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

When can an auditor express negative assurance on supplementary information?

1. A. If performed review procedures allow it

2. B. If the information is related to GAAP

3. C. If agreed upon procedures are established

4. D. This is never allowed for supplementary information

The correct answer is: D. This is never allowed for supplementary information

Negative assurance refers to a form of assurance in which the auditor states that they are not aware of any material modifications that should be made to the information to be in accordance with the applicable framework. For supplementary information, negative assurance can only be provided under specific circumstances. The correct scenario for an auditor to express negative assurance on supplementary information is when review procedures are performed that allow for such a conclusion. This depends on the nature of the engagement, the level of work done, and the relationship of the supplementary information to the primary financial statements. If the auditor is providing assurance on supplementary information that is not explicitly required to meet GAAP (Generally Accepted Accounting Principles) requirements, the auditor cannot claim negative assurance. In the correct context, supplementary information that is provided in conjunction with the primary financial statements may only be subjected to negative assurance if certain review procedures have been adequately performed to gauge its reasonableness and adherence to applicable criteria. This means that option A would correctly identify when negative assurance is permissible, rather than a blanket statement that negative assurance is never allowed. Thus, the conclusion drawn in the answered choice lacks the nuances required to understand when negative assurance can properly be given regarding supplementary information.