The following questions relate to specialized reporting circumstances. Select the best response. 

a. When reporting on financial statements prepared on a comprehensive basis of accounting other than generally accepted accounting principles, the independent auditor should include in the report a paragraph that 

1. States that the financial statements are not intended to be in conformity with generally accepted accounting principles.

2. Justifies the comprehensive basis of accounting being used. 

3. Refers to the authoritative pronouncements that explain the comprehensive basis of accounting being used. 

4. States that the financial statements are not intended to have been audited in accordance with generally accepted auditing standards. 

b. The term "special reports" may include all of the following, except reports on financial statements 

1. Of an organization that has limited the scope of the audit. 

2. Prepared for limited purposes such as a report that relates to only certain aspects of financial statements. 

3. Of a not-for-profit organization which follows accounting practices differing in some respects from those followed by business enterprises organized for profit. 4 Prepared in accordance with historical cost/constant dollar accounting. e Whenever special reports, filed on a printed form designed by authorities, call upon the independent auditor to make an assertion that the auditor believes is not justified, the auditor should 

1. Reword the form or attach a separate report. 

2. Submit a short-form with explanations. 

3. Submit the form with questionable items clearly omitted. 

4. Withdraw from the engagement.

d. A financial forecast is an estimate of financial position, results of operations, and cash flows that, to the best of management's knowledge, is 

1. At the midpoint of a given precision range.

2. At the low point of a given precision range.

3 Conservative. 

4. Most probable. 

e. A CPA's understanding of the internal control structure in an audit 

1. Is generally more limited than that made in connection with an engagement to express an opinion on the internal control structure. 

2. Is generally more extensive than that made in connection with an engagement to express an opinion on the internal control structure. 

3. Will generally be identical to that made in connection with an engagement to express an opinion on the internal control structure. 

4 Will generally result in the CPA expressing an opinion on the internal control structure.