The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?

Related Mcqs:

1. When restrictions that significantly affect the scope of the audit are imposed by the client, the auditor generally should issue which of the following opinion?

   A. Qualified opinion
   B. Disclaimer of opinion
   C. Adverse opinion
   D. Unqualified report with ‘an emphasis of matter’ paragraph;

2. Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?

   A. The shareholders in a general meeting
   B. The managing director
   C. The board of directors in a board meeting
   D. The audit committee

3. The term of the auditor ship of first auditor would be from the date of appointment till________?

   A. the conclusion of statutory meeting
   B. the conclusion of first annual general meeting
   C. the conclusion of next annual general meeting
   D. the date of removal

4. The auditor has serious concern about the going concern of the company. It is dependent on company’s obtaining a working capital loan from a bank which has been applied for. The management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue___________?

   A. unqualified opinion
   B. unqualified opinion with reference to notes to the accounts
   C. qualified opinion
   D. disclaimer of opinion

5. The working papers which auditor prepares for financial statements audit are___________?

   A. Evidence for audit conclusions
   B. Owned by the client
   C. Owned by the auditor
   D. Retained in auditor’s office until a change in auditors

6. An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?

   A. Self-interest threat
   B. Self-review threat
   C. Advocacy threat
   D. Familiarity threat

7. The current file of the auditor’s working papers, generally, should include____________?

   A. A flowchart of the internal controls
   B. Organisation charts
   C. A copy of financial statements
   D. Copies of bond and debentures

8. Which of the following statement is true regarding an auditor’s working papers?

   A. They document the level of independence maintained by the auditor
   B. They should be considered as the principle support for the auditor’s report
   C. They should not contain details regarding weaknesses in the internal control system
   D. They help the auditor to monitor the effectiveness of the audit firm’s quality control

9. Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?

   A. The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation
   B. The safe custody of working papers is the responsibility of client, if kept at his premises
   C. The working papers must be retained by an audit firm for a period of 10 years
   D. Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required.

10. Who out of the following cannot be appointed as a statutory auditor of the company?

    A. Erstwhile director
    B. Internal auditor
    C. Relative of a director
    D. Only (B. and (C.