When an Audited Financial Report Is Presented in a Client's

question 16

Multiple Choice

When an audited financial report is presented in a client's annual report containing other information, the auditor should:

• A)add an explanatory paragraph to the auditor's report without changing the opinion on the financial report.
• B)perform inquiry and analytical procedures to ascertain whether the other information is reasonable.
• C)read the other information to determine whether it is consistent with the audited financial report.
• D)perform the appropriate substantive auditing procedures to corroborate the other information.

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Definitions:

Fair Value Measurement

An accounting approach that provides an estimate of the price at which an asset could be exchanged or a liability settled, based on current market conditions.

Financial Instruments

Contracts that give rise to both a financial asset of one entity and a financial liability or equity instrument of another entity, such as stocks, bonds, or derivatives.

FASB

The Financial Accounting Standards Board, which is responsible for establishing and improving financial accounting and reporting standards in the United States.

IASB

The International Accounting Standards Board, an independent body that establishes and approves accounting standards.