A CPA Who Has Been Engaged to Audit Financial Statements

question 103

Multiple Choice

A CPA who has been engaged to audit financial statements that were prepared on a cash basis:

• A)must ascertain that there is proper disclosure of the fact that the cash basis has been used, the general nature of material items omitted, and the net effect of such omissions.
• B)may not be associated with such statements which are not in accordance with generally accepted accounting principles.
• C)must render a qualified report explaining the departure from generally accepted accounting principles in the opinion paragraph.
• D)must restate the financial statements on an accrual basis and then render the standard (short-form)report.

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Definitions:

Double-Checking

The act of verifying or reviewing information, work, or details a second time to ensure accuracy or correctness.

Conversational Ritual

Patterns or practices followed during communication that serve to establish or maintain social bonds.

Rapport Talk

Talk focused on sharing information about relationships.

Relationship Information

Data or details that describe the nature of interactions, connections, or associations between individuals or entities.