Which of the following statements is true of a public company’s financial statements?

Auditing standards require that the auditor evaluate whether there is a substantial doubt about a client’s ability to continue as a going concern for at least

Briefly describe the circumstances when it is acceptable to use negative confirmations.

Which of the following assertions is described as “this assertion addresses whether all transactions that should be included in the financial statements are in fact included”?

A CPA firm may decide not to continue doing audits for an existing audit client simply due to what the CPA firm deems to be excessive risk, alone, even if the audit engagement is very profitable to the CPA firm.

The fieldwork for the December 31, 2020 audit of Schmidt Corporation ended on March 17, 2021. The financial statements and auditor’s report were issued on March 29, 2021. In each of the material situations (1 through 5) below, indicate the appropriate action.  The situations are as follows:________ 1. On March 1, 2021, one of Schmidt Corporation’s major customers declared bankruptcy. The customer’s financial condition in 2020 was deteriorating and they owed Schmidt Corporation a large sum of money as of the balance sheet date.                           The appropriate action is to [one]. ________ 2. On February 17, 2021, Schmidt Corporation sold some machinery for its book value.                          The appropriate action is to [two].________ 3. On February 20, 2021 a flood destroyed the entire uninsured inventory in one of Schmidt’s warehouses.                           The appropriate action is to [three].________ 4. On January 5, 2021, there was a significant decline in the market value of the securities held for resale from their value as of the balance sheet date.                            The appropriate action is to [four].________ 5. On March 10, 2021, the company settled a lawsuit at an amount significantly higher than the amount recorded as a liability on the books as of the balance sheet date.                            The appropriate action is to [five].

Examples of unmodified opinions which contain modified wording (without adding an emphasis-of-matter paragraph) include

Companies may intentionally understate earnings when income is high to create ________ that may be used in future years to increase earnings.

The auditor is likely to accumulate more evidence when the audit is for a company

Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called