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

What should NOT be included in an auditor's report on financial statements prepared in accordance with an other comprehensive basis of accounting?

1. An opinion on the fair presentation of the financial statements

2. A statement that the accounting basis is non-GAAP

3. An opinion on the appropriateness of the basis used

4. A reference to the note describing the basis of presentation

The correct answer is: An opinion on the appropriateness of the basis used

An auditor's report on financial statements prepared in accordance with an other comprehensive basis of accounting (OCBOA) should not include an opinion on the appropriateness of the basis used. OCBOA refers to accounting frameworks other than generally accepted accounting principles (GAAP), and the auditor's responsibility is to assess whether the financial statements are presented fairly in accordance with this basis of accounting. Including an opinion on the appropriateness would imply a level of judgment regarding the accounting policies themselves, which goes beyond the auditor's role in examining and opining on the fairness of the presentation. Instead, the auditor reports on the compliance of the financial statements with the specified OCBOA and recognizes in the report that this basis is "non-GAAP," emphasizing the differences from traditional GAAP financial statements. In contrast, an opinion on the fair presentation of the financial statements and a reference to the note describing the basis of presentation must be included to provide context and clarity to the users regarding the nature and recognition of the financial information being presented.