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If an auditor includes an emphasis-of-matter paragraph to draw users’ attention to a matter relevant to the users’ understanding of the financial statements of a nonissuer, then the auditor should

Which of the following would be considered a change that affects consistency and requires an explanatory paragraph?

Assume you are using monetary-unit sampling to audit an entity’s accounts receivable balance for proper valuation as of 12/31. 

For each of the following situations indicate the type of audit report that you would issue. BE SPECIFIC.  A) Assume you are auditing Globex as of and for the year-ended 12/31/22. Since November of 2022, a significant number of their operational employees have been on strike demanding raises and safer work conditions. The company has suffered major losses as a result of the strike and is about to default on their largest loan. Management is not sure if they will be able to reach a compromise with the workers and they have not secured alternate financial arrangements. Management fully discloses this situation in their footnotes to the financial statements. B) During the year-end audit procedures, you found a material contingent liability that is concluded to be reasonably possible but cannot be estimated. You asked management to include a footnote disclosure for the contingent liability, but they refused.   C) During your audit of Acme, you were unable to obtain the external confirmation for the company’s largest account receivable even after multiple requests and follow-up calls. The account receivable is a material amount (over tolerable misstatement) as of 12/31. Your team performed alternate procedures and gathered sufficient and reliable evidence on the existence and valuation of the account receivable.  D) Green Lantern Corporation changed from its inventory costing method from LIFO to FIFO during the current year. You concur with the change, the change is material, and the change is properly disclosed in the financial statement footnotes.

Under which of the following circumstances would a disclaimer of opinion not be appropriate?

Which of the following events occurring after the issuance of an entity’s financial statements and the auditor’s report most likely would cause the auditor to make further inquiries about the previously issued financial statements?

Alpha Company uses its sales invoices to record revenue and update perpetual inventory records. Inadequate control activities over the invoicing function allow goods to be shipped that are not invoiced. The inadequate control activities could cause an:

Which of the following is generally requested in a letter of audit inquiry sent to the entity’s attorneys?

Will the load distribution factor Km be same for the gear and the pinion? 

Will the Dynamic factor Kv of the gear be the same as the Kv of pinion?