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

In auditing a client's financial statements, what should an auditor do if supplementary information is presented?

1. Perform detailed tests on the supplementary information.

2. Only confirm if the supplementary information has omissions.

3. Perform limited procedures and reference the information in the report.

4. Negligently disregard the supplementary information.

The correct answer is: Perform limited procedures and reference the information in the report.

When an auditor encounters supplementary information presented alongside a client's financial statements, the auditor's response is guided by the need to ensure that this additional information does not mislead users of the financial statements. The correct approach involves performing limited procedures and referencing that information in the auditor's report. By performing limited procedures, the auditor typically assesses whether the supplementary information is consistent with the financial statements and whether it is presented in a manner that is clear and understandable. This process does not require the same level of detailed testing as the main financial statements because supplementary information is often not considered a core part of the audit. However, it still holds importance, as it can provide additional context or details that impact how the primary financial statements are interpreted or understood. Referencing the supplementary information in the audit report serves to inform the users that this information has been reviewed and considered, yet it also delineates the auditor’s responsibilities regarding that information, indicating that it was not subject to the same rigorous audit procedures. This method effectively balances the auditor's responsibility to provide a fair and accurate assessment of the financial statements while acknowledging the role of supplementary information in the overall financial reporting process.