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

What is the auditor's primary responsibility for supplementary information required by the GASB during a nonissuer audit?

1. The auditor should ensure that the supplementary information is free of material omissions.

2. The auditor should apply certain limited procedures and include an other-matter paragraph in the auditor's report.

3. The auditor should apply substantive tests of transactions to the supplementary information.

4. The auditor has no responsibility for supplementary information as it is outside the basic financial statements.

The correct answer is: The auditor should apply certain limited procedures and include an other-matter paragraph in the auditor's report.

The auditor's primary responsibility for supplementary information required by the Governmental Accounting Standards Board (GASB) during a nonissuer audit is to apply certain limited procedures and include an other-matter paragraph in the auditor's report. This reflects the specific engagement context regarding supplementary information, which is not part of the financial statements but is nonetheless important for financial reporting transparency. Limited procedures typically involve an assessment of whether the supplementary information is consistent with the information presented in the financial statements and ensuring that it has been prepared in accordance with the applicable reporting framework. The auditor does not perform a comprehensive audit of this supplementary information, but instead focuses on ensuring that it does not materially contradict the audited financial statements. Including an other-matter paragraph in the auditor's report serves to highlight the nature of the supplementary information and the auditor's limited responsibility regarding it. This approach provides clarity to users of the financial statements about what the auditor has and has not done in relation to the supplementary information, thereby enhancing the overall transparency and reliability of the financial reporting process. In contrast, the other choices would either imply a greater level of responsibility than is appropriate for supplementary information or suggest a lack of engagement with important financial context that is provided by such information.