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CH6 SIMS, AUD600001, AUD600002 - Coggle Diagram
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AUD600001
The reference to the subsidiary, Biotherm, and the magnitude of its financial statements should be in the “Basis of Opinion” paragraph.
The report correctly includes the reference in the explanatory paragraph following the opinion paragraph.
The other independent auditors, Hill & Hall , should be named in the “Opinion” paragraph rather than in the paragraph referring to the amounts audited by them.
Both are incorrect because then the other auditor’s report is not being presented that auditor should not be named,
A separate (fourth) explanatory paragraph describing the grand jury investigation into possible violations of federal antitrust laws is required to be included in the report. included
The report need not include this paragraph, because the grand jury investigation is considered to be in the early stages and not significant.
The reference to the qualified opinion on the 2014 financial statements is not properly placed. It should be placed in the opinion paragraph
The paragraph referring to the 2014 qualified opinion is properly placed as an explanatory paragraph. It need not be included in the opinion paragraph.
The reference in “Basis of Opinion” paragraph to “the financial statements are free of material misstatement” should be followed by the phrase “whether caused by error or fraud”.
The reviewer is correct because the term “whether caused by error or fraud” should follow the statement “whether the financial statements are free from material misstatement”.
The required reference in “Basis of Opinion” paragraph to assessing “significant estimates made by management” has been omitted.
The reviewer is correct because the “Basis for Opinion” paragraph should include the phrase “significant estimates made by management”.
The reference in “Basis of Opinion” paragraph to “assessing control risk” is inappropriate and should be omitted from the report
The reviewer is correct because the audit report does not include the phrase “assessing control risk”.
The required reference in “Basis of Opinion” paragraph to “evaluating the overall financial statement presentation” should be omitted
The report is correct because the “Basis for Opinion” paragraph should include the phrase “evaluating the overall financial statement presentation”.
AUD600002
The reference in the third explanatory paragraph to Note 10 does not express our concurrence with Quest’s change in accounting principle. Our concurrence should be specifically expressed in this paragraph.
The report is correct since auditors do not express concurrence with an accounting change. It is enough if the report mentions that the accounting change is in conformity with GAAP.
The reference to the other auditors in the opinion paragraph is incomplete. It should specifically include the words “ unqualified opinion” to describe the type of opinion expressed by Hill & Hall.
The report is correct the opinion paragraph does not specifically include the words “unqualified opinion” to describe the other auditor’s opinion.
The opinion paragraph should extend the auditor’s opinion beyond financial position and changes to stockholders' equity to include the results of Quest’s operations.
Both are incorrect since the report should extend opinion to results of operations and cash flows in addition to financial position and changes in stockholder’s equity.
The reference to the uncertainty in the opinion paragraph is incomplete. It should describe the nature of the uncertainty as pertaining to the grand jury investigation into possible violations of federal antitrust laws
Both are incorrect since any uncertainty to be reported should not reported in the opinion paragraph as the opinion is not qualified with respect to such matter. It may reported as an emphasis paragraph, however, as discussed in answer # 7 above, this uncertainty relating to the grand jury investigation is decided as not significant and not required to be included as an emphasis paragraph as well.
The explanatory paragraph following the opinion paragraph does not include the term “substantial doubt”. This term is required to be used in this paragraph under these circumstances.
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The explanatory paragraph following the opinion paragraph does not include the term “going concern”. This term is required to be used in this paragraph under these circumstances.
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The explanatory paragraph following the opinion paragraph includes an inappropriate statement that “the consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty”. This statement is misleading and should be omitted.
The report is correct in stating that “the consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty”.
The auditor’s report is not correctly dated. It should be dual dated because of Note 12, the grand jury investigation, and also because of Note 14, the going concern uncertainty.
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