Unqualified audit reports For each of the following situations, define the type of problem encountered and provide an explanation as to the type of report which was issued. Situation Report Issued The auditor is unable to confirm three customer accounts
receivable. Unqualified Standard The client forgot to accrue a contingent liability. Unqualified Standard The auditor believes there is substantial doubt regarding the client's ability to continue as a going concern. Unqualified with Explanatory Paragraph The client properly adopts a new accounting principle promulgated by the FASB Unqualified with Explanatory Paragraph
Type of Problem Issues Giving Rise to Report
Scope limitation Alternative procedures probably performed.
GAAP violation Most likely immaterial or the client adjusted the financial statements to appropriately reflect the contingency.
Going concern Probably not a significant enough uncertainty to give rise to disclaimer.
Change in accounting principle in accordance with GAAP. Adequate GAAP treatment. Auditor draws attention to the change.
You might also like to view...
Is LMX fair? Should leaders treat all followers alike?
What will be an ideal response?
Which of the following statements is true of a niche strategy?
a. A niche strategy is most suitable for firms that have achieved economies of scale. b. A niche strategy requires business firms to reduce after-purchase service options. c. A niche strategy involves removing extra frills from products. d. A niche strategy is ideal for small companies with limited resources.
Choose the correct verb in parentheses. The hurricane recovery team (shall, will) focus on cleaning up debris and repairing houses
If the present value of the benefits received is less than the present value of the costs incurred,
then a company should make the decision to invest in the project. Indicate whether the statement is true or false