AUD 1.11 - Special Purpose & Other Country Frameworks

Question 1

What does OCBOA stand for?

Answer 1

Other comprehensive basis of accounting

Question 2

Special purpose frameworks can ALSO be used by who?

Answer 2

NONISSUERS

Question 3

A special purpose framework is a financial reporting framework other than GAAP that is one of the following bases of accounting:

Answer 3

1. Cash basis
2. Tax basis
3. Regulatory basis
4. Contractual basis
5. Other basis

Question 4

What is included under OCBOA?

Answer 4

Cash basis
Tax basis
Regulatory basis
Regulatory basis (general use)

Question 5

Examples of suitably titled special purpose financial statements include:

Answer 5

Balance sheet-cash basis
Statement of assets and liabilities arising from cash transactions - cash basis
Statement of assets, liabilities, and stockholders equity-income tax basis
Statement of revenue collected and expenses paid - cash basis
Statement of revenue and expenses-income tax basis
Statement of income-regulatory basis
Statement of operations-income tax basis

Question 6

If required, the emphasis of matter paragraph should include:

Answer 6

1. Indication that financials are prepared in accordance with the applicable special purpose framework
2. Refer to the note to the financials that describes the framework
3. State that the special purpose framework is a basis of accounting other than GAAP

Question 7

If required, the other-matter paragraph should include statement that:

Answer 7

Restricts the use of the auditors report to those within the entity, parties to the contract, or the regulatory agencies to which the entity subjects

Question 8

If the special purpose financials are prepares in accordance with the regulatory basis intended for general use, the auditor should:

Answer 8

NOT include an emphasis-of-matter or our-matter paragraph and instead express an opinion about whether the financials are fairly presented in accordance with GAAP and with the special purpose framework.

Question 9

If the auditor is required by law to use a specific layout or wording for the auditors report, the auditor should:

Answer 9

Refer to GAAS only unless the required layout or wording is not acceptable and then the auditor should reword or attach an appropriately worded separate report

Question 10

If an audit of financials prepared in accordance with a financial reporting framework generally accepted in another country, the auditor should obtain an understanding of:

Answer 10

1. The purpose for which the financials are prepared
2. Whether they are presented fairly
3. The intended users
4. Steps taken by management to determine whether the applicable financial reporting framework is acceptable
5. Applicable legal responsibilities involved

Question 11

For distribution only outside the U.S., the auditor should use either of the two reporting options:

Answer 11

1. The report of the other country or the report set out in the ISAs
   OR
2. A U.S. form of report

Question 12

If the financials are also intended for use in the U.S., the auditor should report using a U.S. form report with an emphasis of matter paragraph that:

Answer 12

1. Identifies the framework
2. Refers to the note in the financials describing the framework
3. Indicates the framework differed from accounting principles generally accepted in the U.S.

Question 13

An accountant in public practice, other than the continuing accountant, who prepares a written report (or provides advice) on th application of requirements of a reporting framework, or the type of report to be used, is referred to as:

Answer 13

A reporting accountant

Question 14

The reporting accountant is not allowed to do what? The reporting accountant does not need to be what?

Answer 14

Not allowed to report on the application of accounting principles
Does not need to be independent of the entity

Question 15

The reporting accountant should request permission from who before consulting with the continuing accountant?

Answer 15

The entity’s management