Super Chef, Inc. issues financial statements that present financial position and results of operations but omits the related statement of cash flows. Management does not believe the statement of cash flows to be a useful financial statement. What guidance is provided by AICPA Professional Standards to address this situation?
Type the paragraph here. Correctly formatted AU paragraphs are 2 or 3 digits.
AU 508.44
The auditor is not required to prepare a basic financial statement (for example, a statement of cash flows for one or more periods) and include it in the report if the company's management declines to present the statement. Accordingly, in these cases, the auditor should ordinarily qualify the report in the following manner:
Independent Auditor's Report
We have audited the accompanying balance sheets of X Company as of December 31, 20X2 and 20X1, and the related statements of income and retained earnings for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
[Same second paragraph as the standard report]
The company declined to present a statement of cash flows for the years ended December 31, 20X2 and 20X1. Presentation of such statement summarizing the Company's operating, investing, and financing activities is required by accounting principles generally accepted in the United States of America.
In our opinion, except that the omission of a statement of cash flows results in an incomplete presentation as explained in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of X Company as of December 31, 20X2 and 20X1, and the results of its operations for the years then ended in conformity with accounting principles generally accepted in the United States of America.
[Paragraph renumbered by the issuance of Statement on Auditing Standards No. 79, December 1995.]
