Page 544 - Auditing Standards

As of December 15, 2017
be prepared in conformity with generally accepted accounting principles except for certain assets, such as

receivables, inventories, and properties for which a valuation basis is specified in the agreement.

.28 Financial statements prepared under a basis of accounting as discussed above are not considered to
be prepared in conformity with a "comprehensive basis of accounting" as contemplated by paragraph .04 of

this section because the criteria used to prepare such financial statements do not meet the requirement of
being "criteria having substantial support," even though the criteria are definite.

.29 When an auditor is asked to report on these types of financial presentations, the report should include
—

a. A title that includes the word independent. 30

b. A paragraph that—

(1) States that the special-purpose financial statements identified in the report were audited.

(2) States that the financial statements are the responsibility of the Company's management 31
and that the auditor is responsible for expressing an opinion on the financial statements

based on the audit. 32

c. A paragraph that—

(1) States that the audit was conducted in accordance with the standards of the PCAOB and
includes an identification of the United States of America as the country of origin of those
standards (for example, the standards of the Public Company Accounting Oversight Board

(United States)).

(2) States that those standards require that the auditor plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material

misstatement.

(3) States that an audit includes—

(a) Examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements,

(b) Assessing the accounting principles used and significant estimates made by

management, and

(c) Evaluating the overall financial statement presentation.

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