Question 1

When a CPA performs an examination engagement under the attestation standards, the amount of evidence gathered is ________ and the level of assurance is ________.

Accepted Answer

A) extensive, varying 
B) significant, high 
C) extensive, high 
D) significant, moderate 
A) extensive, varying 
B) significant, high 
C) extensive, high 
D) significant, moderate C

Question 2

A CPA firm can issue a compilation report:

Accepted Answer

A) only if the partners are independent. 
B) only if all the partners and the staff in the office performing the engagement are independent. 
C) if the partners have no material or direct immaterial interest in client. 
D) even if it is not independent. 
A) only if the partners are independent. 
B) only if all the partners and the staff in the office performing the engagement are independent. 
C) if the partners have no material or direct immaterial interest in client. 
D) even if it is not independent. D

Question 3

The standards which govern the CPA's association with unaudited financial statements of nonpublic companies are the:

Accepted Answer

A) AICPA's Code of Professional Conduct. 
B) Statements on Auditing Standards (SASs). 
C) Statements of Standards on Attestation Engagements (SSAEs). 
D) Statements on Standards for Accounting and Review Services (SSARS). 
A) AICPA's Code of Professional Conduct. 
B) Statements on Auditing Standards (SASs). 
C) Statements of Standards on Attestation Engagements (SSAEs). 
D) Statements on Standards for Accounting and Review Services (SSARS). D

Question 4

Prospective financial statements are for general use or for limited use.General use refers to use by any third party, whereas limited use refers to use by third parties with which the responsible party is negotiating directly.Which of the following statements is not correct?

Accepted Answer

A) Forecasts can be provided for general use. 
B) Forecasts can be provided for limited use. 
C) Projections can be provided for general use. 
D) Projections can be provided for limited use. 
A) Forecasts can be provided for general use. 
B) Forecasts can be provided for limited use. 
C) Projections can be provided for general use. 
D) Projections can be provided for limited use.

Question 5

One of the first steps that should be performed for a review of a nonpublic entity's financial statements is to:

Accepted Answer

A) read the financial statements. 
B) obtain knowledge of the accounting principles and practices of the client's industry. 
C) inquire whether management has omitted substantially all of the disclosures required by applicable accounting standards. 
D) apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements. 
A) read the financial statements. 
B) obtain knowledge of the accounting principles and practices of the client's industry. 
C) inquire whether management has omitted substantially all of the disclosures required by applicable accounting standards. 
D) apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements.

Question 6

An accountant who reviews the financial statements of a nonpublic entity should issue a report stating that a review:

Accepted Answer

A) is substantially equivalent in scope to an audit. 
B) is substantially more in scope than a compilation. 
C) is substantially less in scope than an audit. 
D) provides only limited assurance that the financial statements are fairly presented. 
A) is substantially equivalent in scope to an audit. 
B) is substantially more in scope than a compilation. 
C) is substantially less in scope than an audit. 
D) provides only limited assurance that the financial statements are fairly presented.

Question 7

Briefly describe each of the five Trust Services principles.

Accepted Answer

The five Trust Services principles are:

Question 8

Which of the following is not an accurate statement regarding agreed-upon procedures engagements?

Accepted Answer

A) These engagements are also known as procedures and findings engagements. 
B) A report for such an engagement describes the findings resulting from the procedures, but cannot describe the procedures agreed upon. 
C) All agreed-upon procedure engagements are now under the scope of attestation standards. 
D) Agreed-upon procedures engagements appeal to CPAs because management, or a third-party user, specifies the procedures they want done. 
A) These engagements are also known as procedures and findings engagements. 
B) A report for such an engagement describes the findings resulting from the procedures, but cannot describe the procedures agreed upon. 
C) All agreed-upon procedure engagements are now under the scope of attestation standards. 
D) Agreed-upon procedures engagements appeal to CPAs because management, or a third-party user, specifies the procedures they want done.

Question 9

Discuss the six SSARS requirements that must be met when an accountant is performing a compilation of financial statements.

Accepted Answer

The preparer of the statements must:
•Es

Question 10

If an auditor performs a compilation but lacks independence, an additional paragraph must be added which states that: " We are not independent with respect to XYZ Company."

Accepted Answer

A) True 
 B)False

Question 11

The quarterly reports submitted to the SEC by the client:

Accepted Answer

A) have to be audited and the CPA firm must be identified. 
B) do not have to be audited, but the CPA firm which does the annual audit must be identified. 
C) have to be audited, but the CPA firm does not have to be identified. 
D) do not have to be audited, but the CPA firm which does the annual audit must review the quarterly statements before they are submitted to the SEC. 
A) have to be audited and the CPA firm must be identified. 
B) do not have to be audited, but the CPA firm which does the annual audit must be identified. 
C) have to be audited, but the CPA firm does not have to be identified. 
D) do not have to be audited, but the CPA firm which does the annual audit must review the quarterly statements before they are submitted to the SEC.

Question 12

What is the best reason that standards prohibit accepting an engagement on a projection for general use?

Accepted Answer

A) The CPA's procedures would violate SSARS. 
B) Reports on projections are not well understood by the general public. 
C) Underlying hypothetical assumptions are difficult to interpret without obtaining additional information. 
D) The CPA is not qualified to report on the use of GAAP in the projected financial statement. 
A) The CPA's procedures would violate SSARS. 
B) Reports on projections are not well understood by the general public. 
C) Underlying hypothetical assumptions are difficult to interpret without obtaining additional information. 
D) The CPA is not qualified to report on the use of GAAP in the projected financial statement.

Question 13

Discuss each of the three types of compilation reports and the circumstances in which each should be used.

Accepted Answer

•Compilation with full disclosure.This r

Question 14

Which of the following results in a conclusion that represents positive assurance?

Accepted Answer

A) Review 
B) Compilation 
C) Examination 
D) Agreed upon procedure engagement 
A) Review 
B) Compilation 
C) Examination 
D) Agreed upon procedure engagement

Question 15

The service auditor's Type 2 report contains:

Accepted Answer

A) an opinion on the reasonableness of the financial statements. 
B) the two opinions about the description and suitability of the design of controls that are issued in a Type 1 report plus an additional opinion about the operating effectiveness of controls throughout the period. 
C) contains an opinion only on the operating effectiveness of the controls. 
D) an opinion on the service company's website. 
A) an opinion on the reasonableness of the financial statements. 
B) the two opinions about the description and suitability of the design of controls that are issued in a Type 1 report plus an additional opinion about the operating effectiveness of controls throughout the period. 
C) contains an opinion only on the operating effectiveness of the controls. 
D) an opinion on the service company's website.

Question 16

Which are prospective financial statements that present an entity's financial position, results of operations, and cash flows, to the best of the responsible party's knowledge and belief, given one or more hypothetical assumptions?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 17

Which of the following is a attestation standard under the standards of reporting?

Accepted Answer

A) The practitioner must have adequate technical training. 
B) The practitioner must adequately plan the work. 
C) The practitioner must evaluate internal controls. 
D) The practitioner must identify the subject matter or assertion being reported on. 
A) The practitioner must have adequate technical training. 
B) The practitioner must adequately plan the work. 
C) The practitioner must evaluate internal controls. 
D) The practitioner must identify the subject matter or assertion being reported on.

Question 18

As a CPA you have been asked to examine an entity's financial projections.Acceptance of the engagement would be appropriate if distribution is limited to:

Accepted Answer

A) stockholders of record as of the date of the report. 
B) potential investors and creditors by posting on the company's website. 
C) general public by posting on the company's website. 
D) a financial institution for which the company is negotiating a loan. 
A) stockholders of record as of the date of the report. 
B) potential investors and creditors by posting on the company's website. 
C) general public by posting on the company's website. 
D) a financial institution for which the company is negotiating a loan.

Question 19

The guidance for service auditors has been moved to the attestation standards.

Accepted Answer

A) True 
 B)False

Question 20

Clients occasionally enter into loan agreements that require them to provide the ________ with a report from a CPA about the existence or nonexistence of some condition.

Accepted Answer

A) underwriters of securities 
B) audit committee 
C) lender 
D) the Securities and Exchange Commission 
A) underwriters of securities 
B) audit committee 
C) lender 
D) the Securities and Exchange Commission

Exam 25: Other Assurance Services

When a CPA performs an examination engagement under the attestation standards, the amount of evidence gathered is ________ and the level of assurance is ________.

A CPA firm can issue a compilation report:

The standards which govern the CPA's association with unaudited financial statements of nonpublic companies are the:

Prospective financial statements are for general use or for limited use.General use refers to use by any third party, whereas limited use refers to use by third parties with which the responsible party is negotiating directly.Which of the following statements is not correct?

One of the first steps that should be performed for a review of a nonpublic entity's financial statements is to:

An accountant who reviews the financial statements of a nonpublic entity should issue a report stating that a review:

Briefly describe each of the five Trust Services principles.

Which of the following is not an accurate statement regarding agreed-upon procedures engagements?

Discuss the six SSARS requirements that must be met when an accountant is performing a compilation of financial statements.

If an auditor performs a compilation but lacks independence, an additional paragraph must be added which states that: " We are not independent with respect to XYZ Company."

The quarterly reports submitted to the SEC by the client:

What is the best reason that standards prohibit accepting an engagement on a projection for general use?

Discuss each of the three types of compilation reports and the circumstances in which each should be used.

Which of the following results in a conclusion that represents positive assurance?

The service auditor's Type 2 report contains:

Which are prospective financial statements that present an entity's financial position, results of operations, and cash flows, to the best of the responsible party's knowledge and belief, given one or more hypothetical assumptions?

Which of the following is a attestation standard under the standards of reporting?

As a CPA you have been asked to examine an entity's financial projections.Acceptance of the engagement would be appropriate if distribution is limited to:

The guidance for service auditors has been moved to the attestation standards.

Clients occasionally enter into loan agreements that require them to provide the ________ with a report from a CPA about the existence or nonexistence of some condition.

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Internal and Governmental Financial Auditing and Operational Auditing

Filters

When a CPA performs an examination engagement under the attestation standards, the amount of evidence gathered is and the level of assurance is .