@cpahopeful…enjoy ur free time..and all the best for results
I am very much confused about the estimates and reference of those in the report… could someone please explain why the answer in these 2 questions are those…
An auditor most likely will express an unmodified opinion and will not add additional language to the report if the auditor
Q #1
A. Believes that there is a remote likelihood of a material loss resulting from an uncertainty.
B. Wishes to emphasize that the entity had significant transactions with related parties.
C. Concurs with the entity’s change in its method of computing depreciation.
Answer (C) is incorrect.
A change in the depreciation method is a change in estimate inseparable from a change in principle. If material, the change in principle requires an emphasis-of-matter paragraph.
D. Discovers that supplementary information required by FASB has been omitted.
Answer is A
Q#2
For which of the following events would an auditor issue a report that omits any reference to a change in accounting principle or correction of a material misstatement?
A. A change in the method of accounting for inventories.
B. A change from an accounting principle that is not in accordance with the applicable reporting framework to one that is.
C. Management’s lack of reasonable justification for a material change in accounting principle.
D. A change in the useful life used to calculate the provision for depreciation expense.
Answer (D) is correct.
A change in estimate is neither a change in accounting principle nor the correction of a material misstatement in previously issued financial statements. Thus, it requires no modification of the opinion or other recognition in the report. However, an exception is a change in estimate that is inseparable from a change in principle. The auditor evaluates and reports on this change as a change in principle.
FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂
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