Helpful Co., a nonprofit entity, prepared its financial statements on an accounting basis prescribed by a regulatory agency solely for filing with that agency. Green audited the financial statements in accordance with generally accepted auditing standards and concluded that the financial statements were fairly presented on the prescribed basis. Green should issue a:

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Quizplus · Accepted Answer

Choice "D" is correct. A "special report" (unqualified) would be issued in an audit of financial statements prepared on an accounting basis prescribed by a regulatory agency solely for filing with that agency. Special reports are also issued for: 1. Financial statements that are prepared in accordance with a comprehensive basis of accounting other than GAAP. 2. Specified elements, accounts or items of a financial statement. 3. Compliance with contractual or regulatory requirements related to audited financial statements. 4. Financial information presented in prescribed forms, or schedules that require a prescribed form of auditor's report. Choices "A" and "C" are incorrect. The special report would be unqualified since Green concluded that the financial statements were fairly presented on the prescribed basis. Choice "B" is incorrect. The wording of the special report varies slightly from the auditor's standard three paragraph report, and includes an additional explanatory paragraph.