Harris, CPA has been asked to audit and report on the balance sheet of Fox Co, but not on statements of income, retained earnings, or cash flow. This will not be done in conjunction with an audit of the complete set of financials. Harris may:
Accept the engagement because such engagements merely involve special considerations in application of US GAAS.
Delta Life Insurance Co prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission. If Wall, CPA, Delta's auditor, discovers that the statements are not suitable titled, Wall should:
Disclose any reservations in a basis for modification paragraph and qualify the opinion.
In the standard report on summary financial statements that are derived from a public entity's audited financial statements, a CPA should indicate that the
CPA has audited and expressed an opinion on the complete financial statements.
What type of assurance is provided by special reports?
A positive opinion may be rendered in some types of special reports.
An entity prepares it's financial statements on its income tax basis. A descriptions of how that basis differs from GAAP should be included in the
Notes to the financial statements
When unaudited financial statements are presented in comparative form with audited financial statements in a document filed with the SEC, such statements should be1) Marked as "unaudited" 2) Withheld until audit or referred to in auditors report
1) Marked as "unaudited" YES
Compiled financial statements should be accompanied by an accountants report stating that
The accountant conducted the compilation in accordance with Statements on Standards for Accounting and Review Services OR The objective of a compilation is to assist management in presenting financial information in the form of financial statements
What would NOT be included in a review engagement of a nonissuer?
An accountant compiles financial statements not expected to be used by a 3rd party. The accountant may decline to issue a compilation report provided1) Each page of FS clearly marked to restrict use2) Written engagement letter used to document understanding 3) Written representation letter obtained
1) Each page of FS clearly marked to restrict use YES2) Written engagement letter used to document understanding YES 3) Written representation letter obtained NO
An accountant may compile a nonissuers financial statements that omit all disclosures required by GAAP if the omission is1) Clearly indicated in accountant report 2) Non undertaken with intention of misleading financial statement users
1) Clearly indicated in accountant report YES
During an engagement to review the financial statements of a nonissuer, an accountant becomes aware of a material departure from GAAP. If the accountant modifies the report, he should
Disclose the departure from GAAP in a separate paragraph of the report.
What representation does an accountant make implicitly when issuing the standard report for compilation of a nonissuers financial statements
The accountant is independent with respect to the entity.
What inquiry or analytical procedures are ordinarily performed in an engagement to review a nonissuers financial statements?
Inquiries concerning the entity's procedures for recording and summarizing transactions.
What is performed in a review engagement but not a compilation?
Obtaining a rep letter from CEO
The standard report issued by an accountant after reviewing the financial statements of a non issuer should state that
A review includes primarily applying analytical procedures to managements financial data and making inquiries of company management
Financial statements of a non-issuer that have been reviewed by an accountant should be accompanied by a report stating that
Management is responsible for the preparation and fair presentation of the financial statements
Lawrence CPA is compiling the unaudited financial statements of DML products, a non-issuer. These financial statements are no expected to be used by a 3rd party. What is Lawrence least likely to perform in this engagement?
Evaluate the relationships of DML's financial statement elements that would be expected to conform to a predictable pattern.
An auditor who is conducting a review of the unaudited financial statements of a non-issuer would be required to
Obtain a management rep letter
An accountants compilation report on the unaudited financial statements of a nonissuer should
Disclaim an opinion on the financial statements
CPA determined an entity maintained accounts in OCBOA during review. The CPA would
Modify the review report to reflect the fact that the financial statements were presented in another comprehensive basis of accounting
An accountant compiles the financial statements of a non-issuer and issues the standard compilation report. Although not specifically stated in this report, it is implied that
Substantially all disclosures required by GAAP are included in the financial statements
As a successor accountant in a review and compilation, is it required to communicate with the predecessor accountant to obtain work papers?
A CPA has been hired to perform agreed-upon procedures for rents and royalties. Audit committee & management are responsible parties. Report for internal use. What are the required components for the report
1) A title including independent.2) A statement that the procedures performed were those agreed to by the audit committee and management.3) A list of the procedures performed and findings obtained. 4) Disclaimer of opinion on Statement of Royalties (no opinion)
When an accountant is engaged to compile a non-issuer's financial statement that omit all disclosures required by GAAP, the accountant should indicate in the compilation report that the financial statements are
Not designed for those who are uninformed about the omitted disclosures
What is correct regarding compiled financial statements when 3rd party reliance is anticipated?
A compilation report must be issued.
Which communication options may be used when an accountant submits compiled financial statements to be used only by management?1) Compilation report 2) Written engagement letter
1) Compilation report YES
What would an accountant investigate during a review of financial statements of a non-issuer if accounts receivable did not conform to a predictable pattern during the year?
Financial statements of a non-issuer that have been reviewed by an accountant should be accompanied by a report stating that a review
consists principally of inquiries of company personnel and analytical procedures applied to financial data
Financial statements of a non-issuer that have been reviewed by an accountant should be accompanied by a report stating that
All information included in the financial statements is representation of the management of the entity
Silver CPA has been hired by a public company to conduct a review of its interim financial information. While performing review procedures, Silver becomes aware of a significant change in the control activities at one of Andrew's branch. What might the CPA consider?1) Making additional inquiries such as whether management has monitored the changes and considered whether they were operating as intended? 2) Employing analytical procedures with less precise expectation?
1) Making additional inquiries such as whether management has monitored the changes and considered whether they were operating as intended? YES
Davidson CPA is performing a review under auditing standards of Gold's interim financial information. As part of planning, Davidson reads the audit documentation from the preceding years annual audit. What is least likely to affect Davidson's review?
Scope limitations that were overcome through acceptable alternative procedures.
When planning a review of an audit client's interim financial statements, what procedure should the accountant perform to update the accountants knowledge about the entity's business and its internal control?
Consider the results of audit procedures performed with respect to the current year's financial statements
The quarterly data required by SEC Reg S-K have been omitted. What must be included in the report?
The company has NOT presented the selected quarterly data.
What do letters for underwriters, commonly referred to as comfort letters, give?
Letters for underwriters typically give negative assurance on unaudited interim financial information
What matters are usually covered in a typical comfort letter?
An opinion as the whether the audited financial statements comply in form with the accounting requirements of the SEC
When issuing letters for underwriters, comfort letters, an accountant may provide negative assurance concerning
The conformity of the entity's unaudited condensed interim financial information with GAAP.
When a CPA examines a client's projected financial statements, the CPA's report should
State that the CPA performed procedures to evaluate management's assumptions.
In an attest engagement, use of the accountants report should be restricted to specified parties in situations EXCEPT
When reporting on an assertion about the subject matter instead of reporting directly on the subject matter.
A CPA's report on agreed upon procedures related to managements assertion about an entity's compliance with specified requirements should contain
A statement on limitations of the use of the report
An accountant's standard report on a compilation of a projection should NOT include
Statement that the accountant expresses only limited assurance that the results may be achieved.
Negative assurance may be expressed when an accountant is requested to report on the
results of performing a review on managements assertion
What must be included in an practitioner's report on the results of applying agreed-upon procedures
A list of the procedures performed as agreed to by the specified parties identified in the report.
What is least likely to be included in an examination report related to a financial projection?
An indication that had the accountants performed additional procedures, other matters might have come to their attention that would have been reported.
According to AICPA Statements on Standards for Attestation Engagements, a public accounting firm should establish quality control policies to provide assurance about ____________regarding agreed-upon procedures engagements
The practitioner is independent from the client and other specified parties
What services can an accountant perform without being required to issue a compilation or review report under SSARS? 1) Working trial balance 2) Journal entries
1) Working trial balance YES |
During an engagement to review the financial statements of a nonissuer
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