CPA Auditing and Attestation

CPA Auditing and Attestation practice questions, page 39 of 41, with answer review and explanations.

Question 191

Helpful Co., a nonprofit entity, prepared its financial statements on an accounting basis prescribed by a regulatory agency solely for filing with that agency. Green audited the financial statements in accordance with generally accepted auditing standards and concluded that the financial statements were fairly presented on the prescribed basis. Green should issue a:

  1. Qualified opinion.
  2. Standard three paragraph report with reference to footnote disclosure.
  3. Disclaimer of opinion.
  4. Special report.

Question 192

An auditor's report would be designated a special report when it is issued in connection with:

  1. Interim financial information of a publicly held company that is subject to a limited review.
  2. Compliance with aspects of regulatory requirements related to audited financial statements.
  3. Application of accounting principles to specified transactions.
  4. Limited use prospective financial statements such as a financial projection.

Question 193

When a CPA reports on audited financial statements prepared on the cash receipts and disbursements basis of accounting, the report should:

  1. Explain why this basis of accounting is more useful for the readers of this entity's financial statements than GAAP.
  2. Refer to the note in the financial statements that describes management's responsibility for the financial statements.
  3. State that the basis of presentation is a comprehensive basis of accounting (OCBOA) other than GAAP.
  4. Include a separate explanatory paragraph that discusses the justification for, and the CPA's concurrence with, the departure from GAAP.

Question 194

Which option best describes the level of assurance provided in the following special reports?

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Question 195

Which of the following situations would not result in restricted use language being included in an auditor's special report?

  1. 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.
  2. 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.
  3. 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.
  4. 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. D