Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

What is the auditor’s responsibility when supplementary financial disclosures for pension information are required by the GASB?

1. Only to read the information prior to issuing the report.

2. To examine and report on any inconsistencies found.

3. To apply certain limited procedures and add an additional report paragraph.

4. To provide a full audit opinion on the supplementary disclosures.

The correct answer is: To apply certain limited procedures and add an additional report paragraph.

The auditor's responsibility regarding supplementary financial disclosures for pension information, as required by the Governmental Accounting Standards Board (GASB), involves applying certain limited procedures and including an additional report paragraph in the audit report. This approach reflects the understanding that while these disclosures provide additional context to the financial statements, they are not subject to the same level of scrutiny as the main financial statements. In practice, this means the auditor will perform specific procedures to ensure that the supplementary disclosures are consistent with the financial statements and provide relevant information. This limited scope does not require a full audit opinion on the supplementary disclosures, as would be the case if they were part of the primary set of financial statements being audited. The additional paragraph in the report helps to clarify the auditor's responsibility regarding these disclosures, making it clear to users of the financial statements the extent of the audit procedures undertaken. This option strikes a balance between thoroughness and practical limitation, acknowledging that while supplementary disclosures are important, they do not necessarily require the same exhaustive audit approach that full financial statements do.