Question

1. When an auditor relies on the work of another auditor, the auditor issuing the audit report may:

A. state this fact in the audit report.

B. disclaim responsibility for this audit work.

C. issue a qualified opinion with an explanatory paragraph.

D. issue a qualified opinion, except for the work of the other auditor

2. Under which circumstances should an auditor NOT issue a disclaimer of opinion?

A. When the auditor has not performed all the necessary fieldwork.

B. When an auditor has determined the client is not following GAAP.

C. When the auditor is denied access to the minutes of the Board of Directors.

D. Both “b” and “c”.

3. Who is responsible for compliance with SOX section 404:

A. management.

B. the auditors.          

C. both management and the auditors.

D. It depends on the specifics.

4. If a client refuses to provide a management representation letter for an integrated audit, the auditor may:

A. withdraw from the engagement.

B. note the scope limitation and issue a qualified opinion.

C. issue a report explaining the limitation in the explanatory paragraph.

D. None of the above.

Answer 1

1 When an auditor rely on the work of another auditor,the auditor issuing the audit report may disclaim responsibility for this audit work because he describes that work done my me and this work is done by another auditor and we use the work of another auditor. Hence option B is correct.

2 When the auditor has not performed all the necessary fieldwork then the auditor issue disclaimer of opinion. When the auditor has determined the client is not following GAAP and when the auditor is denied access to the minutes of board of directors.then auditor issue qualify or adverse opinion He does not issue disclaimer of opinion. hence option D is correct.

3 As per section 404 of SOX which requires management and the external auditor to report on the adequacy of a company internal control on financial reporting.Hence option C is correct.

4 As Per SA 580, if a client refuses to provide a management representation letter for an integrated audit the auditor may withdraw from the engagement Hence option A is correct.