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. Issue an "except for" qualified opinion after discussing the matter with the entity's board of directors.
B. Consider the matter closed since the other information is not in the audited financial statements.
C. Disclaim an opinion on the financial statements after explaining the material inconsistency in a separate explanatory/emphasis-of-matter paragraph.
D. Revise the auditor's report to include a separate explanatory/emphasis-of- matter paragraph describing the material inconsistency.
Answer: Revise the auditor's report to include a separate explanatory/emphasis-of- matter paragraph describing the material inconsistency.
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:
A. An opinion as to whether the basis of accounting used is appropriate under the circumstances.
B. An opinion as to whether the financial statements are presented fairly in conformity with the other basis of accounting.
C. Reference to the note to the financial statements that describes the basis of presentation.
D. A statement that the basis of presentation is a basis of accounting other than generally accepted accounting principles.
Answer: An opinion as to whether the basis of accounting used is appropriate under the circumstances.
Which of the generally accepted auditing standards of reporting would not normally apply to special reports such as cash basis statements?
A. First standard.
B. Second standard.
C. Third standard.
D. Fourth standard.
Answer: First standard.
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