Question 1

Compiled financial statements may omit note disclosures.

Accepted Answer

A) True 
 B)False  True

Question 2

During a review of the financial statements of a nonpublic entity,the CPA finds that the financial statements contain a material departure from generally accepted accounting principles.If management refuses to correct the financial statement presentations,the CPA should:

Accepted Answer

A) Disclose the departure in a separate paragraph of the report. 
B) Issue an adverse opinion. 
C) Attach a note explaining the effects of the departure. 
D) Issue a compilation report. 
A) Disclose the departure in a separate paragraph of the report. 
B) Issue an adverse opinion. 
C) Attach a note explaining the effects of the departure. 
D) Issue a compilation report. A

Question 3

Which of the following should not be included in an accountant's standard report based upon the compilation of an entity's financial statements?

Accepted Answer

A) A statement that a compilation is limited to presenting in the form of financial statements information that is the representation of management. 
B) A statement that the compilation was performed in accordance with standards established by the American Institute of CPAs. 
C) A statement that the accountant has not audited or reviewed the financial statements. 
D) A statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements. 
A) A statement that a compilation is limited to presenting in the form of financial statements information that is the representation of management. 
B) A statement that the compilation was performed in accordance with standards established by the American Institute of CPAs. 
C) A statement that the accountant has not audited or reviewed the financial statements. 
D) A statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements. D

Question 4

A "comfort letter" to an investment banking firm will normally not:

Accepted Answer

A) Express negative assurance. 
B) Be included with the registration statement for the securities. 
C) Include the CPA's opinion as to whether the audited financial statements comply in all material respects with applicable requirements of the related securities acts. 
D) Include a statement as to the auditors' independence. 
A) Express negative assurance. 
B) Be included with the registration statement for the securities. 
C) Include the CPA's opinion as to whether the audited financial statements comply in all material respects with applicable requirements of the related securities acts. 
D) Include a statement as to the auditors' independence.

Question 5

One may envision a continuum of assurance ranging from absolute assurance to no assurance.In between may be reasonable assurance,limited assurance,and a summary of findings with no other assurance.
a.What level of assurance is provided in the CPA's report by each of the following types of engagements?
• Examinations
• Audits
• Review
• Agreed-upon procedures
• Compilations
b.What type of assurance is provided on financial statements prepared following a special purpose basis of accounting other than generally accepted accounting principles?

Accepted Answer

a.Assurance provided:
•Examinations--rea

Question 6

An accountant's standard report issued after compiling the financial statements of a nonpublic entity should state that

Accepted Answer

A) I am not aware of any material modifications that should be made to the accompanying financial statements. 
B) A compilation consists principally of inquiries of company personnel and analytical procedures. 
C) A compilation is limited to presenting in the form of financial statements information that is the representation of management. 
D) A compilation is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion. 
A) I am not aware of any material modifications that should be made to the accompanying financial statements. 
B) A compilation consists principally of inquiries of company personnel and analytical procedures. 
C) A compilation is limited to presenting in the form of financial statements information that is the representation of management. 
D) A compilation is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion.

Question 7

The underwriter of a securities offering may request that an auditor perform specified procedures and supply certain assurances concerning unaudited information contained in a registration statement.The auditor's response to such a request is commonly called a:

Accepted Answer

A) Report under federal security statutes. 
B) Comfort letter. 
C) Review of interim financial information. 
D) Compilation report for underwriters. 
A) Report under federal security statutes. 
B) Comfort letter. 
C) Review of interim financial information. 
D) Compilation report for underwriters.

Question 8

The financial statements of nonpublic companies may be compiled or reviewed by the CPAs.
a.Describe a compilation of financial statements.
b.Describe a review of financial statements.
c.Describe three procedures that are performed in the review of a nonpublic company's financial statements.

Accepted Answer

a.A compilation is limited to taking the

Question 9

An assertion that is particularly difficult to audit with respect to personal financial statements is:

Accepted Answer

A) Existence. 
B) Rights. 
C) Completeness. 
D) Legality. 
A) Existence. 
B) Rights. 
C) Completeness. 
D) Legality.

Question 10

Which communication option(s)may be used when an accountant submits compiled financial statements to be used only by management? $\begin{array}{c}
&\text { Comportation Report }&\text { Written Engage Letter}\
\text { A) } & \text { Yes } & \text { Yes} \
\text { B) } & \text { Yes } & \text { No } \
\text { C) } & \text { No } & \text { Yes } \
\text { D) } & \text { No } & \text { No } \
\end{array}$

Accepted Answer

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

Question 11

Which of the following types of services is most likely to result in a report whose use is restricted to specified parties?

Accepted Answer

A) Compilations. 
B) Reviews. 
C) Agreed-upon procedures. 
D) Audits. 
A) Compilations. 
B) Reviews. 
C) Agreed-upon procedures. 
D) Audits.

Question 12

If compiled financial statements presented in conformity with the cash receipts and disbursements basis of accounting do not disclose the basis of accounting used,the accountant should:

Accepted Answer

A) Disclose the basis in the notes to the financial statements. 
B) Clearly label each page "Unaudited." 
C) Disclose the basis of accounting in the accountant's report. 
D) Recompile the financial statements using generally accepted accounting principles. 
A) Disclose the basis in the notes to the financial statements. 
B) Clearly label each page "Unaudited." 
C) Disclose the basis of accounting in the accountant's report. 
D) Recompile the financial statements using generally accepted accounting principles.

Question 13

An auditor's report would be designated as a report on financial statements following a special purpose financial reporting framework for financial statements when they are:

Accepted Answer

A) For an interim period and are subjected to a review. 
B) Unaudited and are prepared from a client's accounting records. 
C) Prepared in accordance with a regulatory basis of accounting other than generally accepted accounting principles. 
D) Purported to be in accordance with generally accepted accounting principles but do not include a presentation of the statement of cash flows. 
A) For an interim period and are subjected to a review. 
B) Unaudited and are prepared from a client's accounting records. 
C) Prepared in accordance with a regulatory basis of accounting other than generally accepted accounting principles. 
D) Purported to be in accordance with generally accepted accounting principles but do not include a presentation of the statement of cash flows.

Question 14

Which of the following is correct relating to compiled financial statements when third party reliance upon those statements is anticipated?

Accepted Answer

A) A compilation report must be issued. 
B) Omission of note disclosures is unacceptable. 
C) A written engagement letter is required. 
D) Each page of the financial statements should have a restriction such as "Restricted for Management's Use Only". 
A) A compilation report must be issued. 
B) Omission of note disclosures is unacceptable. 
C) A written engagement letter is required. 
D) Each page of the financial statements should have a restriction such as "Restricted for Management's Use Only".

Question 15

When the auditors have performed an audit and are asked to report on the client's compliance with aspects of contractual agreements,which of the following is correct?

Accepted Answer

A) They may do so and provide reasonable assurance as to compliance. 
B) They may do so and provide negative assurance as to compliance. 
C) They only may do so when details of the contracts have been audited. 
D) They may not do so. 
A) They may do so and provide reasonable assurance as to compliance. 
B) They may do so and provide negative assurance as to compliance. 
C) They only may do so when details of the contracts have been audited. 
D) They may not do so.

Question 16

When performing a review of a nonpublic company,the auditors must obtain in a representation letter acknowledgement of management for its responsibility for reach of the following except:

Accepted Answer

A) Responsibility for identifying illegal acts committed by employees. 
B) Responsibility for the financial statements conforming with generally accepted accounting principles. 
C) Responsibility to prevent and detect fraud. 
D) Knowledge of any actual or suspected fraud that is material. 
A) Responsibility for identifying illegal acts committed by employees. 
B) Responsibility for the financial statements conforming with generally accepted accounting principles. 
C) Responsibility to prevent and detect fraud. 
D) Knowledge of any actual or suspected fraud that is material.

Question 17

Items a through j present various phrases or characteristics that may apply to audits,reviews,and compilations.Place an X in the cell if the phrase or characteristic applies to the listed service:
 \[\begin{array} { | c | l | l | l | l | } 
\hline \text { Part } & \text { Phrase or characteristic } & \text { Audit } & \text { Review } & \begin{array} { c } 
\text { Compi- } \
\text { lation }
\end{array} \
\hline \text { a. } & \text { Independence is required } & & & \
\hline \text { b. } & \text { Report provides reasonable assurance } & & & \
\hline \text { c. } & \text { Report provides negative assurance. } & & & \
\hline \text { d. } & \begin{array} { l } 
\text { Consists primarily of inquiries and analytical } \
\text { procedures. }
\end{array} & & & \
\hline \text { e. } & \begin{array} { l } 
\text { Only performed on financial statements of } \
\text { nonpublic companies }
\end{array} & & & \
\hline \text { f. } & \begin{array} { l } 
\text { Report states that the financial statements are } \
\text { the responsibility (or representation) of the } \
\text { company's management. }
\end{array} & & & \
\hline \text { g. } & \text { Report provides no explicit assurance } & & & \
\hline \text { h. } & \text { Requires performance of analytical procedures. } & & & \
\hline \text { i. } & \begin{array} { l } 
\text { Report states that financial statements were } \
\text { prepared on a basis consistent with the } \
\text { preceding year. }
\end{array} & & & \
\hline \text { j. } & \begin{array} { l } 
\text { Requires a report modification for substantial } \
\text { doubt about going concern status. }
\end{array} & & & \
\hline
\end{array}\]

Accepted Answer

\[\begin{array} { | c | l | c | c | c |

Question 18

A compilation report is not required when compiled financial statements are expected to be used by:

Accepted Answer

A) Management only. 
B) Management and third parties. 
C) Third parties only. 
D) A compilation report is required whenever financial statements are compiled. 
A) Management only. 
B) Management and third parties. 
C) Third parties only. 
D) A compilation report is required whenever financial statements are compiled.

Question 19

During a review of the financial statements of a non-public entity,the CPA finds that the financial statements contain a material departure from generally accepted accounting principles.If management refuses to correct the financial statement presentations,the CPA should:

Accepted Answer

A) Disclose the departure in a separate paragraph of the report. 
B) Issue an adverse opinion. 
C) Attach a note explaining the effects of the departure. 
D) Issue a compilation report. 
A) Disclose the departure in a separate paragraph of the report. 
B) Issue an adverse opinion. 
C) Attach a note explaining the effects of the departure. 
D) Issue a compilation report.

Question 20

It is the end of the client's first quarter and Bill Smith,CPA has been engaged to perform a compilation and to issue a compilation report on the financial statements.The client does not wish to present notes to the financial statements.The appropriate report includes:

Accepted Answer

A) Qualified opinion ("subject to" the omission of the notes). 
B) Compilation report with an adverse opinion due to inadequate disclosure. 
C) Standard compilation report. 
D) Compilation report with an indication that all required disclosures under GAAP may not be presented with the statements. 
A) Qualified opinion ("subject to" the omission of the notes). 
B) Compilation report with an adverse opinion due to inadequate disclosure. 
C) Standard compilation report. 
D) Compilation report with an indication that all required disclosures under GAAP may not be presented with the statements.

Compiled financial statements may omit note disclosures.

During a review of the financial statements of a nonpublic entity,the CPA finds that the financial statements contain a material departure from generally accepted accounting principles.If management refuses to correct the financial statement presentations,the CPA should:

Which of the following should not be included in an accountant's standard report based upon the compilation of an entity's financial statements?

A "comfort letter" to an investment banking firm will normally not:

An accountant's standard report issued after compiling the financial statements of a nonpublic entity should state that

The underwriter of a securities offering may request that an auditor perform specified procedures and supply certain assurances concerning unaudited information contained in a registration statement.The auditor's response to such a request is commonly called a:

The financial statements of nonpublic companies may be compiled or reviewed by the CPAs. a.Describe a compilation of financial statements. b.Describe a review of financial statements. c.Describe three procedures that are performed in the review of a nonpublic company's financial statements.

An assertion that is particularly difficult to audit with respect to personal financial statements is:

Which communication option(s)may be used when an accountant submits compiled financial statements to be used only by management? Comportation Report Written Engage Letter A) Yes Yes B) Yes No C) No Yes D) No No

Which of the following types of services is most likely to result in a report whose use is restricted to specified parties?

If compiled financial statements presented in conformity with the cash receipts and disbursements basis of accounting do not disclose the basis of accounting used,the accountant should:

An auditor's report would be designated as a report on financial statements following a special purpose financial reporting framework for financial statements when they are:

Which of the following is correct relating to compiled financial statements when third party reliance upon those statements is anticipated?

When the auditors have performed an audit and are asked to report on the client's compliance with aspects of contractual agreements,which of the following is correct?

When performing a review of a nonpublic company,the auditors must obtain in a representation letter acknowledgement of management for its responsibility for reach of the following except:

A compilation report is not required when compiled financial statements are expected to be used by:

During a review of the financial statements of a non-public entity,the CPA finds that the financial statements contain a material departure from generally accepted accounting principles.If management refuses to correct the financial statement presentations,the CPA should:

It is the end of the client's first quarter and Bill Smith,CPA has been engaged to perform a compilation and to issue a compilation report on the financial statements.The client does not wish to present notes to the financial statements.The appropriate report includes:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of CPAS

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property Plant and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

Filters

Exam 19: Additional Assurance Services: Historical Financial Information

Compiled financial statements may omit note disclosures.

During a review of the financial statements of a nonpublic entity,the CPA finds that the financial statements contain a material departure from generally accepted accounting principles.If management refuses to correct the financial statement presentations,the CPA should:

Which of the following should not be included in an accountant's standard report based upon the compilation of an entity's financial statements?

A "comfort letter" to an investment banking firm will normally not:

An accountant's standard report issued after compiling the financial statements of a nonpublic entity should state that

The underwriter of a securities offering may request that an auditor perform specified procedures and supply certain assurances concerning unaudited information contained in a registration statement.The auditor's response to such a request is commonly called a:

The financial statements of nonpublic companies may be compiled or reviewed by the CPAs. a.Describe a compilation of financial statements. b.Describe a review of financial statements. c.Describe three procedures that are performed in the review of a nonpublic company's financial statements.

An assertion that is particularly difficult to audit with respect to personal financial statements is:

Which communication option(s)may be used when an accountant submits compiled financial statements to be used only by management? Comportation Report Written Engage Letter A) Yes Yes B) Yes No C) No Yes D) No No

Which of the following types of services is most likely to result in a report whose use is restricted to specified parties?

If compiled financial statements presented in conformity with the cash receipts and disbursements basis of accounting do not disclose the basis of accounting used,the accountant should:

An auditor's report would be designated as a report on financial statements following a special purpose financial reporting framework for financial statements when they are:

Which of the following is correct relating to compiled financial statements when third party reliance upon those statements is anticipated?

When the auditors have performed an audit and are asked to report on the client's compliance with aspects of contractual agreements,which of the following is correct?

When performing a review of a nonpublic company,the auditors must obtain in a representation letter acknowledgement of management for its responsibility for reach of the following except:

A compilation report is not required when compiled financial statements are expected to be used by:

During a review of the financial statements of a non-public entity,the CPA finds that the financial statements contain a material departure from generally accepted accounting principles.If management refuses to correct the financial statement presentations,the CPA should:

It is the end of the client's first quarter and Bill Smith,CPA has been engaged to perform a compilation and to issue a compilation report on the financial statements.The client does not wish to present notes to the financial statements.The appropriate report includes:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of CPAS

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property Plant and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

Filters