1. For which of the following situations would it be appropriate for the auditors to issue an adverse opinion?
a. Auditor is not independent to the audited organization.
b. Scope limitations that prevent the audit tests from being completed.
c. Statements are not presented in accordance with GAAP.
d. Statements are produced with internal control errors.
2. In which of the following situations would an auditor be unlikely to issue an unmodified opinion?
a. GAAP was applied inconsistently from year to year.
b. The client is unlikely to remain a going concern.
c. The inventory is valued by a non-GAAP method.
d. There were no circumstance-imposed scope limitations.
3. Where should the auditor document a material accounting change that has no effect on the current audit, but will materially affect future audits?
a. Disclosure in the notes of the current year
b. Disclosure in the notes on future years
c. Noted as a paragraph in the audit report
d. Noted as a subsequent event.