Ch 3

27)
A. Items that dont need to be included in the audit report
1) Bellamy Corp doesnt need to report they are presenting comparative financial
statements
2) Change is method of accounting
3) The lawsuit
B. Defencies in Patels report
1) No address or date on the report
2) The balance sheet date compared with that of the Income Statement and
Statement of Retained Earnings
3) No opinion on prior period financials
4) No introductory paragraph or scope paragraph
5) Need to explain the refusal of the statement of cash flows by the customer
6) Explain that GAAP was not consistently applied
7) should be classified as a qualified not unqualified audit

29
1)

Scope of audit restricted Highly Material

C
Disclaimer

2)

None

None

Unqualified-Standard Wording

3)

None

None

Unqualified- Standard Wording

4)
Failure to follow GAAP
GAAP Departure

Material

5)

None

None

6)

Scope of audit restricted Highly Material

7)

Multiple Auditors

Qualified Opinion OnlyQualified-Standard Wording

Material

31)
Type of Change
modified?

Adverse
Unqualified-Modern Wording

Should Auditors report be

1)

An error correction

No

2)

Correction of an error of principle

Yes

3)

Change in accounting methods

Yes

4)

Change in principle and estimate

Yes

5)

Change in principle

Yes

6)

Change in estimate

No

7)

Change in classification

8)

Change in principle

No
Yes