Question 1

A responsible party for information to subject to an attestation engagement would not include

Accepted Answer

A)  The client's controller. 
B)  The independent accountant. 
C)  The client's vice president of marketing. 
D)  A client employee named in a contract or regulation as being responsible for the information. 
A)  The client's controller. 
B)  The independent accountant. 
C)  The client's vice president of marketing. 
D)  A client employee named in a contract or regulation as being responsible for the information.

Question 2

When accountants are not independent,which of the following reports can nevertheless be issued?

Accepted Answer

A)  Compilation report. 
B)  Standard unqualified audit report. 
C)  Examination report on a forecast. 
D)  Examination of internal control over financial reporting. 
A)  Compilation report. 
B)  Standard unqualified audit report. 
C)  Examination report on a forecast. 
D)  Examination of internal control over financial reporting.

Question 3

To be useful,an audit of a service organization's controls should cover a minimum of:

Accepted Answer

A)  Three months. 
B)  Six months. 
C)  A year. 
D)  The user entity's fiscal period. 
A)  Three months. 
B)  Six months. 
C)  A year. 
D)  The user entity's fiscal period.

Question 4

Attestation reports on internal control effectiveness are required to be issued for all nonissuers.

Accepted Answer

A) True 
 B)False

Question 5

When a new accountant is performing the current-year service,the accountant cannot update the predecessors' report.

Accepted Answer

A) True 
 B)False

Question 6

Assurance services are defined as independent professional services that

Accepted Answer

A)  Establish criteria for effective measurement of business activity. 
B)  Improve the quality of information or its context for decision makers. 
C)  Attest to the adequacy of controls over business operations. 
D)  Develop efficient and effective accounting systems to ensure compliance with accounting standards and policy. 
A)  Establish criteria for effective measurement of business activity. 
B)  Improve the quality of information or its context for decision makers. 
C)  Attest to the adequacy of controls over business operations. 
D)  Develop efficient and effective accounting systems to ensure compliance with accounting standards and policy.

Question 7

When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP,the accountant should indicate in the compilation report that the financial statements

Accepted Answer

A)  Might influence users' conclusions about the business if the disclosures were included. 
B)  Are prepared in conformity with a comprehensive basis of accounting other than GAAP. 
C)  Are not compiled in accordance with Statements on Standards for Accounting and Review Services. 
D)  Are special purpose financial statements not comparable to those of prior periods. 
A)  Might influence users' conclusions about the business if the disclosures were included. 
B)  Are prepared in conformity with a comprehensive basis of accounting other than GAAP. 
C)  Are not compiled in accordance with Statements on Standards for Accounting and Review Services. 
D)  Are special purpose financial statements not comparable to those of prior periods.

Question 8

Which of the following is not a condition that must be met for an internal control examination?

Accepted Answer

A)  Management accepts responsibility for the effectiveness of its internal control. 
B)  Management must base its evaluation of internal control on standards established by the AICPA. 
C)  Management's evaluation of control can be supported by sufficient evidence. 
D)  Management presents a written assertion about the effectiveness of its internal control. 
A)  Management accepts responsibility for the effectiveness of its internal control. 
B)  Management must base its evaluation of internal control on standards established by the AICPA. 
C)  Management's evaluation of control can be supported by sufficient evidence. 
D)  Management presents a written assertion about the effectiveness of its internal control.

Question 9

G.Wilson is on the board of directors of a small manufacturing company,Smith Plastics,Inc.Wilson holds a CPA certificate and is a member of the AICPA.The president of the company,J.Smith,has asked Wilson to prepare financial statements for the company to be submitted to Sixth First Bank as part of a loan request.Smith tells Wilson that the bank would like a review or an audit but would settle for a compilation from a CPA and would like Wilson to do the compilation.
Required:
Discuss under what conditions,if any,Wilson would be allowed to prepare a compilation of the financial statements of Smith Plastics,Inc.

Accepted Answer

Wilson is not independent of Smith Plast

Question 10

Delta Life Insurance Co.prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission.Wall,CPA,is Delta's auditor.If Wall discovers that the statements are not suitably titled,Wall should

Accepted Answer

A)  Disclose any reservations in an explanatory paragraph and qualify the opinion. 
B)  Apply to the state insurance commission for an advisory opinion. 
C)  Issue a special statutory basis report that clearly disclaims any opinion. 
D)  Explain in the notes to the financial statements the terminology used. 
A)  Disclose any reservations in an explanatory paragraph and qualify the opinion. 
B)  Apply to the state insurance commission for an advisory opinion. 
C)  Issue a special statutory basis report that clearly disclaims any opinion. 
D)  Explain in the notes to the financial statements the terminology used.

Question 11

According to auditing standards,financial statements presented on a special purpose should not

Accepted Answer

A)  Contain a note describing the special purpose framework. 
B)  Describe in general how the special purpose framework differs from generally accepted accounting principles. 
C)  Be accompanied by an audit report that gives an unqualified opinion with reference to the special purpose framework. 
D)  Contain a note with a quantified dollar reconciliation of the assets based on the special purpose framework with the assets based on generally accepted accounting principles. 
A)  Contain a note describing the special purpose framework. 
B)  Describe in general how the special purpose framework differs from generally accepted accounting principles. 
C)  Be accompanied by an audit report that gives an unqualified opinion with reference to the special purpose framework. 
D)  Contain a note with a quantified dollar reconciliation of the assets based on the special purpose framework with the assets based on generally accepted accounting principles.

Question 12

If a nonissuer wants an accountant to perform an examination of its internal controls,the accountant should follow

Accepted Answer

A)  PCAOB AS 5, "An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements." 
B)  AICPA AT 501, "An Examination of an Entity's Internal Control over Financial Reporting That Is Integrated with an Audit of Its Financial Statements." 
C)  AICPA AU315, "Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement." 
D)  FASB Concepts Statement No.1, "Objectives of Financial Reporting by Business Enterprises." 
A)  PCAOB AS 5, "An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements." 
B)  AICPA AT 501, "An Examination of an Entity's Internal Control over Financial Reporting That Is Integrated with an Audit of Its Financial Statements." 
C)  AICPA AU315, "Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement." 
D)  FASB Concepts Statement No.1, "Objectives of Financial Reporting by Business Enterprises."

Question 13

Auditing standards apply to work on all audited financial statements and on unaudited financial statements of public and nonpublic companies.

Accepted Answer

A) True 
 B)False

Question 14

In ____________________________ engagements,justifiable departures from official pronouncements are treated the same as they are in ____________________________.

Accepted Answer

The answer of In ____________________________ engagements,justifiable departures from official pronouncements...

Question 15

The combination of prior-year/current-year order of lower level of service would not include

Accepted Answer

A)  Review followed by compilation. 
B)  Audit followed by compilation. 
C)  Compilation followed by review. 
D)  Audit followed by review. 
A)  Review followed by compilation. 
B)  Audit followed by compilation. 
C)  Compilation followed by review. 
D)  Audit followed by review.

Question 16

The procedures used in a review engagement are

Accepted Answer

A)  Physical examination, reperformance, and obtaining a management representation letter. 
B)  Analytical procedures, reperformance, and obtaining a management representation letter. 
C)  Analytical procedures, inquiry, and obtaining a management representation letter. 
D)  Physical examination, inquiry, and obtaining a management representation letter. 
A)  Physical examination, reperformance, and obtaining a management representation letter. 
B)  Analytical procedures, reperformance, and obtaining a management representation letter. 
C)  Analytical procedures, inquiry, and obtaining a management representation letter. 
D)  Physical examination, inquiry, and obtaining a management representation letter.

Question 17

The AICPA Assurance Services Executive Committee identified five megatrends that can affect public accounting firms' business.Which of the following is not one of the megatrends it identified?

Accepted Answer

A)  Information technology. 
B)  The shift from the industrial age to the knowledge age. 
C)  Globalization. 
D)  Merging of corporations creating fewer audit opportunities. 
A)  Information technology. 
B)  The shift from the industrial age to the knowledge age. 
C)  Globalization. 
D)  Merging of corporations creating fewer audit opportunities.

Question 18

AR 90 requires adequate documentation for a review engagement.Which items are required to be documented?

Accepted Answer

A)  Analytical procedures, yes; management representations, no; understanding of internal controls, no. 
B)  Analytical procedures, no; management representations, yes; understanding of internal controls, no. 
C)  Analytical procedures, yes; management representations, yes; understanding of internal controls, no. 
D)  Analytical procedures, yes; management representations, yes; understanding of internal controls, yes. 
A)  Analytical procedures, yes; management representations, no; understanding of internal controls, no. 
B)  Analytical procedures, no; management representations, yes; understanding of internal controls, no. 
C)  Analytical procedures, yes; management representations, yes; understanding of internal controls, no. 
D)  Analytical procedures, yes; management representations, yes; understanding of internal controls, yes.

Question 19

During a review of a nonissuer's financial statements,accountants are required to make certain inquiries of management.Which of the following inquiries is not required by the SSARS?

Accepted Answer

A)  The basis for the preparation of financial statements. 
B)  Internal control deficiencies. 
C)  Significant transactions occurring near the end of the reporting period. 
D)  Material subsequent events. 
A)  The basis for the preparation of financial statements. 
B)  Internal control deficiencies. 
C)  Significant transactions occurring near the end of the reporting period. 
D)  Material subsequent events.

Question 20

Which of the following is not a principle of Trust Services?

Accepted Answer

A)  Security. 
B)  Authentication. 
C)  Privacy. 
D)  Confidentiality. 
A)  Security. 
B)  Authentication. 
C)  Privacy. 
D)  Confidentiality.

A responsible party for information to subject to an attestation engagement would not include

When accountants are not independent,which of the following reports can nevertheless be issued?

To be useful,an audit of a service organization's controls should cover a minimum of:

Attestation reports on internal control effectiveness are required to be issued for all nonissuers.

When a new accountant is performing the current-year service,the accountant cannot update the predecessors' report.

Assurance services are defined as independent professional services that

When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP,the accountant should indicate in the compilation report that the financial statements

Which of the following is not a condition that must be met for an internal control examination?

Delta Life Insurance Co.prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission.Wall,CPA,is Delta's auditor.If Wall discovers that the statements are not suitably titled,Wall should

According to auditing standards,financial statements presented on a special purpose should not

If a nonissuer wants an accountant to perform an examination of its internal controls,the accountant should follow

Auditing standards apply to work on all audited financial statements and on unaudited financial statements of public and nonpublic companies.

In engagements,justifiable departures from official pronouncements are treated the same as they are in .

The combination of prior-year/current-year order of lower level of service would not include

The procedures used in a review engagement are

The AICPA Assurance Services Executive Committee identified five megatrends that can affect public accounting firms' business.Which of the following is not one of the megatrends it identified?

AR 90 requires adequate documentation for a review engagement.Which items are required to be documented?

During a review of a nonissuer's financial statements,accountants are required to make certain inquiries of management.Which of the following inquiries is not required by the SSARS?

Which of the following is not a principle of Trust Services?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 13: Other Public Accounting Services

A responsible party for information to subject to an attestation engagement would not include

When accountants are not independent,which of the following reports can nevertheless be issued?

To be useful,an audit of a service organization's controls should cover a minimum of:

Attestation reports on internal control effectiveness are required to be issued for all nonissuers.

When a new accountant is performing the current-year service,the accountant cannot update the predecessors' report.

Assurance services are defined as independent professional services that

When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP,the accountant should indicate in the compilation report that the financial statements

Which of the following is not a condition that must be met for an internal control examination?

Delta Life Insurance Co.prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission.Wall,CPA,is Delta's auditor.If Wall discovers that the statements are not suitably titled,Wall should

According to auditing standards,financial statements presented on a special purpose should not

If a nonissuer wants an accountant to perform an examination of its internal controls,the accountant should follow

Auditing standards apply to work on all audited financial statements and on unaudited financial statements of public and nonpublic companies.

In ____________________________ engagements,justifiable departures from official pronouncements are treated the same as they are in ____________________________.

The combination of prior-year/current-year order of lower level of service would not include

The procedures used in a review engagement are

The AICPA Assurance Services Executive Committee identified five megatrends that can affect public accounting firms' business.Which of the following is not one of the megatrends it identified?

AR 90 requires adequate documentation for a review engagement.Which items are required to be documented?

During a review of a nonissuer's financial statements,accountants are required to make certain inquiries of management.Which of the following inquiries is not required by the SSARS?

Which of the following is not a principle of Trust Services?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

In engagements,justifiable departures from official pronouncements are treated the same as they are in .