Question

The scope paragraph of the auditor's responsibility section of the audit report issued for financial statements of a nonpublic company should refer to auditing standards generally accepted in the United States of America?

Answer 1

The scope paragraph of an audit report for a nonpublic company in the U.S. should refer to the Generally Accepted Auditing Standards (GAAS) as they provide a framework for the audit and enhance its credibility.

Step-by-step explanation:

The question pertains to the auditing standards referenced in the audit report for a nonpublic company in the United States. Specifically, the student is inquiring whether the scope paragraph of the auditor's responsibility section should mention the Generally Accepted Auditing Standards (GAAS) in the U.S.

When auditors report on the financial statements of a nonpublic company, they indeed refer to auditing standards that are accepted in the United States, which are the GAAS. These standards provide a framework for the auditor's professional responsibilities and guide the conduct of the audit. It is crucial for the scope paragraph to reference these standards as they assure users of the financial statements that the audit has been conducted in accordance with accepted guidelines, enhancing the credibility of the audit report.