1. (TCO 2) If a misstatement is immaterial to the financial statements of the entity for the current period, but is expected to have a material effect in future periods, it is appropriate to issue a(n): (Points: 2) adverse opinion. qualified opinion. unqualified opinion. disclaimer of opinion. 2. (TCO 2) When a client has not applied GAAP consistently from the prior year to the current year, the auditor does not concur with the appropriateness of the change, and the change in GAAP has a material effect on the financial statements, the auditor should issue a(n): (Points: 2) disclaimer. adverse opinion. unqualified opinion. qualified opinion. 3. (TCO 2) Which of the following is not an essential condition for issuing the standard unqualified audit opinion? (Points: 2) All statements are included in the financial statements. The general standards have been followed in all respects. The financial statements are prepared in accordance with regulatory principles. Sufficient appropriate audit evidence has been accumulated. 4. (TCO 2) An adverse opinion is issued when the auditor believes: (Points: 2) some parts of the financial statements are materially misstated or misleading. the financial statements would be found to be materially misstated if an investigation were performed. the auditor is not independent. the overall financial statements are so materially misstated that they do not present fairly the financial position or results of operations and cash flows in conformity with GAAP. 5. (TCO 11) A principal purpose of a letter of representation from management is to (Points: 2) serve as an introduction to company personnel and an authorization to examine the records. discharge the auditor from legal liability for the audit. remind management of its primary responsibility for financial statements. confirm in writing management's approval of limitations on the scope of the audit. 6. (TCO 11) A client representation letter is: (Points: 2) prepared on the client's letterhead. addressed to the CPA firm. signed by high-level officials (e.g. the president and chief financial officer). all of the above. 7. (TCO 11) Inquiries of management regarding the possibility of unrecorded contingencies will not be useful in uncovering: (Points: 2) management's intentional failure to disclose existing contingencies. a particular type of contingency which management has overlooked. when management does not comprehend accounting disclosure requirements. all three of the above items. 8. (TCO 11) The audit step most likely to reveal the existence of contingent liabilities is (Points: 2) a review of vouchers paid during the month following the year-end. accounts payable confirmations. mortgage-note confirmation. an inquiry directed to legal counsel. 9. (TCO 2) The standards which govern the CPA’s association with unaudited financial statements are: (Points: 2) AICPA’s Code of Professional Conduct. Statements on Auditing Standards. Statements on Standards on Attestation Engagements. Statements on Standards for Accounting and Review Services. 10. (TCO 2) A CPA firm can issue a compilation report: (Points: 2) only if the partners are independent. only if all the partners and the staff in the office performing the engagement are independent. if the partners have no material or direct immaterial interest in client. even if it is not independent.