Question 1

Comfort letters are ordinarily signed by the:

Accepted Answer

A) Client. 
B) Client's lawyer. 
C) Independent auditor. 
D) Internal auditor. 
A) Client. 
B) Client's lawyer. 
C) Independent auditor. 
D) Internal auditor.

Question 2

Which of the following is correct concerning financial statements prepared in the United States for use in another country?

Accepted Answer

A) The auditor must follow GAAP of both the United States and of the other country. 
B) The type of audit report issued depends upon whether it is for use primarily outside the United States. 
C) The audit must only follow US GAAP. 
D) Auditors from the other country must be involved with the audit to assure adequate performance of that country's standards. 
A) The auditor must follow GAAP of both the United States and of the other country. 
B) The type of audit report issued depends upon whether it is for use primarily outside the United States. 
C) The audit must only follow US GAAP. 
D) Auditors from the other country must be involved with the audit to assure adequate performance of that country's standards.

Question 3

The objective of a review of interim financial information is to provide the accountant with a basis for reporting whether:

Accepted Answer

A) A reasonable basis exists for expressing an updated opinion regarding the financial statements that were previously audited. 
B) Material modifications should be made to conform with generally accepted accounting principles. 
C) The financial statements are presented fairly in accordance with standards of interim reporting. 
D) The financial statements are presented fairly in accordance with generally accepted accounting principles. 
A) A reasonable basis exists for expressing an updated opinion regarding the financial statements that were previously audited. 
B) Material modifications should be made to conform with generally accepted accounting principles. 
C) The financial statements are presented fairly in accordance with standards of interim reporting. 
D) The financial statements are presented fairly in accordance with generally accepted accounting principles.

Question 4

An auditor's report on financial statements prepared in accordance with a special purpose financial reporting framework of accounting other than generally accepted accounting principles should include all of the following except:

Accepted Answer

A) Reference to the note to the financial statements that describes the basis of preparation of the financial statements. 
B) Disclosure that the audit was performed in accordance with generally accepted auditing standards. 
C) An opinion as to whether the basis of accounting used is appropriate under the circumstances. 
D) An opinion as to whether the financial statements are presented fairly in conformity with the basis of accounting described. 
A) Reference to the note to the financial statements that describes the basis of preparation of the financial statements. 
B) Disclosure that the audit was performed in accordance with generally accepted auditing standards. 
C) An opinion as to whether the basis of accounting used is appropriate under the circumstances. 
D) An opinion as to whether the financial statements are presented fairly in conformity with the basis of accounting described.

Question 5

The auditors must issue a compilation report if they prepare a client's financial statements and submit them to a client who intends to use them for external purposes.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following does not result in a modification of a compilation report?

Accepted Answer

A) A lack of independence on the part of the auditors. 
B) A departure from generally accepted accounting principles. 
C) A lack of adequate disclosure in the financial statements. 
D) A lack of consistent application of generally accepted accounting principles. 
A) A lack of independence on the part of the auditors. 
B) A departure from generally accepted accounting principles. 
C) A lack of adequate disclosure in the financial statements. 
D) A lack of consistent application of generally accepted accounting principles.

Question 7

Which of the following is not an example of financial statements that use a special purpose financial reporting framework?

Accepted Answer

A) Of a partnership which follows accounting practices used to file its tax return. 
B) Prepared for limited purposes such as relating to a contract a company has entered into. 
C) Of an organization that has limited the scope of the auditor's examination. 
D) Of an organization that follows procedures of a regulatory agency that oversees the company and its operations. 
A) Of a partnership which follows accounting practices used to file its tax return. 
B) Prepared for limited purposes such as relating to a contract a company has entered into. 
C) Of an organization that has limited the scope of the auditor's examination. 
D) Of an organization that follows procedures of a regulatory agency that oversees the company and its operations.

Question 8

Interim information of public companies.

Accepted Answer

A) Must be as comprehensive as that filed annually with the Securities and Exchange Commission. 
B) Must be reviewed by CPAs before it is filed with the Securities and Exchange Commission. 
C) Must be reviewed continuously by CPAs using continuous auditing techniques. 
D) Requires no accountant association until it becomes a part of the companies' annual financial information. 
A) Must be as comprehensive as that filed annually with the Securities and Exchange Commission. 
B) Must be reviewed by CPAs before it is filed with the Securities and Exchange Commission. 
C) Must be reviewed continuously by CPAs using continuous auditing techniques. 
D) Requires no accountant association until it becomes a part of the companies' annual financial information.

Question 9

A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain

Accepted Answer

A) Negative assurance that the procedures did not necessarily disclose all reportable conditions. 
B) An acknowledgment of the practitioner's responsibility for the sufficiency of the procedures. 
C) A statement of restrictions on the use of the report. 
D) A disclaimer of opinion on the entity's financial statements. 
A) Negative assurance that the procedures did not necessarily disclose all reportable conditions. 
B) An acknowledgment of the practitioner's responsibility for the sufficiency of the procedures. 
C) A statement of restrictions on the use of the report. 
D) A disclaimer of opinion on the entity's financial statements.

Question 10

An audit opinion on cash basis financial statements is an example of an opinion on financial statements that follow a special purpose financial reporting framework.

Accepted Answer

A) True 
 B)False

Question 11

Inquiry and analytical procedures ordinarily performed during a review of a nonpublic entity's financial statements include:

Accepted Answer

A) Analytical procedures designed to identify reportable conditions related to internal control. 
B) Inquiries concerning actions taken at meetings of the stockholders and the board of directors. 
C) Analytical procedures designed to test the accounting records by obtaining corroborating evidential matter. 
D) Inquiries of knowledgeable outside parties such as the client's attorneys and bankers. 
A) Analytical procedures designed to identify reportable conditions related to internal control. 
B) Inquiries concerning actions taken at meetings of the stockholders and the board of directors. 
C) Analytical procedures designed to test the accounting records by obtaining corroborating evidential matter. 
D) Inquiries of knowledgeable outside parties such as the client's attorneys and bankers.

Question 12

If the auditor believes that financial statements prepared on the entity's income tax basis are not suitably titled,the auditor should:

Accepted Answer

A) Issue a disclaimer of opinion. 
B) Explain in the notes to the financial statements the terminology used. 
C) Issue a compilation report. 
D) Modify the auditor's report to disclose any reservations. 
A) Issue a disclaimer of opinion. 
B) Explain in the notes to the financial statements the terminology used. 
C) Issue a compilation report. 
D) Modify the auditor's report to disclose any reservations.

Question 13

The auditors should take exception to assets presented at their estimate current values in personal financial statements.

Accepted Answer

A) True 
 B)False

Question 14

The accountants' compilation report should be dated as of the date of:

Accepted Answer

A) Completion of fieldwork. 
B) Completion of the compilation. 
C) Transmittal of the compilation report. 
D) The latest subsequent event referred to in the notes to the financial statements. 
A) Completion of fieldwork. 
B) Completion of the compilation. 
C) Transmittal of the compilation report. 
D) The latest subsequent event referred to in the notes to the financial statements.

Question 15

A CPA should not normally refer to which one of the following subjects in a "comfort letter" to underwriters?

Accepted Answer

A) The independence of the CPA. 
B) Changes in financial-statement items during a period subsequent to the date and period of the latest financial statements in the registration statement. 
C) Unaudited financial statements and schedules in the registration statement. 
D) Management's determination of line of business classifications. 
A) The independence of the CPA. 
B) Changes in financial-statement items during a period subsequent to the date and period of the latest financial statements in the registration statement. 
C) Unaudited financial statements and schedules in the registration statement. 
D) Management's determination of line of business classifications.

Question 16

When an auditor reports on financial statements prepared on an entity's income tax basis,the auditor's report should:

Accepted Answer

A) Disclose that the income tax basis is a basis of accounting other than generally accepted accounting principles. 
B) Disclaim an opinion on whether the statements were examined in accordance with generally accepted auditing standards. 
C) Not express an opinion on whether the statements are presented in conformity with the basis of accounting used. 
D) Include an explanation of how the results of operations differ from the cash receipts and disbursements basis of accounting. 
A) Disclose that the income tax basis is a basis of accounting other than generally accepted accounting principles. 
B) Disclaim an opinion on whether the statements were examined in accordance with generally accepted auditing standards. 
C) Not express an opinion on whether the statements are presented in conformity with the basis of accounting used. 
D) Include an explanation of how the results of operations differ from the cash receipts and disbursements basis of accounting.

Question 17

Which of the following circumstances requires modification of the accountant's report on a review of interim financial information of publicly held entity? $\begin{array}{c}
&\text{Inconsistent Accounting}\\ & \text{Principle Application}&\text{Inadequate Disclosure}\
\text { A) } & \text { Yes } & \text { Yes } \
\text { B) } & \text { Yes } & \text { No } \
\text { C) } & \text { No } & \text { Yes } \
\text { D) } & \text { No } & \text { No }
\end{array}$

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 18

Which of the following requires modification of a review report:

Accepted Answer

A) A change in accounting principles. 
B) A substantial doubt about a company's ability to continue as a going concern. 
C) A departure from generally accepted accounting principles. 
D) A change in an accounting estimate. 
A) A change in accounting principles. 
B) A substantial doubt about a company's ability to continue as a going concern. 
C) A departure from generally accepted accounting principles. 
D) A change in an accounting estimate.

Question 19

For a CPA,a client imposed scope limitation during a review of financial statements is most likely to result in:

Accepted Answer

A) Resignation from the engagement. 
B) Issuance of a disclaimer of opinion. 
C) Issuance of an adverse opinion. 
D) Only an explanatory paragraph added to report, with no change in the assurance provided. 
A) Resignation from the engagement. 
B) Issuance of a disclaimer of opinion. 
C) Issuance of an adverse opinion. 
D) Only an explanatory paragraph added to report, with no change in the assurance provided.

Exam 19: Additional Assurance Services: Historical Financial Information

Comfort letters are ordinarily signed by the:

Which of the following is correct concerning financial statements prepared in the United States for use in another country?

The objective of a review of interim financial information is to provide the accountant with a basis for reporting whether:

An auditor's report on financial statements prepared in accordance with a special purpose financial reporting framework of accounting other than generally accepted accounting principles should include all of the following except:

The auditors must issue a compilation report if they prepare a client's financial statements and submit them to a client who intends to use them for external purposes.

Which of the following does not result in a modification of a compilation report?

Which of the following is not an example of financial statements that use a special purpose financial reporting framework?

Interim information of public companies.

A practitioner's report on agreed-upon procedures that is in the form of procedures and findings should contain

An audit opinion on cash basis financial statements is an example of an opinion on financial statements that follow a special purpose financial reporting framework.

Inquiry and analytical procedures ordinarily performed during a review of a nonpublic entity's financial statements include:

If the auditor believes that financial statements prepared on the entity's income tax basis are not suitably titled,the auditor should:

The auditors should take exception to assets presented at their estimate current values in personal financial statements.

The accountants' compilation report should be dated as of the date of:

A CPA should not normally refer to which one of the following subjects in a "comfort letter" to underwriters?

When an auditor reports on financial statements prepared on an entity's income tax basis,the auditor's report should:

Which of the following circumstances requires modification of the accountant's report on a review of interim financial information of publicly held entity? Inconsistent Accounting \ Principle Application Inadequate Disclosure A) Yes Yes B) Yes No C) No Yes D) No No

Which of the following requires modification of a review report:

For a CPA,a client imposed scope limitation during a review of financial statements is most likely to result in:

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