D. Condensed financial statements are distributed only to management and the board of
directors.

Answer(s): A
Explanation:
Choice "a" is correct. When reporting on condensed financial statements that are derived from
complete audited financial statements, the auditor should indicate in his report whether the
information in the condensed financial statements is fairly stated in all material respects (in
relation to the basic financial statements taken as a whole). Choices "b" and "d" are incorrect.
There is no requirement that the condensed financial statements be presented in comparative
form, or that they be distributed only to management and the board of directors (i.e., distribution
is not restricted). Choice "c" is incorrect. The auditor would not perform or describe additional
review procedures related to the condensed financial statements.
QUESTION: 118
If management (of a governmental body) declines to present supplementary information
required by the Governmental Accounting Standards Board (GASB), the auditor should issue
a(an):

A. Adverse opinion.
B. Qualified opinion with an explanatory paragraph.
C. Unqualified opinion.
D. Unqualified opinion with an additional explanatory paragraph.

Answer(s): D
Explanation:
Choice "d" is correct. If management (of a governmental body) declines to present information
required by the GASB, the auditor should issue an unqualified opinion with an additional
explanatory paragraph. Choices "a", "b", and "c" are incorrect, per the above Explanation.
QUESTION: 119
The objective of auditing procedures applied to segment information is to provide the auditor
with a reasonable basis for concluding whether:

A. The information is useful for comparing a segment of one enterprise with a similar segment of
another enterprise.
B. Sufficient audit evidence has been obtained to allow the auditor to be associated with the
segment information.
C. A separate opinion on the segment information is necessary due to inconsistent application
of accounting principles.
D. The information is presented in conformity with the FASB Statement on segment information.

Answer(s): D
Explanation:
Choice "d" is correct. The auditor's objective is to provide a reasonable basis for concluding
whether segment information is presented in conformity with GAAP. Choice "a" is incorrect. The
auditor is not required to see that segment information included is comparable to other
enterprises. Choice "b" is incorrect. Sufficient audit evidence must be obtained to ensure that
segment information is presented in accordance with GAAP, not to allow the auditor to be

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