When Financial Statements of a Prior Period Are Presented on a Comparative

question 26

Multiple Choice

When financial statements of a prior period are presented on a comparative basis with financial statements of the current period,the continuing auditor is responsible for:

• A)Expressing dual dated opinions.
• B)Updating the report on the previous financial statements only if there has not been a change in the opinion.
• C)Updating the report on the previous financial statements only if the previous report was qualified and the reasons for the qualification no longer exist.
• D)Updating the report on the previous financial statements regardless of the opinion previously issued.

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Definitions:

Type I Error

The mistake of rejecting a true null hypothesis, or in other words, concluding that a difference or effect exists when it actually does not.

Decision Rule

A pre-determined guideline or criterion used to choose between multiple alternatives in the face of uncertainty, often based on statistical analysis.

P Value

The probability of observing the given result, or more extreme, by chance if the null hypothesis is true.

Critical Value

A threshold in hypothesis testing, which when exceeded or not met determines the outcome of the test, often leading to the rejection or acceptance of the null hypothesis.