AUD Becker MCQ reporting in frameworks other than GAAP

  • Creator
    Topic
  • #844989
    lk
    Participant

    The Becker explanation literally just rephrases the correct answers without explaining.

    I selected a. I don’t understand why II is correct instead of I. So when you report on FS prepped in frameworks other than US GAAP, the US-style report has to be modified? What does modified mean here? Modified opinion or what? Is it just talking about modified format and content of the report?

    Question:
    The financial statements of KCP America, a U.S. entity, are prepared for inclusion in the consolidated financial statements of its non-U.S. parent. These financial statements are prepared in conformity with a financial reporting framework generally accepted in the parent’s country and are for use only in that country. How may KCP America’s auditor report on these financial statements?

    I.A U.S.-style report (unmodified).
    II.A U.S.-style report modified to report on the financial reporting framework of the parent’s country.
    III.The report form of the parent’s country.
    I II III
    a.Yes No Yes
    b.No Yes No
    c.No Yes Yes
    d.Yes No No

    Becker Explanation
    Choice “c” is correct. No – Yes – Yes. When financial statements are prepared in accordance with a financial reporting framework generally accepted in the parent’s country and are for use only in that country, the auditor may report using either a U.S.-style report modified to report on the financial reporting framework of the parent’s country or the report form of the parent’s country.
    Choices “d”, “b”, and “a” are incorrect, per the above explanation.

Viewing 5 replies - 1 through 5 (of 5 total)
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  • #844992
    Chelsea26
    Participant

    It means modified in terms of format and content. The opinion does not change. My notes tell me that an Emphasis of Matter paragraph is added to illustrate the fact we are using another country's financial reporting framework. If someone can verify that, that'd be great 🙂

    BEC - 78
    AUD - 65, 87
    REG - 78
    FAR - 68, 76

    And I'm DONE!

    BEC - July 2016 → 78
    AUD - Sep 2016
    REG - Nov 2016
    FAR - Feb 2017

    #845000
    lk
    Participant

    i thought E-o-M paragraph is only used when the US format report for FS prepped in accordance with frameworks other than US GAAP is also intended for use in the US. in this question, the report is only for use outside of US. so no need to add E-o-M para.

    #845003
    lk
    Participant

    looking at a sample report on Becker text page A1-67, the structure of the report is literally the same as if it were for a FS prepped under US GAAP. only a few things are slightly changed to reference the framework used. does the “modified” in this question refer to those changes?

    #845006
    Chelsea26
    Participant

    I think you could be right. I am looking at the sample report myself and the only differences I see are the ‘specific financial reporting framework' and the ‘name of country'.

    Arghh AUD is such a pain. Full clarification on this question would be great.

    BEC - 78
    AUD - 65, 87
    REG - 78
    FAR - 68, 76

    And I'm DONE!

    BEC - July 2016 → 78
    AUD - Sep 2016
    REG - Nov 2016
    FAR - Feb 2017

    #845142
    Anonymous
    Inactive

    In this question modified report means the report itself would be modified to reflect the fact that it's for use in another country and is based on generally accepted standards in that country. This wouldn't be indicating modification of the opinion.

    Also A wouldn't be correct because it wouldn't make sense to issue a US style standard report without any modification because it's not for use in the US. If the auditor decides to use US style report, he/she will have to modify it so the user knows it's intended use is for a another country.

Viewing 5 replies - 1 through 5 (of 5 total)
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