Question 1

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 A

Question 2

A nonaudit engagement in which the accountant undertakes to present, in the form of financial statements, information that is the representation of management, without undertaking to express any assurance on the statements is called a review engagement.

Accepted Answer

A) True 
 B)False  False

Question 3

Before performing a review of a nonpublic entity's financial statements, an accountant should:

Accepted Answer

A)  complete a series of inquiries concerning the entity's procedures for recording, classifying, and summarizing transactions. 
B)  obtain a sufficient level of knowledge of the accounting principles and practices of the industry in which the entity operates. 
C)  inquire whether management has omitted substantially all of the disclosures required by generally accepted accounting principles. 
D)  apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements. 
A)  complete a series of inquiries concerning the entity's procedures for recording, classifying, and summarizing transactions. 
B)  obtain a sufficient level of knowledge of the accounting principles and practices of the industry in which the entity operates. 
C)  inquire whether management has omitted substantially all of the disclosures required by generally accepted accounting principles. 
D)  apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements. B

Question 4

In a WebTrust attestation engagement the client engages a CPA to provide what level of assurance that the company's Website complies with Trust Services principles?

Accepted Answer

A)  absolute 
B)  reasonable 
C)  limited 
D)  moderate 
A)  absolute 
B)  reasonable 
C)  limited 
D)  moderate

Question 5

Of the three types of attestation engagements, examination engagements provide a higher level of assurance than agreed-upon procedures engagements but less than review engagements.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would not be included in a CPA's report based upon a review of the financial statements of a nonpublic entity?

Accepted Answer

A)  A statement that the review was in accordance with generally accepted auditing standards. 
B)  A statement that all information included in the financial statements is the representation of management. 
C)  A statement describing the principal procedures performed. 
D)  A statement describing the auditor's conclusions based upon the results of the review. 
A)  A statement that the review was in accordance with generally accepted auditing standards. 
B)  A statement that all information included in the financial statements is the representation of management. 
C)  A statement describing the principal procedures performed. 
D)  A statement describing the auditor's conclusions based upon the results of the review.

Question 7

Statements on Standards for Accounting and Review Services (SSARS) govern the CPA's association with unaudited financial statements of nonpublic (private) companies, but not public companies.

Accepted Answer

A) True 
 B)False

Question 8

The use of negative assurance is appropriate in audit reports.

Accepted Answer

A) True 
 B)False

Question 9

The statement that "Nothing came to our attention which would indicate that these statements are not fairly presented" expresses which of the following?

Accepted Answer

A)  disclaimer of an opinion 
B)  negative assurance 
C)  negative confirmation 
D)  shared opinion 
A)  disclaimer of an opinion 
B)  negative assurance 
C)  negative confirmation 
D)  shared opinion

Question 10

An accountant has accepted an engagement in which the audit procedures of inquiry and analytical procedures will be employed. These procedures will form the basis for issuance of:

Accepted Answer

A)  a compilation report. 
B)  audit report on supplemental information issued by the client. 
C)  management advisory report requested by the audit committee. 
D)  review report on comparative financial statements for a non-public company. 
A)  a compilation report. 
B)  audit report on supplemental information issued by the client. 
C)  management advisory report requested by the audit committee. 
D)  review report on comparative financial statements for a non-public company.

Question 11

In a review service where the client has failed to follow GAAP, the accountant is:

Accepted Answer

A)  not required to determine the effect of a departure if management has not done so, but that fact must be disclosed in the report. 
B)  required to determine the effect of a departure if management has not done so, and that fact must be disclosed in the report. 
C)  not required to determine the effect of a departure if management has not done so, and that fact need not be disclosed in the report. 
D)  required to determine the effect of a departure if management has not done so, and that fact need not be disclosed in the report. 
A)  not required to determine the effect of a departure if management has not done so, but that fact must be disclosed in the report. 
B)  required to determine the effect of a departure if management has not done so, and that fact must be disclosed in the report. 
C)  not required to determine the effect of a departure if management has not done so, and that fact need not be disclosed in the report. 
D)  required to determine the effect of a departure if management has not done so, and that fact need not be disclosed in the report.

Question 12

An accountant's standard report on a compilation of a projection should not include a:

Accepted Answer

A)  statement that a compilation of a projection is limited in scope. 
B)  separate paragraph that describes the limitations on the presentation's usefulness. 
C)  disclaimer of responsibility to update the report for events occurring after the report's date. 
D)  statement that the accountant expresses only limited assurance that the results may be achieved. 
A)  statement that a compilation of a projection is limited in scope. 
B)  separate paragraph that describes the limitations on the presentation's usefulness. 
C)  disclaimer of responsibility to update the report for events occurring after the report's date. 
D)  statement that the accountant expresses only limited assurance that the results may be achieved.

Question 13

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 14

A CPA who is not independent and is associated with financial statements should disclaim an opinion with respect to those financial statements. The disclaimer should:

Accepted Answer

A)  clearly state the specific reasons for lack of independence. 
B)  not mention any reason for the disclaimer other than that the CPA was unable to conduct the examination in accordance with generally accepted auditing standards. 
C)  not describe the reason for lack of independence but should state specifically that the CPA is not independent. 
D)  include a middle paragraph clearly describing the CPA's association with the client and explaining why the CPA was unable to gather sufficient competent evidential matter to warrant the expression of an opinion. 
A)  clearly state the specific reasons for lack of independence. 
B)  not mention any reason for the disclaimer other than that the CPA was unable to conduct the examination in accordance with generally accepted auditing standards. 
C)  not describe the reason for lack of independence but should state specifically that the CPA is not independent. 
D)  include a middle paragraph clearly describing the CPA's association with the client and explaining why the CPA was unable to gather sufficient competent evidential matter to warrant the expression of an opinion.

Question 15

Which are prospective financial statements that present an entity's expected financial position, results of operations, and cash flows, to the best of the responsible party's knowledge and belief?

Accepted Answer

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

Question 16

Briefly describe each of the five Trust Services principles.

Accepted Answer

The five Trust Services principles are:

Question 17

Your accounting firm has accepted a compilation engagement from a client in which your firm is not independent. In that case you:

Accepted Answer

A)  may not accept the engagement. 
B)  may accept the engagement and disclose the lack of independence. 
C)  may accept the engagement and not disclose the lack of independence. 
D)  may accept the engagement and disclose the lack of independence and the reason for the lack of independence. 
A)  may not accept the engagement. 
B)  may accept the engagement and disclose the lack of independence. 
C)  may accept the engagement and not disclose the lack of independence. 
D)  may accept the engagement and disclose the lack of independence and the reason for the lack of independence.

Question 18

An examination results in a conclusion that represents ________ assurance.

Accepted Answer

A)  limited assurance 
B)  negative 
C)  positive 
D)  unequivocal 
A)  limited assurance 
B)  negative 
C)  positive 
D)  unequivocal

Question 19

Attestation standards allow a CPA to perform all but which of the following services for a forecast or projection?

Accepted Answer

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

Question 20

The WebTrust service requires that a CPA update its testing of the e-commerce aspects of a entity's Web site at least every:

Accepted Answer

A)  ninety days. 
B)  month. 
C)  six months. 
D)  twelve months. 
A)  ninety days. 
B)  month. 
C)  six months. 
D)  twelve months.

Exam 25: Other Assurance Services

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

A nonaudit engagement in which the accountant undertakes to present, in the form of financial statements, information that is the representation of management, without undertaking to express any assurance on the statements is called a review engagement.

Before performing a review of a nonpublic entity's financial statements, an accountant should:

In a WebTrust attestation engagement the client engages a CPA to provide what level of assurance that the company's Website complies with Trust Services principles?

Of the three types of attestation engagements, examination engagements provide a higher level of assurance than agreed-upon procedures engagements but less than review engagements.

Which of the following would not be included in a CPA's report based upon a review of the financial statements of a nonpublic entity?

Statements on Standards for Accounting and Review Services (SSARS) govern the CPA's association with unaudited financial statements of nonpublic (private) companies, but not public companies.

The use of negative assurance is appropriate in audit reports.

The statement that "Nothing came to our attention which would indicate that these statements are not fairly presented" expresses which of the following?

An accountant has accepted an engagement in which the audit procedures of inquiry and analytical procedures will be employed. These procedures will form the basis for issuance of:

In a review service where the client has failed to follow GAAP, the accountant is:

An accountant's standard report on a compilation of a projection should not include a:

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?

A CPA who is not independent and is associated with financial statements should disclaim an opinion with respect to those financial statements. The disclaimer should:

Which are prospective financial statements that present an entity's expected financial position, results of operations, and cash flows, to the best of the responsible party's knowledge and belief?

Briefly describe each of the five Trust Services principles.

Your accounting firm has accepted a compilation engagement from a client in which your firm is not independent. In that case you:

An examination results in a conclusion that represents ________ assurance.

Attestation standards allow a CPA to perform all but which of the following services for a forecast or projection?

The WebTrust service requires that a CPA update its testing of the e-commerce aspects of a entity's Web site at least every:

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

The CPA Profession

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Section 404 Audits of Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

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 and Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls and Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Internal and Governmental Financial Auditing and Operational Auditing

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