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Exam AUD topic 1 question 110 discussion

Actual exam question from AICPA's AUD
Question #: 110
Topic #: 1
[All AUD Questions]

In the standard report on condensed financial statements that are derived from a public entity's audited financial statements, a CPA should indicate that the:

  • A. Condensed financial statements are prepared in conformity with another comprehensive basis of accounting.
  • B. CPA has audited and expressed an opinion on the complete financial statements.
  • C. Condensed financial statements are not fairly presented in all material respects.
  • D. CPA expresses limited assurance that the financial statements conform with GAAP.
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Suggested Answer: B 🗳️
Choice "B" is correct. The auditor's report on condensed statements derived from audited statements should indicate (1) that the CPA audited and expressed an opinion on the complete financial statements, (2) the date of the auditor's report on the complete financial statements, (3) the type of opinion expressed, and (4) whether, in the auditor's opinion, the information set forth in the condensed financial statements is fairly stated in all material respects in relation to the complete financial statements from which it was derived.
Choice "A" is incorrect. Condensed financial statements are not prepared in conformity with a comprehensive basis of accounting other than GAAP.
Choice "C" is incorrect. The auditor's report on condensed financial statements does not indicate whether they are fairly presented in all material respects; rather, the report indicates whether they are fairly presented in relation to the complete financial statements.
Choice "D" is incorrect. The auditor does not express an opinion (or provide any assurance) on whether condensed FS conform with GAAP; only whether such statements are fairly stated in relation to the complete FS.
by gemazyni at April 5, 2025, 4:11 p.m.

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