Which of the following parties is responsible for the fairness of the representations made in financial statements?
A. Entity's management.
B. Independent auditor.
C. Audit committee.
D. AICPA.
Answer: Entity's management.
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Accounting Chapter 18
- In an engagement to express an opinion on one or more specified elements, accounts, or items of a financial statement, the auditor can generally audit only those specified elements and not the entire set of financial statements. However, the auditor is required to audit the entire set of financial statements if the elements specified include
- In which of the following situations would an auditor ordinarily choose between expressing an "except for" qualified opinion and expressing an adverse opinion?
- A scope limitation sufficient to preclude an unqualified opinion always will result when management
- In the first audit of an entity, because of the entity's record retention policies, an auditor was not able to gather sufficient evidence about the consistent application of accounting principles between the current and the prior year, as well as the amounts of assets or liabilities at the beginning of the current year. If the amounts in question could materially affect current operating results, the auditor would
- When there has been a change in accounting principle that materially affects the comparability of the comparative financial statements presented for a public company and the auditor concurs with the change, the auditor should
- Cravens was asked to perform the first audit of a wholesale business that does not maintain perpetual inventory records. Cravens has observed the current inventory but has not observed the physical inventory at the previous year-end date and concludes that the opening inventory balance, which is not auditable, is a material factor in the determination of cost of goods sold for the current year. Cravens will probably
- An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. If the auditor concludes that the financial statements do not require revision, but the entity refuses to revise or eliminate the material inconsistency, the auditor may
- A special report related to compliance with contractual provisions provides
- When expressing an opinion on a specified account or item in the financial statements, the auditor need only consider that account or item. However, the auditor must have audited the entire set of financial statements if this engagement requires a report on the entity's
- An engagement to express an opinion on a system of internal control will generally
- Which of the generally accepted auditing standards of reporting would not normally apply to special reports such as cash basis statements?
- An auditor's report on financial statements prepared in accordance with a basis of accounting other than generally accepted accounting principles should include all of the following except:
- When an auditor reports on financial statements prepared on an entity's income tax basis, the auditor's report should
- All of the following are true with respect to the auditor's consideration of information other than the audited financial statements that are included in an entity's annual report except:
- What is an auditor's responsibility for supplementary information, such as segment information, that is outside the basic financial statements, but required by the FASB?
- When audited financial statements are presented in an entity's document containing other information, the auditor should
- When audited financial statements are presented in a document containing other information, the auditor
- The auditor's best course of action with respect to "other financial information" included in an annual report containing the auditor's report is to
- An auditor may reasonably issue an "except for" qualified opinion for
- A CPA who is not independent and is associated with financial statements should disclaim an opinion with respect to those financial statements. The disclaimer should
- When are an auditor's reporting responsibilities not met by attaching an explanation of the circumstances and a disclaimer of opinion to the entity's financial statement?
- Which of the following would not require an explanatory/emphasis-of-matter paragraph in the auditor's report?
- When reporting on comparative financial statements where the financial statements of the prior year have been examined by a predecessor auditor whose report is not presented, the successor auditor should make
- Auditing standards define special purpose financial statements as including those prepared under the following base(s)
- If a public company issues financial statements that purport to present its financial position and results of operations but omits the statement of cash flows, the auditor ordinarily will express a(an)
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