ACCT 431 CHAPTER 3
Auditing and Assurance Services, 15e (Arens) Audit Reports
Learning Objective 3-1
1) An audit of historical financial statements most commonly includes the:
A) balance sheet, statement of retained earnings, and the statement of cash flows.
B) income statement, the sta...
acct 431 chapter 3 auditing and assurance services
15e arens audit reports learning objective 3 1 1 an audit of historical financial statements most commonly includes the a balance sheet
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ACCT 431 CHAPTER 3
Auditing and Assurance Services, 15e
(Arens) Audit Reports
Learning Objective 3-1
1) An audit of historical financial statements most commonly includes the:
A) balance sheet, statement of retained earnings, and the statement of cash flows.
B) income statement, the statement of cash flows, and the statement of net working capital.
C) statement of cash flows, balance sheet, and the statement of retained earnings.
D) balance sheet, income statement, statement of cash flows, and the statement of changes
in stockholders' equity.
Answer: D
Terms: Audit of historical financial statements
Diff: Moderate
Objective: LO 3-1
AACSB: Reflective thinking skills
2) Auditing standards require that the audit report must be titled and that the title must:
A) include the word "independent."
B) indicate if the auditor is a CPA.
C) indicate if the auditor is a proprietorship, partnership, or corporation.
D) indicate the type of audit opinion
issued. Answer: A
Terms: Auditing standards require audit report title
Diff: Easy
Objective: LO 3-1
AACSB: Reflective thinking skills
1
,3) To emphasize the fact that the auditor is independent, a typical addressee of the audit
report could be:
A)
Company Controller Shareholders Board of Directors
No Yes Yes
B)
Company Controller Shareholders Board of Directors
No No Yes
C)
Company Controller Shareholders Board of Directors
Yes Yes No
D)
Company Controller Shareholders Board of Directors
Yes No No
Answer: A
Terms: Audit report addressee
Diff: Easy
Objective: LO 3-1
AACSB: Reflective thinking skills
4) The auditor's responsibility section of the standard unqualified audit report states that the
audit is designed to:
A) discover all errors and/or irregularities.
B) discover material errors and/or irregularities.
C) conform to generally accepted accounting principles.
D) obtain reasonable assurance whether the statements are free of material
misstatement. Answer: D
Terms: Scope paragraph of standard unqualified audit report states
Diff: Easy
Objective: LO 3-1
AACSB: Reflective thinking skills
2
,5) The audit report date on a standard unqualified report indicates:
A) the last day of the fiscal period.
B) the date on which the financial statements were filed with the Securities and
Exchange Commission.
C) the last date on which users may institute a lawsuit against either client or auditor.
D) the last day of the auditor's responsibility for the review of significant events that
occurred after the date of the financial statements.
Answer: D
Terms: Audit report date on standard unqualified report
Diff: Easy
Objective: LO 3-1
AACSB: Reflective thinking skills
6) The standard audit report for non-public entities refers to GAAS and GAAP in
which sections?
A)
GAAS GAAP
Auditor's responsibility Auditor's responsibility
B)
GAAS GAAP
Auditor's responsibility Introductory paragraph
C)
GAAS GAAP
Management's responsibility Management's responsibility
and Opinion paragraph and Introductory paragraph
D)
GAAS GAAP
Management's responsibility
Auditor's responsibility and Opinion paragraph
Answer: D
Terms: Standard unqualified audit report for non-public entities; GAAS and GAAP
Diff: Moderate
Objective: LO 3-1
AACSB: Reflective thinking skills
3
, 7) Which of the following is not explicitly stated in the standard unqualified audit report?
A) The financial statements are the responsibility of management.
B) The audit was conducted in accordance with generally accepted accounting principles.
C) The auditors believe that the audit evidence provides a reasonable basis for their opinion.
D) An audit includes assessing the accounting estimates
used. Answer: B
Terms: Standard unqualified audit report
Diff: Easy
Objective: LO 3-1
AACSB: Reflective thinking skills
8) The standard unqualified audit report for a non-public entity must:
A) have a report title that includes the word "CPA."
B) be addressed to the company's stockholders and creditors.
C) be dated.
D) include an explanatory paragraph.
Answer: C
Terms: Standard unqualified audit report for a non-public entity;eight parts of the report
Diff: Easy
Objective: LO 3-1
AACSB: Reflective thinking skills
Topic: Public
9) The management's responsibility section of the standard audit report for a non-
public company states that the financial statements are:
A) the responsibility of the auditor.
B) the responsibility of management.
C) the joint responsibility of management and the auditor.
D) none of the above.
Answer: B
Terms: Standard unqualified audit report for a non-public entity;eight parts of the report
Diff: Easy
Objective: LO 3-1
AACSB: Reflective thinking skills
4
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