Question 1

The two types of services provided in connection with the Statements on Standards for Accounting and Review Services are:

Accepted Answer

A)  audit and examination services. 
B)  compilation and review services. 
C)  examination and review services. 
D)  management advisory services and compilations. 
A)  audit and examination services. 
B)  compilation and review services. 
C)  examination and review services. 
D)  management advisory services and compilations.

Question 2

Which of the following types of engagement reports would provide positive assurance?

Accepted Answer

A)  An examination 
B)  A review 
C)  An agreed-upon procedures engagement 
D)  A compilation 
A)  An examination 
B)  A review 
C)  An agreed-upon procedures engagement 
D)  A compilation

Question 3

The distribution of which of the following types of reports is unrestricted?

Accepted Answer

A)  Examinations and reviews 
B)  Reviews and agreed-upon procedures 
C)  Examinations and agreed-upon procedures 
D)  Examinations, reviews, and agreed-upon procedures 
A)  Examinations and reviews 
B)  Reviews and agreed-upon procedures 
C)  Examinations and agreed-upon procedures 
D)  Examinations, reviews, and agreed-upon procedures

Question 4

The use of positive assurance is appropriate in a review attestation report.

Accepted Answer

A) True 
 B)False

Question 5

You are preparing to issue a report on the compilation of financial statements for a nonpublic company.Prior to issuing the report you should:

Accepted Answer

A)  read the financial statements to determine if they are free from obvious material errors. 
B)  perform analytical procedures to determine if they are free from material misstatements. 
C)  perform tests of balances on selected accounts to determine if they are free from material misstatements. 
D)  perform limited control tests to determine if there are any material misstatements. 
A)  read the financial statements to determine if they are free from obvious material errors. 
B)  perform analytical procedures to determine if they are free from material misstatements. 
C)  perform tests of balances on selected accounts to determine if they are free from material misstatements. 
D)  perform limited control tests to determine if there are any material misstatements.

Question 6

Which of the following services is performed under the attestation standards?

Accepted Answer

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

Question 7

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 8

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.

Question 9

The highest level of assurance is provided for in which one of the following engagements?

Accepted Answer

A)  Review 
B)  Compilation 
C)  Audit 
D)  None of the above 
A)  Review 
B)  Compilation 
C)  Audit 
D)  None of the above

Question 10

Which of the following is not a standard contained in both the Attestation Standards and Generally Accepted Auditing Standards with regards to the standards of field work?

Accepted Answer

A)  The examination is to be performed by a person having adequate technical training. 
B)  An independence in mental attitude is to be maintained. 
C)  Sufficient evidence is to be obtained. 
D)  The practitioner must obtain a sufficient understanding of the client's internal control. 
A)  The examination is to be performed by a person having adequate technical training. 
B)  An independence in mental attitude is to be maintained. 
C)  Sufficient evidence is to be obtained. 
D)  The practitioner must obtain a sufficient understanding of the client's internal control.

Question 11

Reports on agreed-upon procedures are intended to be distributed:

Accepted Answer

A)  to only the involved parties, who would have the requisite knowledge about those procedures and the level of assurance resulting from them. 
B)  to only the involved parties, who would have the requisite knowledge about those procedures but not the level of assurance resulting from them. 
C)  to any party to whom the client wishes. 
D)  only to the stockholders of the client. 
A)  to only the involved parties, who would have the requisite knowledge about those procedures and the level of assurance resulting from them. 
B)  to only the involved parties, who would have the requisite knowledge about those procedures but not the level of assurance resulting from them. 
C)  to any party to whom the client wishes. 
D)  only to the stockholders of the client.

Question 12

A CPA who has been engaged to audit financial statements that were prepared on a cash basis:

Accepted Answer

A)  must ascertain that there is proper disclosure of the fact that the cash basis has been used, the general nature of material items omitted, and the net effect of such omissions. 
B)  may not be associated with such statements which are not in accordance with generally accepted accounting principles. 
C)  must render a qualified report explaining the departure from generally accepted accounting principles in the opinion paragraph. 
D)  must restate the financial statements on an accrual basis and then render the standard (short-form) report. 
A)  must ascertain that there is proper disclosure of the fact that the cash basis has been used, the general nature of material items omitted, and the net effect of such omissions. 
B)  may not be associated with such statements which are not in accordance with generally accepted accounting principles. 
C)  must render a qualified report explaining the departure from generally accepted accounting principles in the opinion paragraph. 
D)  must restate the financial statements on an accrual basis and then render the standard (short-form) report.

Question 13

When performing an attestation engagement a CPA is required to adhere to the Statements on Standards for Attestation Engagements.Describe below the Standards of Field Work for attestation engagements.

Accepted Answer

1.The practitioner must adequately plan

Question 14

The last paragraph of the accountant's review report:

Accepted Answer

A)  details the responsibilities of management. 
B)  details the responsibilities of the accountant. 
C)  expresses limited assurance in the form of negative assurance. 
D)  lists the analytical procedures performed. 
A)  details the responsibilities of management. 
B)  details the responsibilities of the accountant. 
C)  expresses limited assurance in the form of negative assurance. 
D)  lists the analytical procedures performed.

Question 15

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 16

All of the following are steps that should be performed in a review engagement except for:

Accepted Answer

A)  understand the company's ownership structure. 
B)  read the company's financial statements. 
C)  perform analytical procedures. 
D)  assess fraud risk. 
A)  understand the company's ownership structure. 
B)  read the company's financial statements. 
C)  perform analytical procedures. 
D)  assess fraud risk.

Question 17

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 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

Auditors frequently audit statements prepared on bases other than GAAP.Discuss four commonly used bases other than GAAP.

Accepted Answer

•Cash or modified cash basis.With the ca

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 25: Other Assurance Services

The two types of services provided in connection with the Statements on Standards for Accounting and Review Services are:

Which of the following types of engagement reports would provide positive assurance?

The distribution of which of the following types of reports is unrestricted?

The use of positive assurance is appropriate in a review attestation report.

You are preparing to issue a report on the compilation of financial statements for a nonpublic company.Prior to issuing the report you should:

Which of the following services is performed under the attestation standards?

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?

A CPA firm can issue a compilation report:

The highest level of assurance is provided for in which one of the following engagements?

Which of the following is not a standard contained in both the Attestation Standards and Generally Accepted Auditing Standards with regards to the standards of field work?

Reports on agreed-upon procedures are intended to be distributed:

A CPA who has been engaged to audit financial statements that were prepared on a cash basis:

When performing an attestation engagement a CPA is required to adhere to the Statements on Standards for Attestation Engagements.Describe below the Standards of Field Work for attestation engagements.

The last paragraph of the accountant's review report:

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

All of the following are steps that should be performed in a review engagement except for:

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

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:

Auditors frequently audit statements prepared on bases other than GAAP.Discuss four commonly used bases other than GAAP.

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

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Nature and Type of Audit Evidence

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for the Audit Process

Developing the Overall Audit Plan 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 Inventory and Warehousing Cycle

Audit of the Payroll and Personnel Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Audit Completion

Internal and Governmental Financial Auditing and Operational Auditing

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