Page 149 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
“Opinion”. Following the Opinion section, was a section with the heading “Basis for Opinion”. When
expressing an unmodified opinion on financial statements, the auditor’s opinion used the following
phrase, “In our opinion, the accompanying financial statements give a true and fair view of […] in
accordance with [the applicable financial reporting framework].”

During the audit, the audit team had observed that there was uncertainty in Health is Wealth Limited
relating to the future outcome of a regulatory action. So, a paragraph was included in the auditor’s
report that referred to this matter which was appropriately disclosed in the financial statements and
that, in the auditor’s judgment, was of such importance that it was fundamental to users’ understanding
of the financial statements.

CA A also determined whether the financial statements included the comparative information required
by the applicable financial reporting framework and whether such information was appropriately
classified. One team member, Mr R was curious to know whether the auditor’s opinion referred to the
corresponding figures or not, whenever the corresponding figures are presented. CA A explained the
circumstances to Mr R in which, when the corresponding figures are presented, auditor’s opinion
referred to the corresponding figures.

Based on the above information, answer the following questions:
I. CA K explained to Mr. N the pervasive effects on the financial statements in the auditor’s judgement.
Pervasive effects on the financial statements are those that, in the auditor’s judgement:

(i) Are not confined to specific elements, accounts or items of the financial statements;
(ii) If so confined, represent or could represent a substantial proportion of the financial statements;
or
(iii) In relation to disclosures, are fundamental to users’ understanding o f the financial statements.

Which of the following is correct?

(a) (i), (iii)
(b) (ii), (iii)
(c) (i), (ii)
(d) (i), (ii) and (iii)
II. When expressing an unmodified opinion on financial statements, SAM & Company used the
following phrase:
“In our opinion, the accompanying financial statements give a true and fair view of […]
in accordance with [the applicable financial reporting framework].”

Which is the other phrase which is regarded as being equivalent to the above phrase and could also
be used by SAM & Company?
(a) In our opinion, the accompanying financial statements give a true and correct view of […] in
accordance with [the applicable financial reporting framework];
(b) In our opinion, the accompanying financial statements present correctly, in all material
respects, […] in accordance with [the applicable financial reporting framework];
(c) In our opinion, the accompanying financial statements present fairly, in all material respects,
[…] in accordance with [the applicable financial reporting framework];
(d) In our opinion, the accompanying financial statements give a correct and fair view of […] in
accordance with [the applicable financial reporting framework].
III. Which of the following statements is not included in the section with the heading “Basis for
Opinion” in the Auditor’s Report?
(a) Audit was conducted in accordance with the Accounting Standards.
(b) Auditor is independent of the entity in accordance with the relevant ethical requirements relating
to the audit and has fulfilled the auditor’s other ethical responsibilities in accordance with these
requirements.
(c) Description of the auditor’s responsibilities under the SAs.
(d) States whether the auditor believes that the audit evidence the auditor has obtained, is sufficient

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