Reading 29: Financial Statement Analysis: An Introduction

答案和详解如下：

1.The auditor's report is required to:

A)   provide an "unqualified" opinion if material uncertainties exist.

B)   provide reasonable assurance that the financial statements contain no material misstatements.

C)   mention any significant deficiencies in the internal control structure.

D)   provide reasonable assurance that management is reliable.

The correct answer was B)

The standard auditor's report contains three parts:

1.  the financial statements are prepared by management and are their responsibility and the auditor has performed an independent review,

2.  the audit was conducted using GAAP, which provides reasonable assurance that there are no material errors in the financial statements, and

3.  the auditor is satisfied the statements were prepared in accordance with GAAP and the principles chosen and estimates are reasonable.

2.Which of the following would NOT require an explanatory paragraph added to the auditors’ report?

A)   Statements that the financial information was prepared according to GAAP.

B)   Doubt regarding the "going concern" assumption.

C)   Uncertainty regarding the valuation or realization of assets and payment of liabilities.

D)   Uncertainty due to litigation.

The correct answer was A)

The statements that the financial information was prepared according to GAAP should be included in the regular part of the auditors' report and not as an explanatory paragraph. The other information would be contained in explanatory paragraphs added to the auditors’ report.

3.Which of the following is an independent auditor least likely to do with respect to a company’s financial statements?

A)   Provide an opinion concerning their fairness and reliability.

B)   Perform an independent review of them.

C)   Prepare and accept responsibility for them.

D)   Confirm assets and liabilities contained in them.

The correct answer was C)

Auditors make an independent review of financial statements, which are prepared by company management and are management’s responsibility. It is the responsibility of auditors to confirm the assets, liabilities, and other items included in the statements and then issue an opinion concerning their fairness and reliability.