When a Predecessor Auditor Has Examined the Prior-Years' Financial Statements

question 54

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 introductory paragraph, Auditor's Responsibility section, and opinion paragraph.
• 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:

Completed Contract Method

The Completed Contract Method is an accounting approach where revenue and expenses of a contract are recorded only when the contract is completed.

Construction In Progress

An accounting term for the total cost incurred for constructing long-term, physical, non-current assets that are not yet completed at the end of a company’s accounting period.

Fixed Contract

An agreement with terms that set specific prices, conditions, and timeframes, not subject to change.

Eastern Spadefoot Toad

A species of toad known for its distinctive spade-like projections on its hind legs, aiding in burrowing.