Question

NSWER. Write the word or phrase that best completes each statement or answer the question NORT ANSW me you are the partner in charge of the 2013 audit of Franklin Corporation, a private pany. The audit report has not yet been prepared in each independent situation llowing (1-8), indicate the appropriate action (-) to be taken The possible actions are a follows: 16) Issue a standard unqualified report b Issue a Qualified report issue an unqualified opinion with an explanatory paragraph Issue an unqualified opinion with modified wording (no explanatory paragraph) e Issue an adverse opinion f. Disclaim an opinion. The situations are as follows: 1. Franklin Corporation carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a material amount, and the effects are pervasive throughout the financial statements. 2. Management of Franklin Corporation refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is not material 3. You were unable to confirm accounts receivable with Franklin's customers. However, because of detailed sales and cash receipts records, you were able to perform reliable alternative audit procedures. 4. One week before the end of field work, you discover that the audit manager on the Franklin engagement owns a material amount of Franklin's common stock 5. You relied upon another CPA firm to perform part of the audit of Franklin. Although you were the principal auditor, the other firm audited a material portion of the financial statements. You do not wish to refer to the other firm in your report. 6. You have substantial doubt about Franklin's ability to continue as a going concem. _ 7. Franklin Corporation changed its method of computing depreciation in 2013. You concur with the change and the change is properly disclosed in the financial statement footnotes 8. Ten days after the balance sheet date, one of Franklin's buildings was destroyed by a fire. Franklin refuses to disclose this information in a footnote to the financial statements, but you believe disclosure is required to conform with generally accepted accounting principles. The amount of the uninsured loss is highly material, but n B-3

Answer 1

1. @) Issue a adverse opinion 2. (f) Disclaim an opinion. 3.60 Issue a standard unqualified report. 4. (f) Disclaim an opinion 5.(2 Issue an ungualified opinion with on modified wording 6.0 Issue an unqualified opinion with explantory paragraph 7. (c) Issue an unqualified opinion with explantory paragraph 8.66 Issue a qualified report.