Questions from Auditing and Assurance

Q: A public entity changed from the straight-line method to the

A public entity changed from the straight-line method to the declining balance method of depreciation for all newly acquired assets. This change has no material effect on the current year’s financial...

Q: An auditor includes a separate paragraph in an otherwise unmodified financial statement

An auditor includes a separate paragraph in an otherwise unmodified financial statement audit report to emphasize that the entity being reported upon had significant transactions with related parties....

Q: Why does the auditor generally follow a substantive strategy when auditing long

Why does the auditor generally follow a substantive strategy when auditing long-term debt and capital accounts? Under what conditions might the auditor follow a reliance strategy?

Q: How does the fair value evidence the auditor is likely to gather

How does the fair value evidence the auditor is likely to gather differ between Level 1 and Level 3 assets?

Q: Eagle Company, a public company, had a computer failure and

Eagle Company, a public company, had a computer failure and lost part of its financial data. As a result, the auditor was unable to obtain sufficient audit evidence relating to Eagle’s inventory accou...

Q: Tech Company has appropriately disclosed an uncertainty due to pending litigation.

Tech Company has appropriately disclosed an uncertainty due to pending litigation. However, the auditor was unable to satisfy herself that all pending litigation had been identified. The auditor’s dec...

Q: In which of the following circumstances would an auditor usually choose between

In which of the following circumstances would an auditor usually choose between issuing a qualified opinion or a disclaimer of opinion on a client’s financial statements? a. Departure from generally a...

Q: King, CPA, was engaged to audit the financial statements of

King, CPA, was engaged to audit the financial statements of Chang Company, a private company, after its fiscal year had ended. King neither observed the inventory count nor confirmed the receivables b...

Q: Comparative financial statements for a public company include the prior year’s financial

Comparative financial statements for a public company include the prior year’s financial statements, which were audited by a predecessor auditor. The predecessor’s report is not presented along with t...

Q: When reporting on comparative financial statements, which of the following circumstances

When reporting on comparative financial statements, which of the following circumstances should ordinarily cause the auditor to change the previously issued opinion on the prior year’s financial state...