may compile, examine, or apply agreed-upon procedures to limited use prospective financial
statements (PFS) such as a financial projection, but this would not constitute a special report.
QUESTION: 194
When a CPA reports on audited financial statements prepared on the cash receipts and
disbursements basis of accounting, the report should:

A. Explain why this basis of accounting is more useful for the readers of this entity's financial
statements than GAAP.
B. Refer to the note in the financial statements that describes management's responsibility for
the financial statements.
C. State that the basis of presentation is a comprehensive basis of accounting (OCBOA) other
than GAAP.
D. Include a separate explanatory paragraph that discusses the justification for, and the CPA's
concurrence with, the departure from GAAP.

Answer(s): C
Explanation:
Choice "c" is correct. A report on other comprehensive basis of accounting ("OCBOA") financial
statements should include an explanatory paragraph stating the basis, referring to the footnote
that describes it, and indicating that it is a non-GAAP basis. Choice "a" is incorrect. A report on
other comprehensive basis of accounting ("OCBOA") financial statements does not include an
evaluation of the usefulness of the basis of accounting. Choice "b" is incorrect. A report on other
comprehensive basis of accounting ("OCBOA") financial statements makes reference to the
note in the financial statements that describes the accounting basis, not to a note describing
management's responsibility. Choice "d" is incorrect. The separate explanatory paragraph
states the basis, refers to the footnote describing it, and indicates that it is a non-GAAP basis. It
does not discuss the justification for the non-GAAP basis, nor does the CPA indicate
concurrence.
QUESTION: 195
Which option best describes the level of assurance provided in the following special reports?
A. Option A
B. Option B

https://Free-Braindumps.com

Free AICPA CPA-Auditing Exam Braindumps (page: 98)

CPA-Auditing Exam Discussions & Posts