Question 1

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. D

Question 2

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  True

Question 3

Which of the following is an auditor least likely to inquire about when performing a review of a nonpublic company?

Accepted Answer

A)  Significant transactions near the end of the period. 
B)  Communications with regulatory agencies. 
C)  That financial statements are prepared in conformity with a special basis of auditing. 
D)  Questions that have arisen in applying review procedures. 
A)  Significant transactions near the end of the period. 
B)  Communications with regulatory agencies. 
C)  That financial statements are prepared in conformity with a special basis of auditing. 
D)  Questions that have arisen in applying review procedures. C

Question 4

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

Accepted Answer

A)  The accountant is 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 provides no form of assurance on the financial statements. 
D)  A compilation is greater in scope than a financial statement preparation form of association, but lesser than an audit. 
A)  The accountant is 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 provides no form of assurance on the financial statements. 
D)  A compilation is greater in scope than a financial statement preparation form of association, but lesser than an audit.

Question 5

Which of the following would be used on a review engagement?

Accepted Answer

A)  Examination of board minutes. 
B)  Confirmation of cash and accounts receivable. 
C)  Comparison of current year to prior year account balances. 
D)  Recalculation of depreciation expense. 
A)  Examination of board minutes. 
B)  Confirmation of cash and accounts receivable. 
C)  Comparison of current year to prior year account balances. 
D)  Recalculation of depreciation expense.

Question 6

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 7

A modification of the CPA's report on a review of the interim financial statements of a publicly held company would be necessitated by which of the following?

Accepted Answer

A)  An uncertainty. 
B)  Lack of consistency. 
C)  Reference to another accountant. 
D)  Inadequate disclosure. 
A)  An uncertainty. 
B)  Lack of consistency. 
C)  Reference to another accountant. 
D)  Inadequate disclosure.

Question 8

Which of the following is correct relating to compiled financial statements?

Accepted Answer

A)  A compilation report must be issued. 
B)  Omission of note disclosures is unacceptable. 
C)  A written agreement with the client (ordinarily, an engagement letter) is not 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 agreement with the client (ordinarily, an engagement letter) is not required. 
D)  Each page of the financial statements should have a restriction such as "Restricted for Management's Use Only".

Question 9

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 and financial statement preparation
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-re

Question 10

Accountants must issue a compilation report at the conclusion of a compilation unless they have withdrawn from the engagement.

Accepted Answer

A) True 
 B)False

Question 11

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.

Question 12

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

Accepted Answer

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

Question 13

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 14

The auditors should not accept an engagement to issue a compilation report on financial information presented in a prescribed form.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Financial statements that are developed from and summarize the overall information presented in audited financial statements are referred to as:

Accepted Answer

A)  Agreed-upon procedure financial statements. 
B)  Compiled financial statements. 
C)  Summary financial statements. 
D)  Reviewed financial statements. 
A)  Agreed-upon procedure financial statements. 
B)  Compiled financial statements. 
C)  Summary financial statements. 
D)  Reviewed financial statements.

Question 17

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 18

Personal financial statements may be compiled or reviewed, but they should not be audited.

Accepted Answer

A) True 
 B)False

Question 19

Accountant prepared or compiled financial statements may omit note disclosures.

Accepted Answer

A) True 
 B)False

Question 20

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:

Accepted Answer

The answer of Items a through j present various phrases...

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

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.

Which of the following is an auditor least likely to inquire about when performing a review of a nonpublic company?

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

Which of the following would be used on a review engagement?

Interim information of public companies:

A modification of the CPA's report on a review of the interim financial statements of a publicly held company would be necessitated by which of the following?

Which of the following is correct relating to compiled financial statements?

Accountants must issue a compilation report at the conclusion of a compilation unless they have withdrawn from the engagement.

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

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

The auditors should not accept an engagement to issue a compilation report on financial information presented in a prescribed form.

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

Financial statements that are developed from and summarize the overall information presented in audited financial statements are referred to as:

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

Personal financial statements may be compiled or reviewed, but they should not be audited.

Accountant prepared or compiled financial statements may omit note disclosures.

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:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Planning the Audit; Linking Audit Procedures to Risk

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

Filters

Exam 19: Additional Assurance Services: Historical Financial Information

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

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.

Which of the following is an auditor least likely to inquire about when performing a review of a nonpublic company?

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

Which of the following would be used on a review engagement?

Interim information of public companies:

A modification of the CPA's report on a review of the interim financial statements of a publicly held company would be necessitated by which of the following?

Which of the following is correct relating to compiled financial statements?

Accountants must issue a compilation report at the conclusion of a compilation unless they have withdrawn from the engagement.

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

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

The auditors should not accept an engagement to issue a compilation report on financial information presented in a prescribed form.

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

Financial statements that are developed from and summarize the overall information presented in audited financial statements are referred to as:

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

Personal financial statements may be compiled or reviewed, but they should not be audited.

Accountant prepared or compiled financial statements may omit note disclosures.

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:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Planning the Audit; Linking Audit Procedures to Risk

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

Filters