Psa 710, 720 Exercise

ACP323
PSA 710, 720
INSTRUCTIONS: For True or False items, kindly write T if the statement is True and write F is the statement is false.
For MCQ portion, choose the letter of your choice.
TRUE OR FALSE
1. The nature of the comparative information presented in an entity's financial statements depends on the
requirements of the applicable financial reporting framework.
2. There are two different broad approaches to the auditor's reporting responsibilities in respect of
comparative information: corresponding figures and comparative financial statements.
3. The level of detail presented in corresponding figures is dictated primarily by its relevance to the current
period figures.
4. Comparative financial statements include amounts and other disclosures for the prior period for comparison
with the financial statements of the current period.
5. If the auditor's report on the prior period included a qualified opinion, a disclaimer of opinion, or an adverse
opinion and the matter is unresolved, it does not affect the auditor's opinion on the current period's
financial statements.
6. If the auditor finds material misstatements in the prior period financial statements, it may affect the
auditor's opinion on the current period financial statements.
7. The prior period financial statements being unaudited relieves the auditor of the requirement to obtain
sufficient appropriate audit evidence for the opening balances of the current period's financial statements.
8. The auditor's opinion on comparative financial statements refers to each period for which financial
statements are presented.
9. The auditor has specific responsibility for determining whether or not other information in documents
containing audited financial statements is properly stated.
10. The auditor reads the other information in documents containing audited financial statements to identify
material inconsistencies with the audited financial statements.
MULTIPLE CHOICE
1. What are the two broad approaches to the auditor's reporting responsibilities in respect of comparative
information?
A) Current period figures and prior period figures
B) Financial statements and disclosure notes
C) Auditor's reporting and auditor's opinion
D) Corresponding figures and comparative financial statements
2. What is the essential audit reporting difference between corresponding figures and comparative financial
statements?
A) Corresponding figures have more detailed information than comparative financial statements.
B) Corresponding figures include prior period disclosures, whereas comparative financial statements only
include current period disclosures.
C) Corresponding figures are not audited, whereas comparative financial statements are audited.
D) For corresponding figures, the auditor's opinion refers to the current period only, whereas for comparative
financial statements, the auditor's opinion refers to each period for which financial statements are presented.
3. What is the definition of comparative information?

A) The correlation of figures between two different financial reporting frameworks.
B) The amounts and disclosures included in the financial statements in respect to one or more prior periods in
accordance with the applicable financial reporting framework.
C) The disclosure notes included in the financial statements for the current period.
D) The comparison between the current period's financial statements and prior period alterations.
4. What is the definition of corresponding figures?

A) Financial information from a separate entity that has a similar industry position.
B) Projected figures for the next financial period based on current trends.
C) Comparative information where amounts and other disclosures for the prior period are included as an
integral part of the current period financial statements, and are intended to be read only in relation to the
amounts and other disclosures relating to the current period.
D) Comparative information where amounts and other disclosures for the prior period are included for
comparison with the financial statements of the current period.
ACP323
PSA 710, 720
5. What is the auditor's responsibility in relation to other information in documents containing audited financial
statements?
A) The auditor is responsible for determining whether or not other information is properly stated.
B) The auditor reads the other information to identify material inconsistencies with the audited financial
statements.
C) The auditor verifies the accuracy of all other information in documents containing audited financial
statements.
D) The auditor ensures that the other information is consistent but does not need to read it.
6. When should the auditor obtain the other information in documents containing audited financial statements?
A) The auditor should obtain the other information during the planning phase of the audit.
B) The auditor does not need to obtain the other information as it is not relevant to the audit process.
C) The auditor should make appropriate arrangements to obtain the other information prior to the date of the
auditor's report.
D) The auditor should obtain the other information after issuing the auditor's report.
7. What action should the auditor take if material inconsistencies are identified in other information obtained
prior to the date of the auditor's report and management refuses to make the revision?
A) Notify those charged with governance without taking any further action.
B) Revise the audited financial statements to align with the other information.
C) Ignore the material inconsistencies and proceed with issuing an unmodified auditor's report.
D) Include in the auditor's report an Other Matter(s) paragraph describing the material inconsistency or
withhold the auditor's report; or withdraw from the engagement if legally permitted.
8. What does the auditor do if revision of the other information is necessary but management refuses to make
the revision?
A) The auditor notifies those charged with governance of the auditor's concern regarding the other information
and takes any further appropriate action.
B) The auditor should produce a separate report addressing the discrepancies in the other information.
C) The auditor should issue an adverse opinion on the audited financial statements.
D) The auditor should revise the audit opinion to align with the other information.
9. When should the auditor modify the opinion in connection with prior period financial statements?
A) When material inconsistencies are identified between prior period financial statements and the current
period's financial statements.
B) When management refuses to make necessary revisions to the current period's financial statements.
C) When the financial reporting framework requires the auditor to provide a modified opinion on comparative
financial statements.
D) When the auditor's opinion on such prior period financial statements differs from the opinion previously
expressed, and the substantive reasons for the different opinion are disclosed in an Other Matter paragraph.
10. What action should the auditor take if material inconsistencies are identified in other information obtained
subsequent to the date of the auditor's report and management agrees to make the revision?
A) The auditor shall carry out the procedures necessary under the circumstances.
B) Include a separate written communication detailing the material inconsistencies between the audited
financial statements and other information.
C) Withhold the auditor's report until all inconsistencies are addressed by management.
D) Re-audit the financial statements and issue a revised auditor's report.
END OF ACTIVITY

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ACP323

PSA 710, 720

3. What is the definition of comparative information?

4. What is the definition of corresponding figures?

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