Restrictions placed on various reports related to services provided by CPAs are intended to ensure that?...

Restrictions placed on various reports related to services provided by CPAs are intended to ensure that?

A) the user of the report understands that only analytical procedures have been performed and that an audit was not performed.

B) the user of the report understands that management representations have been obtained and the accountant agrees with them.

C) the report will self-destruct in the hands of an inappropriate user.

D) the users of the report are limited, and the CPA is protected if the report is used by inappropriate parties.

Solutions

Expert Solution

Based on the options listed above, the correct answer for the given scenario is Option D.

Option A is incorrect. The question does not mention what kind of services are performed and why it should be restricted. The reasons for restriction is not limited to performing any specific procedures.

Option B is incorrect. This is a general understanding that the users/readers of the financial statements agree to. The question is however specific to restrictions and the reason for the restrictions.

Option C is incorrect. This statement is not a valid reason for the restrictions being placed on the various reports related to services provided. by CPAs.Even though the reports in the hands of an inappropriate user is dangerous, it does not mention the fact that CPAs are protected even if there are inappropriate users of the report.

Option D is correct. As mentioned within the choice, the restrictions on the use of audit reports are placed in such a way that the auditor is protected from any legal challenges incase the report is used by inappropriate parties. The auditor clearly mentions the restriction on the use of the report and the persons to whom the report is intended to. Any unauthorized use of such reports would not be ethical or legal.

ekkarill92 answered 1 year ago

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