How are management's responsibility and the auditor's responsibility represented in the standard auditor's report?
When there is a significant change in accounting principle, an auditor's report should refer to the lack of consistency in:
For a particular entity's financial statements to be presented fairly in conformity with generally accepted accounting principles, it is not required that the principles selected:
An auditor has been asked to report on the balance sheet of Kane Company but not on the other basic financial statements. The auditor will have access to all information underlying the basic financial statements. Under these circumstances, the auditor:
To exercise due professional care an auditor should:
This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.Assume:- The auditor is independent.- The auditor previously expressed an unqualified opinion on the prior year's financial statements.- Only single-year (not comparative) statements are presented for the current year.- The conditions for an unqualified opinion exist unless contradicted in the factual situations.- The conditions stated in the factual situations are material.- No report modifications are to be made except in response to the factual situation.Item to Be Answered -An entity is a defendant in a lawsuit alleging infringement of certain patent rights. However, the ultimate outcome of the litigation cannot be reasonably estimated by management. The auditor believes there is a reasonable possibility of a significantly material loss, but the lawsuit is adequately disclosed in the notes to the financial statements.List B -Report Modifications -
