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ISA 700, Forming an opinion and reporting on financial statements
ISA 700 Forming an Opinion and Reporting on Financial Statements states the objectives of the auditor are to express clearly their opinion through a written report. Here on MCQs.club we have prepared easy Multiple-Choice Questions (MCQs) on ISA 700 revised IFAC that fully cover the ISA 700 summary and definition, ISA 700 MCQs with answers, these MCQs are a basis of conclusions. These MCQ on SA 700 are helpful for Competitive exams, Professional Accountancy exams and Business management exams.
- ISA 700 Forming an Opinion and Reporting on Financial Statements states the objectives of the auditor are:
- To form an opinion on the financial statements based on an evaluation of the conclusions drawn from the audit evidence obtained.
- To express clearly their opinion through a written report.
- Both A&B
- None
- The auditor forms an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. In order to do that the auditor should evaluate whether:
- The financial statements adequately disclose the significant accounting policies.
- The accounting policies selected are consistently applied and appropriate.
- Accounting estimates made by management are reasonable.
- Information is relevant, reliable, comparable and understandable.
- The financial statements provide adequate disclosures to enable the users to understand the effects of material transactions and events.
- All of the above
- (I) (III) and (IV) only
- (I) (II) and (V) only
- None
- When the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework they issue an unmodified opinion in the auditor’s report.
- The above statement is correct
- The above statement is incorrect
- The auditor’s report can be:
- Unmodified – the financial statements show a true and fair view.
- Modified without modifying the opinion – the financial statements show a true and fair view but there is additional communication required to bring something to the attention of the user.
- Modified with a modified opinion – the financial statements don’t fully show a true and fair view or the auditor has not obtained sufficient appropriate evidence to make that conclusion.
- All of the above
- When the auditor issues Modified report with unmodified opinion, Issues requiring communication include:
- Material Uncertainty Related to Going Concern
- Emphasis of Matter paragraph
- Other Matter paragraph
- Inconsistencies in the Other Information
- All of the above
- An unmodified audit report is an audit report containing an audit opinion not modified in any way – either by changing the unmodified opinion (to a qualified opinion, an adverse opinion or a disclaimer of opinion) or by adding an extra paragraph such as an ‘emphasis of matter’ or ‘other matters’ paragraph after the opinion paragraph.
- The above statement is correct
- The above statement is incorrect
- An unmodified opinion provides a high level of assurance that a professional, independent examination of the financial statements has not revealed any material misstatements in those financial statements.
- True
- False
- The term ‘expectation gap’ refers to the fact that the public perception of the role and responsibilities of the external auditor is different from his statutory role and responsibilities.
- True
- False
- Examples of the misunderstandings inherent in the public’s expectations include:
- The public believes that the audit opinion in the audit report amounts to a ‘certificate’ that the financial statements are correct and can be relied upon for all decision-making purposes, including decisions about takeovers.
- The public believes that the auditor has a duty to prevent and detect fraud and that this is one reason for an audit.
- The public assumes that, in carrying out his audit work, the auditor tests 100% of the transactions undertaken during the accounting period.
- All of the above
- The Opinion section of the auditor’s report shall:
- identify the entity whose financial statements have been audited
- identify the title of each of statement that makes up the complete set of financial statements
- specify the date or period covered by each statement.
- All of the above
- The Basis for opinion shall be placed immediately after the ‘opinion’ section of the auditor’s report. This section shall:
- States that the audit was conducted in accordance with International Standards on Auditing
- Refers to the section of the auditor’s report that describes the auditor’s responsibilities under the ISAs
- Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit
- All of the above
- The report should be signed:
- in the name of the audit firm
- in the personal name of the auditor
- Both A or B
- None
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