When a Client Declines to Include a Statement of Cash

question 38

Multiple Choice

When a client declines to include a statement of cash flows in its financial report, the auditor's report will usually:

• A)include a separate paragraph that summarises the company's financing and investing activities.
• B)contain either a qualified or adverse opinion because of inadequate disclosure.
• C)refer to the scope limitation.
• D)contain either a qualified opinion or a disclaimer of opinion on the basis of the uncertainty caused by this disagreement with those charged with governance.

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business for a specific period.

Disclosure

The act of providing important information to stakeholders, required by regulations to ensure transparency and fairness in financial reporting and corporate actions.

Bank Reconciliation

The process of matching and comparing figures from the accounting records against those presented on a bank statement to ensure accuracy and consistency in the accounts.