An auditor's special report on financial statements prepared in conformity with the cash basis of accounting should include a separate explanatory paragraph before the opinion paragraph that
A) Justifies the reasons for departing from generally accepted principles.
B) States whether the financial statements are fairly presented in conformity with a special purpose framework.
C) Refers to the note to the financial statements that describes the special purpose framework.
D) Explains how the results of operations differ from financial statements prepared in conformity with generally accepted accounting principles.

Question

Quizplus · Accepted Answer

The explanatory paragraph should refer to the note in the financial statements that describes the special purpose framework, such as the cash basis of accounting, to provide clarity on the accounting framework used.

An Auditor's Special Report on Financial Statements Prepared in Conformity