program are $5,000,000. The threshold for reporting questioned costs is $25,000. <br/><br/>Must the auditor report this finding?
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