Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

How should the auditor report on supplementary information presented with the basic financial statements for a nonissuer?

1. Include a paragraph before the opinion paragraph referencing the information.

2. Make no reference to required supplementary information in the report.

3. Include a paragraph after the opinion paragraph referencing the supplementary information.

4. Include the reference in the opinion paragraph.

The correct answer is: Include a paragraph after the opinion paragraph referencing the supplementary information.

When reporting on supplementary information presented with the basic financial statements for a nonissuer, the auditor should include a separate paragraph after the opinion paragraph that references the supplementary information. This practice is important for clarity and transparency regarding how the supplementary information relates to the main financial statements. The rationale behind this approach is that it ensures stakeholders understand that the supplementary information is an integral part of the financial reporting package but is not necessarily subjected to the same level of audit scrutiny as the primary financial statements. By placing this paragraph after the opinion, the auditor makes it clear that while the supplementary information may enhance the understanding of the financial statements, it does not alter the opinion provided on the overall financial statements themselves. Including the reference in a separate paragraph helps maintain the structure and readability of the audit report, allowing users to easily differentiate between the opinion on the financial statements and the auditor's acknowledgment of the supplementary information. This enhances the overall communication of the audit findings.