Exam 20: Other Assurance and Nonassurance Services

You have just recently become a member of your local non-profit housing co-op by moving into the largest unit. The board of directors has asked that you handle the review engagement but you are concerned about independence. What is a practical way for you to stay in the co-op but also perform the review engagement?

Sean Clem has done a review engagement and prepared the tax return for your web design business for the last five years. The books and records have always been well organized, although year-end adjusting entries have been required. You do some of the accounting yourself and the rest of the accounting records are handled by your spouse, who is also an employee of the business. This year, you would like to expand your business to provide ISP (internet service provider) services to your clients. This would involve purchasing additional computer equipment and software. You are also considering hiring an additional employee (you currently have three), and you are looking at obtaining a loan for $100 000 from the bank. The bank says that you should have your records audited, but you are not sure what this will mean. Required: What would Sean say to you about the differences between an audit and a review?

A compilation presents information, in the form of financial statements, that is the representation of management. The public accountant who prepares the compilation undertakes to express

In addition to having modifications of wording for the financial statement audit opinion, other types of opinions can have modifications as well. Which of the following describes a situation where there would be a qualification or disclaimer of opinion for a direct reporting engagement?

As part of the conduct of a review engagement, which of the following procedures would be appropriate for assessing the ending value of accounts payable?

The fact that a client has a material accounting departure for failure to follow ASPE would require the accountant to disclose that fact in a separate reservation paragraph when the accountant is performing

Which of the following procedures would most likely be conducted by an accountant during a compilation engagement?

Define "assurance engagements."

What is an auditor's responsibility for supplementary information that is outside the basic financial statements but required by accounting guidelines?

You have just signed off the audit report on the financial statements of your client. What type of engagement did you complete?

The accountant is working on an engagement with respect to the client's financial statements. Which of the following engagements would omit an assessment of the client's accounting policies' compliance with GAAP?

As part of a loan agreement that it is thinking of obtaining, Always Quick Manufacturing Limited has decided that it will use accounts receivable and inventory as security for working capital funds. The bank has indicated that in addition to an annual financial statement audit, it would require quarterly assurance on the accounts receivable and inventory amounts. The type of assurance required has not been stated. The bank has told Jose, the owner of the company, that he would need to provide a detailed inventory list and an aged accounts receivable trial balance on the fifteenth of each month for the information as at the preceding month end. Jose would like to know what his alternatives are. Required: Your partner is going to meet with Jose next week and would like you to prepare a memo to file that will be used as part of the meeting. Draft a brief memo that includes a list of alternative types of engagements that could be used to provide assurance on the accounts receivable and inventory balances.

An engagement for applying specified auditing procedures to financial information other than financial statements provides no assurance. This results in

The Locker Building is a new apartment building in a Vancouver suburb. In order to receive a subsidy from the municipality, it needs to prove that it has complied with the city's new rules about "green efficiency." The "green efficiency" rules are described on the municipality's website and list the requirements a building must meet to be considered green and efficient. Your firm, with the help of an environmental scientist, has been asked to perform a direct reporting engagement for the Locker Building. The suitable criteria in this case are the

As part of the review engagement for a small manufacturing company, which of the following would be a typical review procedure for the sales cycle?

A review engagement includes

Which of the following is a professional standard that must be followed by an accountant when conducting a compilation engagement?

Leon Levy, a partner at the audit firm where you work, asked you to work on the audit of the balance sheet of Geminy Corp. Geminy is not a public company and has not been required to have audited financial statements in the past. This year, due to a new bank loan, its bank requested that audited financial statements be provided. Who are the primary users in this assurance engagement?

Identify the reporting standards for compilation engagements.

Which of the following items includes criteria for accepting a compilation engagement?