[jeff]

Welcome to the Q2 2015 CPA Exam Study Group for AUD.

World Premier: “Unmodified” (Audit Reports Rap Video) 🙂

Posted by Another71 on Thursday, November 13, 2014

Free NINJA: https://www.another71.com/cpa-exam-study-plan/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[NoraU]

D?

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[trish_1234]

Digit Co. uses the FIFO method of costing for its international subsidiary's inventory and LIFO for its domestic inventory. Under these circumstances, the auditor's report on Digit's financial statements should express an:

A.

unmodified opinion.

B.

opinion qualified because of a lack of consistency.

C.

opinion qualified because of a departure from GAAP.

D.

adverse opinion.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[ladybossxo]

@Trish and Nora: D is correct!

To satisfy the valuation assertion when auditing an investment accounted for by the equity method, an auditor most likely would examine the audited financial statements of the investee company, including performing recalculations of prorata share of income/loss.

I thought it was C. Here's the explanation why it is NOT C:

Obtaining market quotations from financial newspapers or periodicals would satisfy the valuation assertion for an investment accounted for by the COST method.

CPA Exams Done.

[ladybossxo]

A

CPA Exams Done.

[Martin]

A.

unmodified opinion.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[trish_1234]

A

The use of the FIFO method of costing for international subsidiaries' inventories while using LIFO for domestic inventories is consistent with GAAP. Therefore, given no other issues, the auditor may express an unmodified opinion.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[trish_1234]

I dont get this

When the auditor reissues a report of the financial statements, the responsibility of the auditor with respect to the reissued report is which of the following?

The auditor:

A.

should adjust the financial statements as needed or qualify the opinion.

B.

must disclaim an opinion.

C.

should perform additional audit procedures under certain circumstances.

D.

has no responsibility in this case.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[NoraU]

C?

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[trish_1234]

that is what I thought tooo so weird the answer is:

D

When the auditor reissues a report of the financial statements, the independent auditor has no responsibility to make further investigation or inquiry as to events which may have occurred during the period between the original report date and the date of the release of additional reports.

WHY!!!!!!!!!!!!!!!!!!!

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[Martin]

I think is because this is a report from last year with the same Auditor, and when is another Auditor involve is when you perform additional procedures? He is just reissuing his own report, why would he perform any additional procedures? He is the only one who has access to make changes on this report, and his opinion was final so need to do anything else unless subsequent events, etc.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[trish_1234]

in my gleim book it states that a predecessor auditor can reissue a report for a prior period at request of the former client if

(1) satisfactory arrangements are made to perform this service and (2) certain procedures are performed

consider whether report is still appropriate given the current report form or presentation of the prior – period statements and any subsequent events

should

read the current period statements

obtain representation letter from the current auditor and management among other things

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[trish_1234]

@ martin when it is a continuing auditor it is called an update report not reissuance

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[NoraU]

The question does not say if it is the same auditor now. What if it is predecessor auditor reissuing the report for comparative FS?

Also stupid question ( I have nothing to do with audit so bear with me). After the report has been issued the auditor realized it is not correct due to omission of significant test of details. Can the auditor reissue a report in this case?

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[Martin]

You are right, one word changed the whole scenario now.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[trish_1234]

lets say the auditor issued the report and realized that there was omitted procedures

1. is it material ( can the opinion expressed still be supported?) if yes do nothing if no

2 see if other procedures performed can substitute if not

3 perform the procedure to support opinion

4 if the report cant be relied on talk to management

and procede to steps to advice ppl relying that the auditor cannot support the opinion previously expressed

NOTE: this came from my memory but im sure it pretty accurate

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[Author]

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