Auditing Exam #4

Which of the following approaches is most suitable for auditing the finance and investment cycle?

a. Perform extensive tests of controls and limit substantive procedures to analytical procedures.

b. Ignore internal controls and perform extensive substantive procedures.

c. Gain an understanding of internal controls and perform extensive substantive procedures.

d. Ignore internal controls and limit substantive procedures to analytical procedures.

C

Loan covenants are used for which of the following reasons?

a. To protect the lender from the borrower’s substantially weakening financial position.

b. To protect the borrower from the lender’s calling the loan early.

c. To protect the auditors from false information by the borrower.

d. To protect shareholders from management taking on too much debt.

A

A related party is a person or entity that

a. Has a family tie to a management member.

b. Does business with the company.

c. Can exert significant influence over or be influenced by the company.

d. Is a member of the company’s management team or board of directors.

C

Jones was engaged to examine the financial statements of Gamma Corporation for the year ended June 30. Having completed an examination of the investment securities, which of the following is the best method of verifying the accuracy of recorded dividend income?

a. Tracing recorded dividend income to cash receipts records and validated deposit slips.

b. Performing analytical procedures and statistical sampling.

c. Comparing recorded dividends with amounts appearing on federal information Form 1099.

d. Comparing recorded dividends with a standard financial reporting service’s record of dividends

D

When the client holds a large amount of negotiable securities, auditors need to plan to guard against

a. Unauthorized negotiation of the securities before they are counted.

b. Unrecorded sales of securities after they are counted.

c. Substitution of securities already counted for other securities that should be on hand but are not.

d. Substitution of authentic securities with counterfeit securities.

C

Which of the following internal control activities would most likely justify reducing the assessment of the risks of material misstatement for long-term notes payable?

a. The use of prenumbered purchase orders to prevent unrecorded notes.

b. All direct borrowings on notes payable are authorized by the board of directors.

c. Any use of assets for collateral on long-term notes payable are analyzed for criticality to operations.

d. Proceeds from long-term notes payable are included in regular review of budgets to ensure adequacy of cash flow availability.

B

Which of the following assertions is most likely to have the highest risk of material misstatement for the goodwill account?

a. Existence

b. Completeness

c. Valuation

d. Rights & Obligations

C

In connection with the audit of an issue of long-term bonds payable, the audit team should

a. Determine whether bondholders are persons other than owners, directors, or officers of the company issuing the bond.

b. Calculate the effective interest rate to see whether it is substantially the same as the rates charged for similar issues.

c. Decide whether the bond issue was made without violating state or local laws or regulations.

d. Ascertain that the client has obtained the opinion of counsel on the legality of the issue.

D

Which of the following is the most important audit consideration when examining the stockholders’ equity section of a client’s balance sheet?

a. Changes in the capital stock account are verified by an independent stock transfer agent.

b. Stock dividends and stock splits during the year under audit were approved by the stockholders.

c. Stock dividends are capitalized at par or stated value on the dividend declaration date.

d. Entries in the capital stock account can be traced to resolutions in the minutes of meetings of the board of directors.

D

If the auditors discover that the carrying amount of a client’s investments is overstated because of a loss in value that is other than a temporary decline in market value, they should insist that

a. The approximate market value of the investments be shown in parentheses on the face of the balance sheet.

b. The investments be classified as long term for balance-sheet purposes with full disclosure in the footnotes.

c. The loss in value be recognized in the financial statements.

d. The equity section of the balance sheet separately shows a charge equal to the amount of the loss

C

The primary reason for preparing a reconciliation between interest-bearing obligations outstanding during the year and interest expense in the financial statements is to

a. Evaluate internal control over securities.

b. Determine the validity of prepaid interest expense.

c. Ascertain the reasonableness of imputed interest.

d. Detect unrecorded liabilities.

D

The auditors should insist that a representative of the client be present during the inspection and count of securities to

a. Lend authority to the auditors’ directives.

b. Detect forged securities.

c. Coordinate the return of all securities to proper locations.

d. Acknowledge the receipt of securities returned.

D

When independent stock transfer agents are not employed and the corporation issues its own stock and maintains stock records, canceled stock certificates should

a. Be defaced to prevent reissuance and attached to their corresponding stubs.

b. Not be defaced but be segregated from other stock certificates and retained in a canceled certificates file.

c. Be destroyed to prevent fraudulent reissuance.

d. Be defaced and sent to the secretary of state.

A

When a client company does not maintain its own capital stock records, the auditors should obtain written confirmation from the transfer agent and registrar concerning

a. Restrictions on the payment of dividends.

b. The number of shares issued and outstanding.

c. Guarantees of preferred stock liquidation value.

d. The number of shares subject to agreements to repurchase

B

All corporate capital stock transactions should ultimately be traced to the

a. Minutes of the meetings of the board of directors.

b. Cash receipts journal.

c. Cash disbursements journal.

d. Numbered stock certificates

A

An audit plan for the examination of the retained earnings account should include a step that requires verification of the (choose two steps)

a. Market value used to charge retained earnings to account for a 2-for-1 stock split.

b. Approval of the adjustment to the beginning balance as a result of a write-down of account receivables.

c. Authorization for both cash and stock dividends declared and paid.

d. Gain or loss resulting from disposition of treasury shares.

C,D

When an entity uses a trust company as custodian of its marketable securities, the possibility of concealing fraud most likely would be reduced if the

a. Trust company has no direct contact with the entity employees responsible for maintaining investment accounting records.

b. Securities are registered in the name of the trust company rather than the entity itself.

c. Interest and dividend checks are mailed directly to an entity employee who is authorized to sell securities.

d. The trust company places the securities in a bank safe deposit vault under the custodian’s exclusive control.

A

An audit team would most likely verify the interest earned on bond investments by

a. Vouching the receipt and deposit of interest checks.

b. Confirming the bond interest rate with the issuer of the bonds.

c. Recomputing the interest earned on the basis of face amount, interest rate, and period held.

d. Testing internal controls relevant to cash receipts.

C

A client has a large and active investment portfolio that is kept in a bank safe deposit box. If the auditors are unable to count securities at the balance sheet date, they most likely will

a. Request the bank to confirm to the auditors the contents of the safe deposit box at the balance-sheet date.

b. Examine supporting evidence for transactions occurring during the year.

c. Count the securities at a subsequent date and confirm with the bank whether securities were added or removed since the balance-sheet date.

d. Request the client to have the bank seal the safe deposit box until the auditors can count the securities at a subsequent date.

D

An audit team testing long-term investments would ordinarily use analytical procedures to ascertain the reasonableness of the

a. Existence of unrealized gains or losses.

b. Completeness of recorded investment income.

c. Classification as available-for-sale or trading securities.

d. Valuation of trading securities.

B

In auditing for unrecorded long-term bonds payable, an audit team most likely will

a. Perform analytical procedures on the bond premium and discount accounts.

b. Examine documentation of assets purchased with bond proceeds for liens.

c. Compare interest expense with the bond payable amount for reasonableness.

d. Confirm the existence of individual bondholders at year-end.

C

An audit plan to examine long-term debt most likely would include steps that require

a. Comparing the carrying amount of held-to-maturity securities with their year-end market values.

b. Correlating interest expense recorded for the period with outstanding debt.

c. Verifying the existence of the holders of the debt by direct confirmation.

d. Inspecting the accounts payable subsidiary ledger for unrecorded long-term debt.

B

Which of the following questions would auditors most likely include on an internal control questionnaire for notes payable?

a. Are assets that collateralize notes payable critically needed for the entity’s continued existence?

b. Are two or more authorized signatures required on checks that repay notes payable?

c. Are the proceeds from notes payable used to purchase noncurrent assets?

d. Are direct borrowings on notes payable authorized by the board of directors?

D

An audit team’s purpose in reviewing the documentation concerning the renewal of a note payable shortly after the balance-sheet date most likely is to obtain evidence concerning management’s assertions about

a. Existence.

b. Valuation.

c. Completeness.

d. Classification.

D

Which of the following audit procedures would not likely be performed for audits of investments?

a. Read board of directors’ minutes for authorization of investment strategies.

b. Confirm investments with registrar.

c. Confirm investments with broker or trustee.

d. Compare valuation to published market prices

B

Which of the following audit procedures would not likely be performed for audits of shareholders’ equity?

a. Read board of directors’ minutes for authorization of equity transactions.

b. Confirm outstanding common and preferred stock with stock registrar.

c. Compare valuation of stock to published market prices.

d. Obtain management representation about number of shares issued and outstanding

C

ABC Company has 100 shares of IBM stock that it holds as an investment. The stock was purchased three years ago and has been in the client’s safe deposit box along with other investment securities. During an inspection of securities held by the client, the auditor noted the 100 shares of IBM stock had a different CUSIP number than the number listed when purchased and the number verified during the previous audit. Which of the following would be the auditor’s main concern about this discovery?

a. The certificates in the safe deposit box were forgeries.

b. There had been unauthorized buying and selling of investment securities.

c. The securities may be misclassified on the balance sheet.

d. ABC Company no longer owns the securities.

B

Which of the following best describes the role of analytical procedures near the end of the audit engagement?

a. To identify possible deficiencies in the client’s internal control over financial reporting.

b. To identify accounts that appear to be misstated with the intention of planning the nature, timing, and extent of other substantive procedures.

c. To gather evidence to support one or more assertion(s) related to the account balance or class of transactions.

d. To provide an overall review of the financial information and assessment of the adequacy of evidence gathered during the audit engagement.

D

A major objective of written representations is to

a. Shift responsibility for financial statements from the management to auditors.

b. Provide a substitute source of audit evidence for substantive procedures that auditors would otherwise perform.

c. Provide management an opportunity to make assertions about the quantity and valuation of the physical inventory.

d. Impress on management its ultimate responsibility for the financial statements and disclosures.

D

Which of these substantive procedures is not used to obtain evidence about contingencies?

a. Scanning expense accounts for credit entries.

b. Obtaining a letter from the client’s attorney.

c. Reading the minutes of the board of directors’ meetings.

d. Examining terms of sale in sales contracts.

A

Subsequent knowledge of which of the following would cause the entity to adjust its December 31 financial statements?

a. Sale of an issue of new stock for $500,000 on January 30.

b. Settlement of a damage lawsuit for a customer’s injury sustained February 15 for $10,000.

c. Settlement of litigation in February for $100,000 that had been estimated at $12,000 in the December 31 financial statements.

d. Storm damage of $1 million to the entity’s buildings on March 1.

C

J. Griffith audited the financial statements of Mets Magnificent Corporation for the year ended December 31, 2023. She completed gathering sufficient appropriate evidence on January 30 and later learned of a stock split voted by the board of directors on February 5. The financial statements were changed to reflect the split, and she now needs to dual date the report on the entity’s financial statements. Which of the following is the proper form?

a. December 31, 2023, except as to Note X, which is dated January 30, 2024.

b. January 30, 2024, except as to Note X, which is dated February 5, 2024.

c. December 31, 2023, except as to Note X, which is dated February 5, 2024.

d. February 5, 2024, except for the date of the auditor’s report, for which the date is Janu ary 30, 2024

B

Auditors have a responsibility related to management’s disclosure of new information related to subsequent events until

a. The date of the financial statements.

b. The date of the auditor’s report.

c. The audit report release date.

d. The following year’s date of the financial statements.

C

The auditing standards regarding subsequently discovered facts refer to knowledge obtained after

a. The date the fieldwork began.

b. The date of the auditor’s report.

c. The date of the financial statements.

d. The date interim audit work was complete

B

Which of the following is not required by generally accepted auditing standards?

a. Written representations

b. Attorney letter

c. Management letter

d. Engagement letter

C

Which of the following is ordinarily performed last in the audit examination?

a. Securing a signed engagement letter from the client.

b. Performing tests of controls.

c. Performing a review for subsequent events.

d. Obtaining signed written representations.

D

Which of the following normally occurs earliest in the audit examination?

a. Discovery of an omitted audit procedure.

b. Dual dating the auditor’s report on the entity’s financial statements for subsequent events that exist at the date of the financial statements. c. Preparation of the management letter.

d. Review of audit documentation

D

Ambrose is auditing the financial statements of Mays (dated December 31, 2023). The date of the auditor’s report is February 17, 2024, and the audit report release date is February 20, 2024. For which of the following matters would Ambrose have the least responsibility?

a. The obsolescence of inventory held on December 31, 2023, that was identified on January 20, 2024.

b. A customer’s deteriorating financial condition that was identified on February 19, 2024.

c. A merger that was announced by Mays and known by Ambrose on February 12, 2024.

d. A major loss due to a catastrophe that occurred and was known by Ambrose on March 1, 2024.

D

Which of the following statements is most likely to be included in an attorney letter?

a. “Certain representations in this letter are described as being limited to matters that are material.”

b. “If any unasserted claims or assessments are omitted from this disclosure, please provide this information directly to our auditors.”

c. “Our work enabled us to notice some actions that could enhance the profitability of the Company.”

d. “Please furnish to our auditors such explanation, if any, that you consider necessary to supplement the foregoing information.

D

After the audit report release date, auditors determine that an important auditing procedure was omitted. Which of the following initial courses of action is most appropriate?

a. Perform the omitted procedure or an alternative procedure.

b. Notify the board of directors and regulatory agencies that are currently relying on auditor’s reports.

c. Determine whether the omitted procedure is important in supporting the auditor’s opinion on the entity’s financial statements.

d. Engage another public accounting firm to conduct a quality assurance review.

C

Which of the following statements is not true with respect to written representations?

a. The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer of opinion.

b. They should address management’s responsibility for designing internal control to prevent and detect fraud.

c. Auditors use them to corroborate information received during the audit from the client and its employees.

d. They are dated the same date as the auditor’s report

A

Hall accepted an engagement to audit the year 1 financial statements of XYZ Company. XYZ completed the preparation of the year 1 financial statements on February 13, year 2, and its auditors began the fieldwork on February 17, year 2. Hall completed gathering sufficient appropriate evidence on March 24, year 2; Hall’s report and XYZ’s financial statements were released on March 28, year 2. The written representations normally would be dated

a. February 13, year 2.

b. February 17, year 2.

c. March 24, year 2.

d. March 28, year 2

C

What is an auditor’s primary method to corroborate information on litigation, claims, and assessments?

a. Examining legal invoices sent by the client’s attorney.

b. Verifying attorney–client privilege through interviews.

c. Reviewing the response from the client’s lawyer to a letter of audit inquiry.

d. Reviewing the written representation letter obtained from management.

C

Which of the following substantive procedures should auditors ordinarily perform regarding subsequent events?

a. Compare the latest available interim financial statements with the financial statements being audited.

b. Send second requests to the client’s customers who failed to respond to initial accounts receivable confirmation requests.

c. Communicate material weaknesses in internal control over financial reporting to the cli ent’s audit committee.

d. Review the cutoff bank statements for several months after the date of the financial statements

A

Which of the following substantive procedures would auditors most likely perform to obtain evidence about the occurrence of subsequent events?

a. Recompute a sample of large-dollar transactions occurring after the date of the financial statements for arithmetic accuracy.

b. Investigate changes in shareholders’ equity occurring after the date of the financial statements.

c. Send confirmations to vendors with whom the client normally does business but for which no balance in accounts payable is noted.

d. Confirm bank accounts established after the date of the financial statements.

B

The primary reason auditors request responses to attorney letters is to provide auditors

a. The probable outcome of asserted claims and pending or threatened litigation.

b. Corroboration of the information furnished by management about litigation, claims, and assessments.

c. The attorney’s opinions of the client’s historical experiences in recent similar litigation.

d. A description and evaluation of litigation, claims, and assessments that existed at the date of the financial statements.

B

The scope of an audit is not restricted when an attorney letter limits the response to

a. Matters to which the attorney has given substantive attention in the form of legal representation.

b. An evaluation of the likelihood of an unfavorable outcome of the matters disclosed by the entity.

c. The attorney’s opinion of the entity’s historical experience in recent similar litigation.

d. The probable outcome of asserted claims and pending or threatened litigation.

A

Lee and Kerzman is the auditor for Nance Corporation. During the course of the audit, the audit team noticed that Nance Corporation showed signs of financial distress. In particular, Nance Corporation was at risk for defaulting on several key loans and had therefore begun the process of restructuring their debt. This, among other indicators, led the audit team to have substantial doubt regarding Nance Corporation’s ability to continue as a going concern. The next step the team should take is to

a. Do nothing, as the auditors have no responsibility related to going concern assessments.

b. Obtain and discuss with management their plan to continue as a going concern and assess the likelihood the plan will be successful.

c. Issue an unmodified opinion with a separate Substantial Doubt About the Entity’s Ability to Continue as a Going Concern section discussing Nance Corporation’s ability to continue as a going concern.

d. Resign from the engagement.

B

What does the auditor need to document when there is substantial doubt that a client will continue as a going concern?

a. The conditions or events that suggest there is a going concern uncertainty.

b. Management’s plan (or lack thereof) to mitigate the conditions and to continue as a going concern.

c. The auditor’s conclusion on whether, after evaluating management’s plan, substantial doubt exists regarding the company’s ability to continue as a going concern and whether any report modifications are needed.

d. All of the above.

D

How is the auditors’ responsibility for expressing the opinion on financial statements disclosed in the standard (unmodified) report for a nonissuer?

a. Stated explicitly in the Auditor’s Responsibility for the Audit of the Financial Statements section.

b. Unstated but understood in the Auditor’s Responsibility for the Audit of the Financial Statements section.

c. Stated explicitly in the Opinion section.

d. Stated explicitly in the Basis for Opinion section

A

Which of the following is not included in the standard (unmodified) report on the financial statements?

a. An identification of the financial statements that were audited.

b. A general description of an audit.

c. An opinion that the financial statements present financial position in accordance with GAAP.

d. An emphasis-of-matter paragraph commenting on the effect of economic conditions on the entity.

D

Which of the following statements is not true with respect to the audit examinations and reports for issuers and nonissuers?

a. Audit examinations for nonissuers are based on user demand but for issuers audit exami nations are based on legislative requirements.

b. The reports for both issuers and nonissuers express an opinion on the entity’s financial statements.

c. Auditors are required to express an opinion on internal control in the audit of nonissuers but not in the audit of issuers.

d. Management is responsible for the fairness of the financial statements for both issuers and nonissuers

C

The audit team found that the entity has not capitalized a material amount of leases in the financial statements. When considering the materiality of this departure from GAAP, the auditors would choose between which reporting options?

a. Unmodified opinion or disclaimer of opinion.

b. Unmodified opinion or qualified opinion.

c. Unmodified opinion with an emphasis-of-matter paragraph or an adverse opinion.

d. Qualified opinion or adverse opinion.

D

Which of the following situations would not ordinarily require auditors to modify the Opinion section of the report on the financial statements of a nonissuer?

a. A material departure from GAAP.

b. Reference to the use of a component auditor in the examination of group financial statements.

c. A significant scope limitation.

d. A change from one generally accepted accounting principle to another

D

If audit teams are unable to apply an auditing procedure to an account balance or class of transactions and the impact has a material effect on the audit, the audit team should first

a. Attempt to determine whether alternative auditing procedures are available and can be applied.

b. Withdraw from the engagement and issue a disclaimer of opinion.

c. Assess the significance of the scope limitation on the overall fairness of the financial statements.

d. Notify individuals currently relying on the financial statements that the statements may no longer be relied upon.

A

When component auditors are involved in the audit of group financial statements, the group auditors may issue a report that

a. Refers to the component auditors, describes the extent of the component auditors’ work, and expresses an unmodified opinion.

b. Does not consider or evaluate the component auditors’ work but expresses an unmodified opinion in a standard report.

c. Places primary responsibility for the reporting on the component auditors.

d. Names the component auditors, describes their work, and presents only the group auditors’ report.

A

Under which of the following conditions can a disclaimer of opinion never be issued?

a. The entity’s going-concern problems are highly material and pervasive.

b. The entity does not allow the audit team access to evidence about important accounts.

c. Members of the audit team own stock in the entity.

d. The audit team has determined that the entity uses the NIFO (next-in, first-out) inventory costing method.

D

The audit team determined that the entity is suffering financial difficulty and its going concern status is seriously in doubt. Assuming that the entity adequately disclosed this matter in the financial statements, the auditors must choose between which of the following report alternatives?

a. Unmodified opinion with a reference to going-concern or disclaimer of opinion.

b. Standard (unmodified) report or a disclaimer of opinion.

c. Qualified opinion or adverse opinion.

d. Standard (unmodified) report or adverse opinion.

A

Which of these situations would require auditors to include an emphasis-of-matter para graph about consistency to an otherwise unmodified opinion?

a. Entity changed its estimated allowance for uncollectible accounts receivable.

b. Entity corrected a prior mistake in accounting for interest capitalization.

c. Entity sold one of its subsidiaries and consolidated six subsidiaries this year compared to seven last year.

d. Entity changed its inventory costing method from FIFO to LIFO

D

When auditors wish to issue an unmodified opinion but highlight that the entity changed its method of accounting for software development costs, they would most appropriately identify the change in accounting method in which of the following?

a. The Opinion section.

b. The Basis for Opinion section.

c. An emphasis-of-matter paragraph.

d. An other-matter paragraph.

C

Which of the following would not be addressed in an emphasis-of-matter or other-matter paragraph?

a. A change in accounting principles that was accounted for in conformity with GAAP.

b. Information relating to a material acquisition made during the previous year.

c. The financial statement effects of a material departure from generally accepted accounting principles.

d. Procedures performed on supplementary information required by the Financial Accounting Standards Board.

C

R. Wolfe became the new auditor for Royal Corporation, succeeding C. Mason, who audited the financial statements last year. Wolfe needs to report on Royal’s comparative financial statements and should disclose in the report an explanation about other auditors having audited the prior year

a. Only if Mason’s opinion last year was qualified.

b. To describe the prior audit and the opinion but not name Mason as the predecessor auditor.

c. To describe the audit but not reveal the type of opinion issued by Mason.

d. To describe the audit and the opinion and name Mason as the predecessor auditor

B

When financial statements are presented in comparative form and another firm audited the prior years’ financial statements (but the other firm’s report is not presented with the financial statements), the auditors’ report on the current year financial statements should

a. Disclaim an opinion on the prior years’ financial statements.

b. Not refer to the prior years’ financial statements.

c. Refer to any procedures performed by the current auditor to verify the opinion on the prior years’ financial statements.

d. Refer to the report and type of opinion issued by the other firm on the prior years’ financial statements.

D

If the opinion issued on prior years’ financial statements is no longer appropriate and financial statements are presented in comparative form, the auditors’ current report should

a. Not reference the prior years’ financial statements.

b. Indicate that the opinion on the prior years’ financial statements cannot be relied upon.

c. Reference the type of opinion issued on the prior years’ financial statements and indicate that the current opinion on these financial statements differs from that expressed in the prior years.

d. Express the revised opinion on the prior years’ financial statements without referencing the previously issued opinion.

C

When a predecessor auditor has examined comparative financial statements and that report is not presented with the successor auditor’s report, the successor auditor should

a. Assume responsibility for the work of the predecessor auditor and report on all com parative years presented.

b. Express an opinion on the year(s) examined by the successor auditor without referenc ing the comparative years examined by the predecessor auditor.

c. Indicate that comparative year(s) were examined by the predecessor auditor and dis close the type of opinion issued.

d. Express an opinion on the year(s) examined by the successor auditor and disclaim an opinion on the comparative year(s) examined by the predecessor auditor.

C

If auditors examine all years presented in comparative form, which of the following best describes their responsibility for prior years’ financial statements in their current report?

a. Auditors are not required to address prior years’ financial statements in their current report.

b. Auditors should consider whether information has come to their attention that might affect their previous opinion on the prior years’ financial statements.

c. Auditors should not modify their previous opinion on prior years’ financial statements.

d. Auditors are only required to consider whether new information might affect their previous opinion on prior years’ financial statements if a report other than unmodified was issued.

B

Which of the following would not be included in an auditors’ report on financial statements prepared using a special purpose framework?

a. A statement that the financial statements are the responsibility of management.

b. An identification of the financial statements and years examined.

c. An opinion on the appropriateness of the special purpose framework.

d. A reference to a footnote or other disclosure discussing the special purpose framework used in preparing the financial statements.

C

Auditors may accept an engagement and express an unmodified opinion on an element, account, or item of the financial statements if they

a. Perform analytical procedures related to all significant account balances and classes of transactions.

b. Limit the use of their report to specified users.

c. Conduct the engagement in accordance with generally accepted auditing standards.

d. Have expressed an adverse opinion on the full financial statements.

C

Which of the following statements is not true regarding an auditors’ report on compliance with contractual provisions conducted in conjunction with a GAAS audit?

a. Auditors may issue either a separate report on compliance with contractual provisions or a combined report on compliance included with the report on the financial statements.

b. The auditors’ report expresses an opinion on the financial statements and compliance with contractual provisions.

c. The use of the auditors’ report is limited.

d. The auditors’ report acknowledges that the audit was not conducted with the purpose of obtaining knowledge regarding compliance with contractual provisions

B