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

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What does an auditor include when conducting an audit using both GAAS and GAGAS?

A statement indicating compliance with only GAAS.
A discussion about discrepancies in findings.
Additional language in the Auditor's Responsibility paragraph.
A summary of both sets of standards used.

The correct answer is: Additional language in the Auditor's Responsibility paragraph.

When an auditor conducts an audit using both Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS), it is essential to provide clarity about the standards applied during the audit. This is typically done by including additional language in the Auditor's Responsibility paragraph of the audit report. This inclusion highlights the specific responsibilities of the auditor under both sets of standards and informs users of the report that the audit has adhered to both GAAS and GAGAS requirements. Such transparency is crucial for stakeholders, especially in government audits where the expectations and compliance requirements may differ significantly from those of private sector audits. By specifying adherence to both GAAS and GAGAS, the auditor ensures that the users of the financial statements understand the framework that guided the audit process, reinforcing the credibility and reliability of the audit findings.