CPA Test practice questions, page 12 of 13, with answer review and explanations.
Question 56
Which of the following is true regarding the auditor's responsibility to report on information accompanying the basic financial statements in a client-prepared document?
The auditor may report on information accompanying the basic financial statements in a clientprepared document only if he or she has been specifically engaged to do so.
The auditor is required to express an opinion on whether information accompanying the basic financial statements in a client-prepared document is fairly stated in all material respects in relation to the financial statements taken as a whole.
If an auditor chooses to report on information accompanying the basic financial statements in a clientprepared document, the report should include a description of the character of the audit work performed.
If an auditor chooses to report on information accompanying the basic financial statements in a clientprepared document, the report should include an opinion on the information but should not describe the character of the audit work performed.
Question 57
Which of the following reporting options is least likely with regard to supplementary information that is required by GAAP?
The auditor's report on the financial statements makes no reference to the supplementary information.
A disclaimer of opinion is issued on supplementary information that is not clearly distinguished from the financial statements and is not marked "unaudited."
The auditor's report on the financial statements includes both an opinion on the supplementary information and a statement restricting the use of the report.
The auditor's report on the financial statements includes an opinion regarding whether the supplementary information is fairly stated in all material respects in relation to the financial statements taken as a whole.
Question 58
When an auditor submits a document containing audited financial statements to a client, and those financial statements include supplementary information required by GAAP, the auditor may choose any of the following options, except:
Express an opinion on the information, if he or she has been engaged to examine such information.
Express negative assurance on the information, if review procedures have been appropriately performed.
Report on whether the information is fairly stated in relation to the financial statements taken as a whole, if appropriate auditing procedures have been applied.
Disclaim an opinion on the information.
Question 59
An auditor may report on condensed financial statements that are derived from complete financial statements if the:
Condensed financial statements are distributed to stockholders along with the complete financial statements.
Auditor describes the additional procedures performed on the condensed financial statements.
Auditor indicates whether the information in the condensed financial statements is fairly stated in all material respects in relation to the complete financial statements from which it has been derived.
Condensed financial statements are presented in comparative form with the prior year's condensed financial statements.
Question 60
An auditor is engaged to report on selected financial data that are included in a client-prepared document containing audited financial statements. Under these circumstances, the report on the selected data should:
Be limited to data derived from the audited financial statements.
Be distributed only to senior management and the board of directors.
State that the presentation is a comprehensive basis of accounting other than GAAP.
Indicate that the data are not fairly stated in all material respects.