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

What should the scope paragraph include in an auditor's report?

1. The nature of the audit performed.

2. The auditor's opinion on the internal controls.

3. Details of the management's responsibilities.

4. The dates covered by the financial statements.

The correct answer is: The nature of the audit performed.

The scope paragraph in an auditor's report is important because it outlines the nature of the audit that was performed. This includes a description of the auditing standards followed and an overview of the procedures carried out during the audit process. By detailing the scope, the auditor provides context for how the audit was conducted, which allows readers to understand the level of assurance provided on the financial statements. The inclusion of the nature of the audit performed helps users of the financial statements to gauge the reliability of the information presented. It typically explains whether the audit was comprehensive, focused, or limited in nature and may mention the use of judgment or the assessment of risks that were performed in reaching the auditor's conclusions. While other elements like management’s responsibilities, the auditor's opinion on internal controls, and the dates covered by the financial statements are relevant to the audit report, they belong to different sections of the auditor's report. Specifically, management's responsibilities are usually outlined separately, internal controls may be discussed in the context of the audit but are not directly part of the scope, and the reporting period is generally addressed elsewhere in the report. Thus, the scope paragraph serves a unique and critical function in conveying the nature of the audit itself.