A. Option A
B. Option B
C. Option C
D. Option D

Answer(s): A
Explanation:
Choice "a" is correct. The responsibility of the auditor and the responsibility of management are
stated explicitly in the introductory paragraph of the standard auditor's report. Choices "b", "c",
and "d" are incorrect, as explained above.
QUESTION: 157
When there is a significant change in accounting principle, an auditor's report should refer to the
lack of consistency in:

A. The scope paragraph.
B. An explanatory paragraph between the second paragraph and the opinion paragraph.
C. The opinion paragraph.
D. An explanatory paragraph following the opinion paragraph.

Answer(s): D
Explanation:
Choice "d" is correct. When there is a significant change in accounting principle, the auditor's
report should refer to the lack of consistency in an explanatory paragraph following the opinion
paragraph. The explanatory paragraph should identify the change and refer to the note in the
FS that discusses the change in detail. The auditor's concurrence with the change in GAAP is
implicit, unless he or she takes exception. Choice "a" is incorrect. Lack of consistency is not a
scope limitation. Choice "b" is incorrect. An explanatory paragraph is often inserted between the
second paragraph and opinion paragraph. However, where a change is accounted for in
accordance with GAAP, the explanatory paragraph should follow the unqualified opinion
paragraph. Choice "c" is incorrect. The lack of consistency would not be disclosed in an opinion
paragraph unless the auditor does not concur and wishes to qualify the opinion. In such case an
explanatory paragraph would precede the opinion paragraph and the opinion paragraph would
be qualified.
QUESTION: 158
When a principal auditor decides to make reference to another auditor's examination, the
principal auditor's report should always indicate clearly, in the introductory, scope, and opinion
paragraphs, the:

A. Magnitude of the portion of the financial statements examined by the other auditor.

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