Question

An auditor's report on financial statements prepared in accordance with a basis of accounting other than generally accepted accounting principles should include all of the following except:

a. An opinion as to whether the basis of accounting used is appropriate under the circumstances.
b. An opinion as to whether the financial statements are presented fairly in conformity with the other basis of accounting.
c. Reference to the note to the financial statements that describes the basis of presentation.
d. A statement that the basis of presentation is a basis of accounting other than generally accepted accounting principles.

Answer 1

An auditor's report on financial statements should include several components, including opinions on the basis of accounting and presentation, and references to relevant notes. Option A, which states that the report should not include an opinion on the appropriateness of the basis of accounting, is incorrect.

Step-by-step explanation:

An auditor's report on financial statements prepared in accordance with a basis of accounting other than generally accepted accounting principles should include all of the following except:

1. An opinion as to whether the basis of accounting used is appropriate under the circumstances. The auditor's report should include an opinion on the appropriateness of the basis of accounting.
2. An opinion as to whether the financial statements are presented fairly in conformity with the other basis of accounting. The auditor's report should include an opinion on the fairness of the financial statements.
3. Reference to the note to the financial statements that describes the basis of presentation. The auditor's report should reference the note that provides details about the basis of accounting.
4. A statement that the basis of presentation is a basis of accounting other than generally accepted accounting principles. This statement should be included in the auditor's report.

Therefore, the correct answer is option A, which is that the auditor's report should not include an opinion as to whether the basis of accounting used is appropriate under the circumstances.