When a Predecessor Auditor Has Examined the Prior Years' Financial

question 78

Multiple Choice

When a predecessor auditor has examined the prior years' financial statements presented in comparative format, the current auditors' report should

• A)make no reference to the predecessor auditors' report.
• B)reference the predecessor auditors' report in the Opinion Section, Basis for Opinion Section, and Auditor's Responsibilities for the Audit of the Financial Statements Section.
• C)reference the predecessor auditors' report in an other-matter paragraph.
• D)disclaim an opinion on the prior years' financial statements.

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Definitions:

Theoretical

Based on or involving theory; not practical or applied, but focused on understanding and explaining phenomena.

Beta Coefficient

A measure of a stock's volatility in relation to the overall market, indicating the risk associated with the stock's returns.

Scatter Diagram

A graphical representation that displays the relationship between two quantitative variables by using dots.

Historical Beta

A measure of a stock's volatility in relation to the market, based on past performance.