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AICPA CPA-Auditing Exam
CPA Auditing and Attestation (AUD) (Page 35 )

Updated On: 12-Feb-2026
Page 35 of 207
PDF with 1026 Questions

This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.
Assume:
· The auditor is independent.
· The auditor previously expressed an unqualified opinion on the prior year's financial statements. · Only single-year (not comparative) statements are presented for the current year. · The conditions for an unqualified opinion exist unless contradicted in the factual situations. · The conditions stated in the factual situations are material. · No report modifications are to be made except in response to the factual situation.
Item to Be Answered
Due to recurring operating losses and working capital deficiencies, an auditor has substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. However, the financial statement disclosures concerning these matters are adequate.

List A
Types of Options

  1. An "except for" qualified opinion.
  2. An unqualified opinion.
  3. An adverse opinion.
  4. A disclaimer of opinion.
  5. Either an "except for" qualified opinion or an adverse opinion.
  6. Either a disclaimer of opinion or an "except for" qualified opinion.
  7. Either an adverse opinion or a disclaimer of opinion.

Answer(s): B

Explanation:

Choice "B" is the correct opinion. In a going concern situation that is properly disclosed, an unqualified opinion should be issued.



This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.
Assume:
· The auditor is independent.
· The auditor previously expressed an unqualified opinion on the prior year's financial statements. · Only single-year (not comparative) statements are presented for the current year. · The conditions for an unqualified opinion exist unless contradicted in the factual situations. · The conditions stated in the factual situations are material. · No report modifications are to be made except in response to the factual situation.
Item to Be Answered
Due to recurring operating losses and working capital deficiencies, an auditor has substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. However, the financial statement disclosures concerning these matters are adequate.
List B
Report Modifications

  1. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph without modifying the three standard paragraphs.
  2. Describe the circumstances in an explanatory paragraph following the opinion paragraph without modifying the three standard paragraphs.
  3. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the opinion paragraph.
  4. Describe the circumstances in an explanatory paragraph following the opinion paragraph and modify the opinion paragraph.
  5. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the scope and opinion paragraphs.
  6. Describe the circumstances in an explanatory paragraph following the opinion paragraph and modify the scope and opinion paragraphs.
  7. Describe the circumstances within the scope paragraph without adding an explanatory paragraph.
  8. Describe the circumstances within the opinion paragraph without adding an explanatory paragraph.
  9. Describe the circumstances within the scope and opinion paragraphs without adding an explanatory paragraph.
  10. Issue the standard auditor's report without modification.

Answer(s): B

Explanation:

Choice "B" is the correct modification. The circumstances should be described in an explanatory paragraph following the opinion paragraph without modifying the three standard paragraphs.



This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.
Assume:
· The auditor is independent.
· The auditor previously expressed an unqualified opinion on the prior year's financial statements. · Only single-year (not comparative) statements are presented for the current year. · The conditions for an unqualified opinion exist unless contradicted in the factual situations. · The conditions stated in the factual situations are material. · No report modifications are to be made except in response to the factual situation.
Item to Be Answered
A principal auditor decides to take responsibility for the work of another CPA who audited a wholly- owned subsidiary of the entity and issued an unqualified opinion. The total assets and revenues of the subsidiary represent 17% and 18%, respectively, of the total assets and revenues of the entity being audited.
List A
Types of Options

  1. An "except for" qualified opinion.
  2. An unqualified opinion.
  3. An adverse opinion.
  4. A disclaimer of opinion.
  5. Either an "except for" qualified opinion or an adverse opinion.
  6. Either a disclaimer of opinion or an "except for" qualified opinion.
  7. Either an adverse opinion or a disclaimer of opinion.

Answer(s): B

Explanation:

Choice "B" is the correct opinion. An unqualified opinion should be issued.



This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.
Assume:
· The auditor is independent.
· The auditor previously expressed an unqualified opinion on the prior year's financial statements. · Only single-year (not comparative) statements are presented for the current year. · The conditions for an unqualified opinion exist unless contradicted in the factual situations. · The conditions stated in the factual situations are material. · No report modifications are to be made except in response to the factual situation.
Item to Be Answered
A principal auditor decides to take responsibility for the work of another CPA who audited a wholly- owned subsidiary of the entity and issued an unqualified opinion. The total assets and revenues of the subsidiary represent 17% and 18%, respectively, of the total assets and revenues of the entity being audited.
List B
Report Modifications

  1. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph without modifying the three standard paragraphs.
  2. Describe the circumstances in an explanatory paragraph following the opinion paragraph without modifying the three standard paragraphs.
  3. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the opinion paragraph.
  4. Describe the circumstances in an explanatory paragraph following the opinion paragraph and modify the opinion paragraph.
  5. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the scope and opinion paragraphs.
  6. Describe the circumstances in an explanatory paragraph following the opinion paragraph and modify the scope and opinion paragraphs.
  7. Describe the circumstances within the scope paragraph without adding an explanatory paragraph.
  8. Describe the circumstances within the opinion paragraph without adding an explanatory paragraph.
  9. Describe the circumstances within the scope and opinion paragraphs without adding an explanatory paragraph.
  10. Issue the standard auditor's report without modification.

Answer(s): J

Explanation:

Choice "J" is the correct modification.
When assuming responsibility for another auditor's work, the principal auditor should issue the standard auditor's report without modification.



This question presents independent factual situations an auditor might encounter in conducting an audit.
List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.
Assume:
· The auditor is independent.
· The auditor previously expressed an unqualified opinion on the prior year's financial statements. · Only single-year (not comparative) statements are presented for the current year. · The conditions for an unqualified opinion exist unless contradicted in the factual situations. · The conditions stated in the factual situations are material. · No report modifications are to be made except in response to the factual situation.
Item to Be Answered
An entity issues financial statements that present financial position and results of operations but omits the related statement of cash flows. Management discloses in the notes to the financial statements that it does not believe the statement of cash flows to be a useful financial statement.
List A
Types of Options

  1. An "except for" qualified opinion.
  2. An unqualified opinion.
  3. An adverse opinion.
  4. A disclaimer of opinion.
  5. Either an "except for" qualified opinion or an adverse opinion.
  6. Either a disclaimer of opinion or an "except for" qualified opinion.
  7. Either an adverse opinion or a disclaimer of opinion.

Answer(s): A

Explanation:

Choice "A" is the correct opinion. Failure to include a statement of cash flows is a GAAP violation that requires an "except for" qualified opinion to be issued.






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