Question 1

An agreed-upon procedures engagement is one in which

Accepted Answer

A)  the CPA and management agree that procedures will be applied to all accounts and circumstances. 
B)  the CPA and management agree that procedures will not be applied to all accounts and circumstances. 
C)  the CPA, the responsible party making the assertions, and the specific persons who are the intended users of the CPA's report agree to all the procedures the CPA will perform. 
D)  the CPA, the responsible party making the assertions, and the specific persons who are the intended users of the CPA's report agree that the CPA will apply his judgment to determine the procedures to be performed. 
A)  the CPA and management agree that procedures will be applied to all accounts and circumstances. 
B)  the CPA and management agree that procedures will not be applied to all accounts and circumstances. 
C)  the CPA, the responsible party making the assertions, and the specific persons who are the intended users of the CPA's report agree to all the procedures the CPA will perform. 
D)  the CPA, the responsible party making the assertions, and the specific persons who are the intended users of the CPA's report agree that the CPA will apply his judgment to determine the procedures to be performed.

Question 2

As a CPA, you have been engaged to perform an attestation engagement. You would typically

Accepted Answer

A)  express a conclusion about an assertion. 
B)  provide management consulting services. 
C)  prepare financial forecasts to secure in preparation for receiving debt funding. 
D)  compile financial statements for the client. 
A)  express a conclusion about an assertion. 
B)  provide management consulting services. 
C)  prepare financial forecasts to secure in preparation for receiving debt funding. 
D)  compile financial statements for the client.

Question 3

Which of the following statements regarding prospective financial statements is most correct?

Accepted Answer

A)  CPAs are not attesting to the accuracy of the prospective financial statements. 
B)  CPAs are attesting to the accuracy of the prospective financial statements. 
C)  CPAs are performing a review on the company's assumptions and hypotheticals that underlie the prospective financial statements. 
D)  CPAs are performing a review on the achievability of the prospective financial statements. 
A)  CPAs are not attesting to the accuracy of the prospective financial statements. 
B)  CPAs are attesting to the accuracy of the prospective financial statements. 
C)  CPAs are performing a review on the company's assumptions and hypotheticals that underlie the prospective financial statements. 
D)  CPAs are performing a review on the achievability of the prospective financial statements.

Question 4

In an examination engagement for prospective financial statements, the CPA obtains satisfaction as to the completeness and reasonableness of all the assumptions.

Accepted Answer

A) True 
 B)False

Question 5

When issuing a debt compliance letter, the auditor's opinion should be in the form of a negative assurance.

Accepted Answer

A) True 
 B)False

Question 6

If a client has failed to follow applicable accounting standards in a review engagement, the report must be modified. Prepare an example of the suggested wording in a separate paragraph covering known departures from accounting principles generally accepted in the United States of America.

Accepted Answer

Known Departures from Accounting Princip

Question 7

In a preparation service engagement,

Accepted Answer

A)  the CPA's responsibilities are similar to those performed during a review. 
B)  the CPA does not provide any assurance of the financial statements. 
C)  the CPA must issue a preparation service engagement report. 
D)  the CPA must be independent. 
A)  the CPA's responsibilities are similar to those performed during a review. 
B)  the CPA does not provide any assurance of the financial statements. 
C)  the CPA must issue a preparation service engagement report. 
D)  the CPA must be independent.

Question 8

Evidence for a review engagement consists primarily of

Accepted Answer

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

Question 9

The engagement and report on debt compliance letters should be limited to compliance matters that the auditor is qualified to evaluate. Which of the following engagements would be inappropriate for the CPA to attempt to evaluate?

Accepted Answer

A)  determining whether the client has properly restricted its business activities to the requirements of an agreement 
B)  determining whether principal and interest payments were made when due 
C)  determining whether the proper limitations were maintained on dividends, working capital, and debt ratios 
D)  determining whether the accounting records were adequate for conducting an ordinary audit 
A)  determining whether the client has properly restricted its business activities to the requirements of an agreement 
B)  determining whether principal and interest payments were made when due 
C)  determining whether the proper limitations were maintained on dividends, working capital, and debt ratios 
D)  determining whether the accounting records were adequate for conducting an ordinary audit

Question 10

For compilations, an accountant does which of the following?

Accepted Answer

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

Question 11

An interim review of the financial information for public companies is performed following standards of the

Accepted Answer

A)  American Institute of Certified Public Accountants (AICP
A) . 
B)  Public Company Accounting Oversight Board (PCAO
B) . 
C)  Securities and Exchange Commission (SE
C) . 
D)  Statements on Standards for Accounting and Review Services (SSARS). 
A)  American Institute of Certified Public Accountants (AICP
A) . 
B)  Public Company Accounting Oversight Board (PCAO
B) . 
C)  Securities and Exchange Commission (SE
C) . 
D)  Statements on Standards for Accounting and Review Services (SSARS).

Question 12

Auditors of the financial statements of public companies must follow the guidelines in the SSAEs.

Accepted Answer

A) True 
 B)False

Question 13

When performing a review service and the accountant becomes aware that fraud may have occurred, the accountant must withdraw from the engagement.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would not be included in a CPA's report based upon a review of the financial statements of a nonpublic entity?

Accepted Answer

A)  a statement that the review was in accordance with generally accepted auditing standards 
B)  a statement that all information included in the financial statements is the representation of management 
C)  a statement that the review primarily consists of analytical procedures and inquiries 
D)  a statement that the accountant has conducted a review 
A)  a statement that the review was in accordance with generally accepted auditing standards 
B)  a statement that all information included in the financial statements is the representation of management 
C)  a statement that the review primarily consists of analytical procedures and inquiries 
D)  a statement that the accountant has conducted a review

Question 15

Review reports are normally dated as of the client's balance sheet date.

Accepted Answer

A) True 
 B)False

Question 16

Statements on Standards for Accounting and Review Services (SSARS) are issued by the SEC.

Accepted Answer

A) True 
 B)False

Question 17

The concept of limited assurance is provided for in which of the following engagements?

Accepted Answer

A)  audit 
B)  review 
C)  compilation 
D)  agreed-upon procedures 
A)  audit 
B)  review 
C)  compilation 
D)  agreed-upon procedures

Question 18

A financial statement review conducted in compliance with Statements on Standards for Accounting and Review Services (SSARS) requires the accountant to obtain evidence to express negative assurance. One of these procedures is to "perform analytical procedures." List three other procedures the accountant must perform.

Accepted Answer

• Obtain agreement on engagement terms.

Question 19

SOC 3 reports are prepared using the Trust Services Criteria.

Accepted Answer

A) True 
 B)False

Question 20

Auditors should provide debt compliance letters only for clients for whom the auditor has done an audit of the overall financial statements.

Accepted Answer

A) True 
 B)False

Exam 25: Other Assurance Services

An agreed-upon procedures engagement is one in which

As a CPA, you have been engaged to perform an attestation engagement. You would typically

Which of the following statements regarding prospective financial statements is most correct?

In an examination engagement for prospective financial statements, the CPA obtains satisfaction as to the completeness and reasonableness of all the assumptions.

When issuing a debt compliance letter, the auditor's opinion should be in the form of a negative assurance.

If a client has failed to follow applicable accounting standards in a review engagement, the report must be modified. Prepare an example of the suggested wording in a separate paragraph covering known departures from accounting principles generally accepted in the United States of America.

In a preparation service engagement,

Evidence for a review engagement consists primarily of

The engagement and report on debt compliance letters should be limited to compliance matters that the auditor is qualified to evaluate. Which of the following engagements would be inappropriate for the CPA to attempt to evaluate?

For compilations, an accountant does which of the following?

An interim review of the financial information for public companies is performed following standards of the

Auditors of the financial statements of public companies must follow the guidelines in the SSAEs.

When performing a review service and the accountant becomes aware that fraud may have occurred, the accountant must withdraw from the engagement.

Which of the following would not be included in a CPA's report based upon a review of the financial statements of a nonpublic entity?

Review reports are normally dated as of the client's balance sheet date.

Statements on Standards for Accounting and Review Services (SSARS) are issued by the SEC.

The concept of limited assurance is provided for in which of the following engagements?

SOC 3 reports are prepared using the Trust Services Criteria.

Auditors should provide debt compliance letters only for clients for whom the auditor has done an audit of the overall financial statements.

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 Materiality

Assessing the Risk of Material Misstatement

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

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

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