Required Supplementary Information Flashcards
An auditor determines that the entity is presenting certain supplementary financial disclosures of pension information that are required by the GASB. Under these circumstances, the auditor should
Provide an opinion on the supplementary information.
State that this audit is not being performed in accordance with generally accepted auditing standards.
Document in the working papers that the required supplementary information is presented, but should not apply any procedures to the information.
Compare the required supplementary information for consistency with the audited financial statements.
Compare the required supplementary information for consistency with the audited financial statements.
This answer is correct because an auditor’s responsibility with respect to this information is to apply certain limited procedures to such information to obtain assurance that it is consistent with the audited financial statements.
Inclusion of inaccurate interim information required by the FASB will result in which of the following types of reports?
Standard unmodified.
Unmodified with an other matter paragraph.
Qualified with a basis for modification paragraph.
Adverse.
Unmodified with an other matter paragraph.
This answer is correct because such information is considered unaudited and accordingly an unmodified report with an other matter paragraph is appropriate.
What is an auditor’s responsibility for supplementary information, such as disclosure of pension information, which is outside the basic financial statements but required by the GASB?
The auditor should engage a specialist, such as an actuary, to verify that management’s assertions are reasonable.
The auditor’s only responsibility for supplementary information is to determine that such information has not been omitted.
The auditor should perform tests of transactions to the supplementary information to verify that it is reasonably comparable to the prior year’s information.
The auditor should apply certain limited procedures to the supplementary information and report deficiencies in, or omissions of, such information.
The auditor should apply certain limited procedures to the supplementary information and report deficiencies in, or omissions of, such information.
This answer is correct because an auditor applies limited procedures and reports deficiencies or omission of such information; note that while deficiencies are reported in the audit report, the opinion is not modified since the information is considered unaudited.
The client’s financial reporting includes supplementary financial information outside the basic financial statements but required by the Financial Accounting Standards Board (FASB). Which of the following statements is correct regarding the auditor’s responsibility for this supplementary financial information?
The auditor should perform limited procedures.
The auditor should apply tests of details of transactions.
The auditor is not required to report omissions.
The auditor should read the supplementary financial information.
The auditor should perform limited procedures.
Correct! The auditor should make certain specific inquiries of management about the required supplementary information, including (1) whether it is measured and presented in accordance with prescribed guidelines; (2) whether the methods of measurement or presentation have been changed relative to the prior period; and (3) whether any significant assumptions affect the measurement or presentation of it.
An auditor determines that the entity is presenting certain supplementary financial disclosures of pension information that are required by the GASB. Under these circumstances, the auditor should
Add an other-matter paragraph to the auditor’s report preceding the opinion paragraph that explicitly identifies the required supplementary information as unaudited.
State that the audit is not being performed in accordance with generally accepted auditing standards.
Document in the audit documentation that the required supplementary information is presented, but should not apply any procedures to the information.
Compare the required supplementary information for consistency with the audited financial statements.
Compare the required supplementary information for consistency with the audited financial statements.
When required supplementary information is included with the financial statements, the auditor is required to perform the following: 1) inquire OF management about methods of preparing the information and whether such methods have changed; 2) ask about significant assumptions; 3) compare the information for consistency with management’s responses, the audited financial statements, and other knowledge obtained during the audit; and 4) obtain additional representations in the management representation letter.
What is an auditor’s responsibility for supplementary information, such as disclosure of pension information, which is outside the basic financial statements, but required by the GASB?
The auditor should engage a specialist, such as an actuary, to verify that management’s assertions are reasonable.
The auditor’s only responsibility for supplementary information is to determine that such information has not been omitted.
The auditor should perform tests of transactions to the supplementary information to verify that it is reasonably comparable to the prior year information.
The auditor should apply certain limited procedures to the supplementary information and report deficiencies in, or omissions of, such information.
The auditor should apply certain limited procedures to the supplementary information and report deficiencies in, or omissions of, such information.
AICPA Professional Standards describe the limited procedures that the auditor is to perform to address required supplementary information. The auditor is further required to report deficiencies in or the omission of such information.
If management declines to present supplementary information required by the Governmental Accounting Standards Board (GASB), the auditor should issue a(n)
Adverse opinion.
Qualified opinion with an other-matter paragraph.
Unmodified opinion.
Unmodified opinion with an other-matter paragraph.
Unmodified opinion with an other-matter paragraph.
Failure to include supplementary information required by the Governmental Accounting Standards Board would result in an unmodified opinion with an other-matter paragraph.
What is an auditor’s responsibility for supplementary information, which is outside the basic financial statements, but which is required by the FASB?
The auditor has no responsibility for required supplementary information, as long as it is outside the basic financial statements.
The auditor’s only responsibility for required supplementary information is to determine that such information has not been omitted.
The auditor should apply certain limited procedures to the required supplementary information and report deficiencies in, or omissions of, such information.
The auditor should apply tests of details of transactions and balances to the required supplementary information and report any material misstatements in such information.
The auditor should apply certain limited procedures to the required supplementary information and report deficiencies in, or omissions of, such information.
Supplementary information, which is required by the FASB, differs from other information presented outside the basic financial statements because authoritative guidelines have been established for the measurement and presentation of such information. As a result, an auditor’s responsibility for required supplementary information is to apply certain limited procedures to ascertain whether the information has been presented in accordance with the prescribed guidelines.
