AUD practice questions, page 39 of 41, with answer review and explanations.
Question 191
When a CPA reports on audited financial statements prepared on the cash receipts and disbursements basis of accounting, the report should:
Explain why this basis of accounting is more useful for the readers of this entity's financial statements than GAAP.
Refer to the note in the financial statements that describes management's responsibility for the financial statements.
State that the basis of presentation is a comprehensive basis of accounting (OCBOA) other than GAAP.
Include a separate explanatory paragraph that discusses the justification for, and the CPA's concurrence with, the departure from GAAP.
Question 192
Which option best describes the level of assurance provided in the following special reports?
Option A
Option B
Option C
Option D
Question 193
Which of the following situations would not result in restricted use language being included in an auditor's special report?
A report on a specified element in a financial statement, where that element is prepared in accordance with the terms specified in a related contract.
A report on a client's compliance with a regulatory requirement, assuming the report is prepared based on a financial statement audit of the complete financial statements.
An "OCBOA" report on financial statements prepared in conformity with requirements established by a regulatory agency, assuming that the auditor's report is a matter of public record.
A report on an incomplete financial presentation that is prepared in conformity with GAAP, assuming that the presentation and report will be filed with a regulatory agency and included in a document distributed to the general public.
Question 194
Which of the following is true about management representations obtained during an engagement to review the financial statements of a nonissuer?
Written representations from the current management are required for all periods being reported on.
Written representations with respect to prior periods should not be provided by the current management if they were not present during those periods.
Written representations should be addressed to members of management whom the accountant believes are responsible for and knowledgeable about the matters covered in the representation letter.
Written representations need not include information concerning subsequent events.
Question 195
In reviewing the financial statements of a nonissuer, an accountant is required to modify the standard review report for which of the following matters?