Special Purpose Frameworks

Question 1

required disclosures for F/S prepared using special purpose framework (SPF)

Answer 1

1. title indicating non-GAAP SPF (eg. Statement of income: regulatory basis)
2. summary of significant accounting policies
3. description of material differences between SPF and GAAP
4. if SPF is a contractual basis, description of significant interpretations of contract

Question 2

SPF include which types of basis

Answer 2

cash basis, tax basis, regulatory basis and contractual basis

Question 3

True or false:
no comment need be made concerning the appropriateness of the disclosed method

Answer 3

true

Question 4

emphasis-of-matter paragraph on SPF

Answer 4

1. indicates the SPF
2. state that the SPF is non-GAAP
3. refers to note in F/s describing SPF

Question 5

auditors responsibility section uses the phrase..

Answer 5

“…evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting”
estimates made by management, as well as evaluate the overall presentation of the F/S…”

Question 6

true or false: F/S and related footnotes are representations of management

Answer 6

true

Question 7

true or false: auditor is to modify the report to disclose any reservations regarding SPF

Answer 7

true

Question 8

use of SPF emphasis of matter paragraph if the F/S..

Answer 8

meet disclosure requirements and conform to the SPF

Question 9

when SPF on contractual basis or regulatory basis and F/S are not for general use, auditor will include

Answer 9

an other matter paragraph restricting use of report

Question 10

form

Answer 10

legal structure of the transaction

Question 11

substance

Answer 11

true economic intent or reality of the transaction

Question 12

when a printed report form calls upon an independent auditor to make an assertion that s/he believes is not justified in making the form,

Answer 12

should be reworded or attached to a separate report

Question 13

single audit gives a report on

Answer 13

summary of audit results for F/S, I/C and compliance with laws and regulations
AND
schedule of federal award expenditures, schedule of findings & questioned costs

Question 14

single audits apply to

Answer 14

applies to state and local governments and not-for-profit organizations that receive funds under a major federal financial assistance program (more than $750,000 per year in federal funds)

Question 15

questioned costs are costs that

Answer 15

seem unreasonable or were not adequately documented

Question 16

opinions on compliance under Single Audit Act

Answer 16

unmodified: no material noncompliance

qualified: noncompliance has material but not pervasive effect on financial assistance program

adverse : noncompliance has material and pervasive effect on financial assistance program

disclaimer: auditor unable to obtain sufficient appropriate evidence to support an opinion