Where should an extraordinary assumption be stated in a report?
Correct Answer
A) Prominently, wherever the reader will encounter it
Why this is correct: The key principle is clear and prominent disclosure so any reader relying on the value conclusion understands it is conditional. This typically means stating it in the assumptions section and near the value conclusion itself. Why the other choices are wrong: Placing it only in the workfile hides it from the report user. A footnote at the end of addenda may be missed. Stating it only in the transmittal letter is insufficient as the report may be separated from the letter. Exam tip: Disclose extraordinary assumptions prominently, where the reader will definitely see them.
Why This Is the Correct Answer
Why this is correct: The key principle is clear and prominent disclosure so any reader relying on the value conclusion understands it is conditional. This typically means stating it in the assumptions section and near the value conclusion itself. Why the other choices are wrong: Placing it only in the workfile hides it from the report user. A footnote at the end of addenda may be missed. Stating it only in the transmittal letter is insufficient as the report may be separated from the letter. Exam tip: Disclose extraordinary assumptions prominently, where the reader will definitely see them.
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