[Anonymous]

Becker Question –

This is in Chapter 2: Other Reports

Which of the following items should be included in an auditor’s report for financial statements prepared in conformity with another comprehensive basis of accounting (OCBOA)?

a. A title that includes the word “independent.”

b. A paragraph stating that the audit was conducted in accordance with OCBOA.

c. The signature of the company controller.

d. A sentence stating that the auditor is responsible for the financial statements.

The answer is A, but couldn’t it have very well been also B? Unless the question is SUPER nitpicky, there should AT LEAST be a STATEMENT (not a paragraph) in the auditor’s report that the audit was conducted in accordance with OCBOA, right?

I understand that the title should include the word “independent”, but answer B also makes sense to me. There should be an emphasis-of-matter paragraph stating that the special purpose framework is an OCBOA other than GAAP.

Please help!

[WaivingMyHands_ALOT]

The big thing to know in order to weed out answer choice B is difference between financial reporting framework and auditing standards.

The framework is the rules followed to present and create the financial statements. Usually it's GAAP. In this question it is specifically dealing with OCBOA (i.e., not GAAP).

The auditing standards (typically GAAS), would be the procedures the auditor followed in order to form an opinion that the financial statements are presented fairly in accordance with the framework (OCBOA).

When you are taking about a sentence that states “A paragraph stating that the audit was conducted in accordance with…”

they are reference the auditing standards followed. So in order for answer B to be correct it would have to say “A paragraph stating that the audit was conducted in accordance with GAAS”, not OCBOA.

So answer choice B is incorrect.

You would however need to include a sentence/paragraph referencing the basis of accounting (which would be OCBOA). But again, the basis of accounting (OCBOA), and how the audit was conducted (GAAS), are two completely different things.

Hope that helps.

AUD 99
BEC 96
FAR 94
REG 96

[Anonymous]

I understand! Thank you! So basically, OCBOA are not auditing standards, they are an applicable framework. Therefore, an audit being conducted under OCBOA does not make any sense. Another auditing standard can be GAGAS.

That makes perfect sense now. Thanks for clearing it up!

[Author]

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