A CPA who has been engaged to audit financial statements that were prepared on a cash basis
A) must ascertain that there is proper disclosure of the fact that the cash basis has been used.
B) may not be associated with such statements which are not in accordance with generally accepted accounting principles.
C) must render a qualified report explaining the departure from generally accepted accounting principles in the opinion paragraph.
D) must restate the financial statements on an accrual basis and then render the standard (short-form) report.

Question

Quizplus · Accepted Answer

A CPA must ensure that the financial statements clearly disclose the basis of accounting used, including if they are prepared on a cash basis, to ensure users are aware of the basis on which the financial statements are prepared.

A CPA Who Has Been Engaged to Audit Financial Statements