Question 1

Review reports are normally dated as of the client's balance sheet date.

Accepted Answer

A) True 
 B)False

Question 2

An agreed-upon procedures engagement is one in which:

Accepted Answer

A)  the auditor and management agree that procedures will be applied to all accounts and circumstances. 
B)  the auditor and management agree that procedures will not be applied to all accounts and circumstances. 
C)  the auditor and management or a third party agree that the engagement will be limited to certain specific procedures. 
D)  the auditor and management or a 3rd party agree that the auditor will apply his or her judgment to determine procedures to be performed. 
A)  the auditor and management agree that procedures will be applied to all accounts and circumstances. 
B)  the auditor and management agree that procedures will not be applied to all accounts and circumstances. 
C)  the auditor and management or a third party agree that the engagement will be limited to certain specific procedures. 
D)  the auditor and management or a 3rd party agree that the auditor will apply his or her judgment to determine procedures to be performed.

Question 3

CPAs must be independent to issue a review report.

Accepted Answer

A) True 
 B)False

Question 4

A CPA firm can issue a compilation report:

Accepted Answer

A)  only if the partners are independent. 
B)  only if all the partners and the staff in the office performing the engagement are independent. 
C)  if the partners have no material or direct immaterial interest in client. 
D)  even if it is not independent. 
A)  only if the partners are independent. 
B)  only if all the partners and the staff in the office performing the engagement are independent. 
C)  if the partners have no material or direct immaterial interest in client. 
D)  even if it is not independent.

Question 5

When performing an attestation engagement a CPA is required to adhere to the Statements on Standards for Attestation Engagements. Describe below the Standards of Field Work for attestation engagements.

Accepted Answer

1. The practitioner must adequately plan

Question 6

Assurance provided by a review is substantially less than an audit. Which of the following statements is true regarding these services?

Accepted Answer

A)  A review requires more substantive evidence than an audit. 
B)  An audit requires less evidence related to internal control than a review. 
C)  A review requires less evidence than an audit. 
D)  None of the above statements is true. 
A)  A review requires more substantive evidence than an audit. 
B)  An audit requires less evidence related to internal control than a review. 
C)  A review requires less evidence than an audit. 
D)  None of the above statements is true.

Question 7

The concept of limited assurance is provided for in which of the following engagements?

Accepted Answer

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

Question 8

There are no questions for this Learning Objective.

Accepted Answer

Learning O

Question 9

AICPA attestation standards define two general types of prospective financial statements, forecasts and projections. Define what is meant by each and give an example.

Accepted Answer

Forecasts-prospective financial statemen

Question 10

The engagement and report on debt compliance letters should be limited to compliance matters that the auditor is qualified to evaluate. Which of the following engagements would be inappropriate for the CPA to attempt to evaluate?

Accepted Answer

A)  Determining whether the client has properly restricted its business activities to the requirements of an agreement. 
B)  Determining whether principal and interest payments were made when due. 
C)  Determining whether the proper limitations were maintained on dividends, working capital, and debt ratios. 
D)  Determining whether the accounting records were adequate for conducting an ordinary audit. 
A)  Determining whether the client has properly restricted its business activities to the requirements of an agreement. 
B)  Determining whether principal and interest payments were made when due. 
C)  Determining whether the proper limitations were maintained on dividends, working capital, and debt ratios. 
D)  Determining whether the accounting records were adequate for conducting an ordinary audit.

Question 11

When performing a review of interim information for a public company, the accountant ordinarily does not perform tests of the accounting records, independent confirmations, or physical examinations.

Accepted Answer

A) True 
 B)False

Question 12

When issuing a debt compliance letter, the auditor's opinion should be in the form of a negative assurance.

Accepted Answer

A) True 
 B)False

Question 13

An auditor has been asked to report on the balance sheet of Kane Company but not on the other basic financial statements. The auditor will have access to all information underlying the basic financial statements. Under these circumstances, the auditor:

Accepted Answer

A)  may accept the engagement because such engagements merely involve limited reporting objectives. 
B)  may accept the engagement but should disclaim an opinion because of an inability to apply the procedures considered necessary. 
C)  should refuse the engagement because there is a client-imposed scope limitation. 
D)  should refuse the engagement because of a departure from generally accepted auditing standards. 
A)  may accept the engagement because such engagements merely involve limited reporting objectives. 
B)  may accept the engagement but should disclaim an opinion because of an inability to apply the procedures considered necessary. 
C)  should refuse the engagement because there is a client-imposed scope limitation. 
D)  should refuse the engagement because of a departure from generally accepted auditing standards.

Question 14

CPAs can issue a WebTrust opinion only on all five Trust Services principles.

Accepted Answer

A) True 
 B)False

Question 15

You are preparing to issue a report on the compilation of financial statements for a non-public company. Prior to issuing the report you should:

Accepted Answer

A)  read the financial statements to determine if they are free from obvious material errors. 
B)  perform analytical procedures to determine if they are free from material misstatements. 
C)  perform tests of balances on selected accounts to determine if they are free from material misstatements. 
D)  perform limited control tests to determine if there are any material misstatements. 
A)  read the financial statements to determine if they are free from obvious material errors. 
B)  perform analytical procedures to determine if they are free from material misstatements. 
C)  perform tests of balances on selected accounts to determine if they are free from material misstatements. 
D)  perform limited control tests to determine if there are any material misstatements.

Question 16

As a CPA, you have been engaged to perform an attestation engagement. You would typically:

Accepted Answer

A)  express a conclusion about an assertion. 
B)  provide management consulting services. 
C)  prepare financial forecasts to secure in preparation for receiving debt funding. 
D)  compile financial statements for the client. 
A)  express a conclusion about an assertion. 
B)  provide management consulting services. 
C)  prepare financial forecasts to secure in preparation for receiving debt funding. 
D)  compile financial statements for the client.

Question 17

Which of the following results in a conclusion that represents positive assurance?

Accepted Answer

A)  review 
B)  compilation 
C)  examination 
D)  agreed upon procedure engagement 
A)  review 
B)  compilation 
C)  examination 
D)  agreed upon procedure engagement

Question 18

An auditor who conducts an examination in accordance with generally accepted auditing standards and concludes that the financial statements are fairly presented in accordance with a comprehensive basis of accounting other than GAAP, should issue a:

Accepted Answer

A)  review report. 
B)  special kind of report. 
C)  qualified opinion. 
D)  disclaimer of opinion. 
A)  review report. 
B)  special kind of report. 
C)  qualified opinion. 
D)  disclaimer of opinion.

Question 19

The quarterly reports submitted to the SEC by the client:

Accepted Answer

A)  have to be audited and the CPA firm must be identified. 
B)  do not have to be audited, but the CPA firm which does the year-end audit must be identified. 
C)  have to be audited, but the CPA firm does not have to be identified. 
D)  do not have to be audited, but the CPA firm which does the year-end audit must review the quarterly statements before they are submitted to the SEC. 
A)  have to be audited and the CPA firm must be identified. 
B)  do not have to be audited, but the CPA firm which does the year-end audit must be identified. 
C)  have to be audited, but the CPA firm does not have to be identified. 
D)  do not have to be audited, but the CPA firm which does the year-end audit must review the quarterly statements before they are submitted to the SEC.

Question 20

Auditors frequently audit statements that were prepared on a comprehensive basis of accounting other than GAAP. When this occurs:

Accepted Answer

A)  generally accepted auditing standards apply to these engagements and the reporting requirements differ. 
B)  generally accepted auditing standards apply to these engagements and the reporting requirements are the same as well. 
C)  generally accepted auditing standards do not apply to these examinations and the reporting requirements differ also. 
D)  generally accepted auditing standards do not apply to this engagement and the reporting requirements remain the same for the CPA. 
A)  generally accepted auditing standards apply to these engagements and the reporting requirements differ. 
B)  generally accepted auditing standards apply to these engagements and the reporting requirements are the same as well. 
C)  generally accepted auditing standards do not apply to these examinations and the reporting requirements differ also. 
D)  generally accepted auditing standards do not apply to this engagement and the reporting requirements remain the same for the CPA.

Exam 25: Other Assurance Services

Review reports are normally dated as of the client's balance sheet date.

An agreed-upon procedures engagement is one in which:

CPAs must be independent to issue a review report.

A CPA firm can issue a compilation report:

When performing an attestation engagement a CPA is required to adhere to the Statements on Standards for Attestation Engagements. Describe below the Standards of Field Work for attestation engagements.

Assurance provided by a review is substantially less than an audit. Which of the following statements is true regarding these services?

The concept of limited assurance is provided for in which of the following engagements?

There are no questions for this Learning Objective.

AICPA attestation standards define two general types of prospective financial statements, forecasts and projections. Define what is meant by each and give an example.

The engagement and report on debt compliance letters should be limited to compliance matters that the auditor is qualified to evaluate. Which of the following engagements would be inappropriate for the CPA to attempt to evaluate?

When performing a review of interim information for a public company, the accountant ordinarily does not perform tests of the accounting records, independent confirmations, or physical examinations.

When issuing a debt compliance letter, the auditor's opinion should be in the form of a negative assurance.

An auditor has been asked to report on the balance sheet of Kane Company but not on the other basic financial statements. The auditor will have access to all information underlying the basic financial statements. Under these circumstances, the auditor:

CPAs can issue a WebTrust opinion only on all five Trust Services principles.

You are preparing to issue a report on the compilation of financial statements for a non-public company. Prior to issuing the report you should:

As a CPA, you have been engaged to perform an attestation engagement. You would typically:

Which of the following results in a conclusion that represents positive assurance?

An auditor who conducts an examination in accordance with generally accepted auditing standards and concludes that the financial statements are fairly presented in accordance with a comprehensive basis of accounting other than GAAP, should issue a:

The quarterly reports submitted to the SEC by the client:

Auditors frequently audit statements that were prepared on a comprehensive basis of accounting other than GAAP. When this occurs:

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

Filters