More MCQs
HOME
Categories
Courses
Audit and Assurance MCQs
» ISA 620 Using the work of auditor’s expert MCQs
» ISA 700 Forming an opinion and reporting on financial statements MCQs
» ISA 701 Communicating key audit matters MCQs
» ISA 705 Modifications to the opinion MCQs
» ISA 706 Emphasis of matter paragraphs and other matter paragraphs MCQs
ISA 705, Modifications to the opinion in the independent auditor’s report
ISA 705 provides guidance on modifications to the opinion of the auditor including Qualified opinion, Adverse opinion, Disclaimer of opinion. Here on MCQs.club we have prepared easy Multiple-Choice Questions (MCQs) on ISA 705, Modifications to the opinion in the independent auditor’s report revised IFAC that fully cover the ISA 705 summary and definition, ISA 705 MCQs with answers, these MCQs are a basis of conclusions. These MCQ on SA 705 are helpful for Competitive exams, Professional Accountancy exams and Business management exams.
- The auditor may decide they need to modify the opinion when they conclude that:
- Based upon the evidence obtained the financial statements as a whole are not free from material misstatement.
- They have been unable to gather sufficient appropriate evidence to be able to conclude that the financial statements as a whole are free from material misstatement.
- Both A&B
- None
- The nature of the modification of auditor’s opinion depends upon whether the auditor considers the matter to be material but not pervasive, or material and pervasive, to the financial statements.
- True
- False
- If the misstatement or lack of sufficient appropriate evidence is material but not pervasive, a qualified opinion will be issued.
- True
- False
- A material misstatement of the financial statements may arise in relation to:
- The appropriateness of the selected accounting policies
- The application of the selected accounting policies
- The appropriateness or adequacy of disclosures in the financial statements.
- All of the above
- A matter is considered ‘pervasive’ if, in the auditor’s judgment:
- The effects are not confined to specific elements, accounts or items of the financial statements
- If so confined, represent or could represent a substantial proportion of the financial statements
- In relation to disclosures, are fundamental to users’ understanding of the financial statements.
- All of the above
- ISA 705 provides guidance on modifications to the opinion of the auditor including:
- Qualified opinion
- Adverse opinion
- Disclaimer of opinion
- All of the above
- An adverse opinion is issued when a misstatement is considered material and pervasive.
- True
- False
- A disclaimer of opinion is issued when the auditor has not obtained sufficient appropriate evidence and the effects of any possible misstatements could be pervasive.
- True
- False
- The auditor does not express an opinion on the financial statements under Disclaimer of opinion. Examples include:
- Failure by the client to keep adequate accounting records.
- Refusal by the directors to provide written representation.
- Failure by the client to provide evidence over a single balance which represents a substantial proportion of the assets or profits or over multiple balances in the financial statements.
- All of the above
- Where a disclaimer of opinion is being issued:
- The statement that sufficient appropriate evidence to provide a basis for the auditor’s opinion has been obtained is not included.
- The statement that the financial statements have been audited is changed to ‘we were engaged to audit the financial statements’.
- Both A&B
- None
- When the auditor decides to modify the opinion, they must amend the heading ‘Basis for Opinion’ to ‘Basis for Qualified Opinion’, ‘Basis for Adverse Opinion’ or ‘Basis for Disclaimer of Opinion’, as appropriate.
- The above statement is correct
- The above statement is incorrect
- Which of the following statement is correct?
- If after accepting the engagement management impose a limitation of scope that will result in a modified opinion, the auditor will request management remove the limitation.
- If the auditor is unable to obtain sufficient appropriate evidence and the matter is material but not pervasive, the auditor must issue a qualified audit opinion.
- If withdrawal is not possible before issuing the auditor’s report, a disclaimer of opinion should be issued.
- All of the above
- The auditor’s inability to obtain sufficient appropriate audit evidence (also referred to as a limitation on the scope of the audit) may arise from:
- Circumstances beyond the control of the entity
- Circumstances relating to the nature or timing of the auditor’s work
- Limitations imposed by management.
- All of the above
- Examples of an inability to obtain sufficient appropriate audit evidence arising from a limitation on the scope of the audit imposed by management include when:
- Management prevents the auditor from observing the counting of the physical inventory.
- Management prevents the auditor from requesting external confirmation of specific account balances.
- Both A&B
- None
- If there is a material misstatement of the financial statements that relates to the non-disclosure of information required to be disclosed, the auditor shall:
- Discuss the non-disclosure with those charged with governance
- Describe in the basis for opinion section the nature of the omitted information
- Unless prohibited by law or regulation, include the omitted disclosures
- All of the above
- Disclosing the omitted information in the basis for modification paragraph would not be practicable if:
- The disclosures have not been prepared by management or the disclosures are otherwise not readily available to the auditor
- In the auditor’s judgment, the disclosures would be unduly voluminous in relation to the auditor’s report.
- Both A&B
- None
—more to come soon—
