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

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Which statement is NOT typically included in an auditor's report for financial statements prepared on the cash receipts and disbursements basis of accounting?

  1. A statement that the audit was conducted in accordance with auditing standards generally accepted in the U.S.

  2. An opinion as to whether the financial statements are presented fairly in conformity with the cash receipts and disbursements basis of accounting.

  3. A reference to the note to the financial statements that describes the cash receipts and disbursements basis of accounting.

  4. A statement that the cash receipts and disbursements basis of accounting is NOT a comprehensive basis of accounting.

The correct answer is: A statement that the cash receipts and disbursements basis of accounting is NOT a comprehensive basis of accounting.

The choice indicating that a statement about the cash receipts and disbursements basis of accounting being not a comprehensive basis of accounting is not typically included in an auditor's report is accurate. Auditors often provide information about the basis of accounting used in the preparation of financial statements, which may include a description of the cash receipts and disbursements basis. However, they do not usually make a declarative statement that this basis is not comprehensive within their report. The purpose of the auditor's report is to provide an opinion on whether the financial statements present a fair view, in accordance with the applicable basis of accounting. Therefore, statements that affirm the adherence to generally accepted auditing standards, provide an opinion on the fairness of presentation, and references to notes describing the accounting basis are standard components of the report. Acknowledging the limitations of the cash receipts and disbursements basis as not being comprehensive is more suited for disclosure in the financial statements themselves, rather than in the auditor's opinion. This distinction highlights the primary aim of the auditor's report, which is to evaluate and express an opinion on the financial statements rather than to critique the accounting basis utilized.

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