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

Which statement must be included in the auditor's report if a company's SEC Regulation S-K required quarterly data has been omitted?

1. The auditor will review the selected data during a subsequent quarterly review.

2. The company’s internal controls provide an adequate basis for the review.

3. The company has not presented the selected quarterly financial data.

4. The auditor was unable to review the data.

The correct answer is: The company has not presented the selected quarterly financial data.

When a company's SEC Regulation S-K required quarterly data has been omitted, it's essential for the auditor's report to include a statement indicating the absence of this critical information. This transparency is crucial for stakeholders as it informs them that the company has not fulfilled its regulatory disclosures, which could affect their understanding of the company's financial position and performance. Including such a statement highlights the omission, ensuring that users of the financial statements are aware that certain required information is missing and prompting them to seek additional context or explanations regarding the company's financial performance during that period. It is a way of maintaining accountability and trust in the financial reporting process. The other options presented do not address the core issue of the omission directly. They might suggest further actions or imply adequacy in controls or review processes, but none clearly state that the required quarterly data has not been presented, which is the key concern that must be communicated to the users of the auditor's report. This direct acknowledgment is vital for compliance with regulatory requirements and provides clarity to users relying on the completeness of financial reporting.