ACCT 3222-3, WILEY, LSU, EXAM 1 NEWEST 2024 ACTUAL EXAM QUESTIONS AND ANSWERS

ACCT 3222-3, WILEY, LSU, EXAM 1 NEWEST 2024
ACTUAL EXAM

Audit standards require a __ be used for all audits – ANSWERAudit standards require a standard format of the audit report be used for
all audits
Standard Unmodified Report – ANSWER- Used when auditors have
determined the financial statements are presented fairly in accordance
with the applicable financial reporting framework
Also called standard, unmodified/unqualified, or “clean” report
Sections of an unmodified audit report of a private company –
ANSWER- 1. Independent Auditor’s Report

2. To the owner’s of company:
3. Report on the Financial Statements (IDs the F/S and what service
   performed)
4. Management’s Responsibility for the Financial Statements (Prep and
   fair presentation of the F/S; design, implementation, and maintenance of
   IC; F/S free from material misstatement whether due to fraud or error)
5. Auditor’s Responsibility (Express an opinion, used auditing standards
   (ASB), reasonable assurance F/S free from material misstatement,

Obtain audit evidence and Procedures on auditor’s judgment, considered
IC relevant to design audit procedures, no expressed opinion on IC,
evidence obtained sufficient and appropriate to provide opinion)

6. Opinion (present fairly, in all material respects, financial opinion in
   accordance with accounting principles GAAP)
7. CPA firm signature
8. Date end of field work, evidence gathering complete
   What does second paragraph of Auditor’s Responsibilities represent? –
   ANSWER- How an audit is performed
   PCAOB standards use the term __ report – ANSWER- Unqualified
   report. Equivalent to unmodified used in private companies and
   sometimes used interchangeably as unmodified used to be used for
   private companies too.
   Sections of Unqualified audit report of public company – ANSWER- 1.
   Report of Independent Registered Public Accounting Firm (registered w/
   PCAOB)
9. To the shareholders and Board of Director of company
10. Opinion on the Financial Statements (note moves to top of report but
    stmt stays the same as private company)
11. We have also audited IC … and reference IC report
12. Basis for opinion (F/S responsibility of company’s mgmt, auditor
    responsibility to express an opinion and be independent
13. What is an audit section

7. Signature of audit firm
8. Date (end of fieldwork)
9. Statement about auditor tenure
   What is unique to the public company audit report? – ANSWER- 1. Title

• registered with PCAOB

7. Opinion moves from last paragraph to top of report
8. Paragraph referencing the audit of IC as public companies are
   required to have an audit of ICFR and auditors issue a separate opinion
   for that audit
9. Basis for opinion paragraph – less detail than private company and
   that registered with PCAOB and independence requirements of the SEC
   and other federal securities laws
10. Scope paragraph – explicit statement that PCAOB audit standards
    were followed
11. Audit tenure – states the year audit firm began serving consecutively
    as the company’s auditor
    Qualified or Adverse opinion – ANSWER- Material departures and
    client refuses to make corrections
    Qualified or Disclaimer of Opinion – ANSWER- Material limitation
    known as “Scope Limitation” on auditor’s ability to gather sufficient
    appropriate evidence
    Disclaimer of Opinion – ANSWER- Auditor is not independent

PCAOB Auditing Standard 2201 states_____ – ANSWER- PCAOB
Auditing Standard 2201 An Audit of Internal Control Over Financial
Reporting That Is Integrated with An Audit of Financial Statements
states that auditors must conduct an integrated audit for public
companies
AS 2201 requires – ANSWER- a standard format of the audit report be
used for all audits of effectiveness of ICFR
Components of the unqualified report on ICFR – ANSWER- 1. Title –
independent is also in the title of this report and registered with PCAOB

2. Address – addressed to S/H and Board of Directors of company
3. Opinion paragraph – explains an audit of ICFR was conducted
   references the COSO IC – Integrated Framework as criteria. Second
   sentence states auditor’s opinion
4. Paragraph referencing the F/S audit and the opinion given
5. Basis for opinion paragraph – states different responsibilities of mgmt
   and auditors. References registration with PCAOB and independence
   requirements of SEC and other fed. security laws
6. Scope paragraph – explains auditor’s used PCAOB standards. Auditors
   only required to obtain reasonable assurance and did so as basis for
   opinion
7. Definition and inherent limitations paragraph – definition of ICFR
   directly from AS 2201. Final sentence not to use CY opinion to assume
   future IC will be effective and circumstances may change
8. Signature – audit firm’s

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