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AAA Completion and the auditor's report

7 ACCA Strategic Professional questions with answers and explanations.

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All questions with answers
  1. A misstatement is material but not pervasive. The auditor should issue:

    • 1 A disclaimer of opinion
    • 2 An adverse opinion
    • 3 An unmodified opinion
    • 4 A qualified opinion, 'except for'
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    Correct answer: A qualified opinion, 'except for'

    Qualified opinions are used for material but not pervasive misstatement, or a limit on scope.

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  2. A misstatement is material and pervasive. The auditor should issue:

    • 1 A qualified opinion
    • 2 An adverse opinion
    • 3 A disclaimer of opinion
    • 4 An unmodified opinion
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    Correct answer: An adverse opinion

    A pervasive effect on the financial statements as a whole means that they do not give a true and fair view.

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  3. A limit on scope that is material and pervasive leads to:

    • 1 A disclaimer of opinion
    • 2 An adverse opinion
    • 3 A qualified opinion
    • 4 An emphasis of matter paragraph
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    Correct answer: A disclaimer of opinion

    The auditor cannot obtain sufficient appropriate evidence and so cannot form an opinion.

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  4. A material uncertainty over going concern is adequately disclosed in the financial statements. The audit report should include:

    • 1 An adverse opinion
    • 2 A disclaimer
    • 3 A qualified opinion
    • 4 An unmodified opinion with a separate section on material uncertainty related to going concern
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    Correct answer: An unmodified opinion with a separate section on material uncertainty related to going concern

    The disclosure is adequate, so the opinion is not modified, but the matter is highlighted.

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  5. Key audit matters are communicated in the auditor's report for:

    • 1 Listed entities
    • 2 Only small companies
    • 3 Only public sector bodies
    • 4 All entities
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    Correct answer: Listed entities

    They are matters of most significance in the audit that were communicated to those charged with governance.

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  6. An emphasis of matter paragraph is used to:

    • 1 Qualify the opinion
    • 2 Draw attention to a matter that is fundamental to users' understanding and is appropriately disclosed
    • 3 Report an error
    • 4 Disclaim the opinion
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    Correct answer: Draw attention to a matter that is fundamental to users' understanding and is appropriately disclosed

    It does not modify the opinion.

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  7. Events that occur after the date of the auditor's report but before the financial statements are issued:

    • 1 Are ignored
    • 2 Are the responsibility of the regulator
    • 3 Are not the auditor's responsibility to look for, but must be dealt with if the auditor becomes aware
    • 4 Must always be audited
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    Correct answer: Are not the auditor's responsibility to look for, but must be dealt with if the auditor becomes aware

    The auditor takes action if a fact becomes known which would have affected the report.

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