Audit - Chapter 3 Solutions

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3-28
1) a. The scope of an audit has been restricted b. Material c. Qualified audit report.

2) a. Not Independent b. N/a c. Disclaimer of opinion

3) a. No departure necessary b. N/a c. Unqualified report with emphasis of matter, explanatory paragraph because of a change in accounting principal

4) a. No departure necessary b. N/a c. Unqualified report with emphasis of other matters, explanatory paragraph about the substantial doubt about the company as a going concern

5) a. No departure necessary b. N/a c. Unqualified report with modified wording due to use of another auditor

6) a. b. Material c. An adverse opinion

3-29
1) a. Financial statements not prepared in accordance with GAAP b. Material c. (4) Qualified opinion – GAAP departure

2) a. No departure necessary b. N/a c. (2) Unqualified opinion – explanatory paragraph

3) a. No departure necessary b. Material c. (2) Unqualified opinion – explanatory paragraph

4) a. Non GAAP and a restricted scope b. Material c. (6) Disclaimer

5) a. No departure necessary b. N/a c. Unqualified – modified wording

6) a. The scope of the audit has been restricted b. Material c. Qualified opinion – scope limitation

7) a. No departure necessary b. N/a c. Unqualified opinion – modified wording

4-2
An ethical dilemma is a situation in which a decision must be made about the appropriate behavior. The way to resolve an ethical dilemma has been broken down into a framework of six steps. 1) Obtain the relevant facts 2) Identify the ethical issues from the facts. 3) Determine who is affected by the outcome of the dilemma and how each person or group is affected 4) Identify the alternatives available to the person who must resolve the…...

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