MULTIPLE CHOICE QUESTIONS FROM BECKER CPA EXAM REVIEW
3-22 (OBJECTIVES 3-5, 3-7, 3-8) The following questions concern audit reports other than un-
modified opinion audit reports with standard wording. Choose the best response.
a. As compared to an unmodified opinion, an opinion qualified due to a material de-
parture from generally accepted accounting principles would
(1) include an extra paragraph in the opinion section.
(2) include a slight modification to the auditor’s responsibility section.
AUDIT REPORTS
(3) include a slight modification to the introductory paragraph in the opinion section.
(4) indicate that, except for the problem noted, the financial statements are presented fairly
b. An auditor who qualified an opinion because of an insufficiency of audit evidence
should refer to the scope limitation in the
Auditor’s Responsibility
Section Opinion Section
Note to the Financial
Statements
(1) Yes No Yes
(2) No Yes No
(3) Yes Yes No
(4) Yes Yes Yes
c. An adverse opinion and a disclaimer of opinion
(1) may be used interchangeably.
(2) both require modification of the opinion section.
(3) result in the auditor’s withdrawal from the engagement.
(4) indicate situations in which there are material GAAP departures.
DISCUSSION QUESTIONS AND PROBLEMS
3-23 (OBJECTIVE 3-1) A careful reading of an unmodified opinion audit report indicates several important phrases. Explain why each of the following phrases or clauses is used rather than the alternative provided:
a. “The accompanying financial statements present fairly, in all material respects, the finan-
cial position” rather than “The financial statements mentioned above are correctly stated.”
b. “In accordance with accounting principles generally accepted in the United States of
America” rather than “are properly stated to represent the true economic conditions.”
c. “In our opinion, the financial statements present fairly” rather than “The financial
statements present fairly.”
d. “Brown & Phillips, CPAs (firm name),” rather than “James E. Brown, CPA (individual
partner’s name).”
e. “We conducted our audit in accordance with auditing standards generally accepted in
the United States of America” rather than “Our audit was performed to detect mate-
rial misstatements in the financial statements.”
3-24 (OBJECTIVES 3-1, 3-2, 3-4, 3-6, 3-7) Patel, CPA, has completed the audit of the financial
statements of Bellamy Corporation as of and for the year ended December 31, 2019. Patel
also audited and reported on the Bellamy financial statements for the prior year. Patel
drafted the following report for 2019.
