Question 1

Accountants must issue a compilation report at the conclusion of a compilation unless they have withdrawn from the engagement.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

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

Accepted Answer

a.Financial statement preparation involves preparing the financial statements using the client's records,documents,explanations and other information provided by management.To perform the engagement,the accountant should have or obtain an understanding of the financial framework adopted by management for preparation of the financial statements (e.g. ,generally accepted accounting principles)and the significant accounting policies adopted by management.
b.A compilation is limited to taking the representations of management and putting them in the form of financial statements.No explicit assurance is provided on the financial statements.
c.A review of financial statements involves the performance of inquiry and analytical procedures to provide the accountants with a reasonable basis for expressing limited assurance that the financial statements are in accordance with generally accepted accounting principles.
d.Procedures performed in the review of financial statements include (only three required):
-Inquiries of officers and other executives.
-Analytical procedures applied to financial data by reference to prior financial data,budgets,and other operating data.
-Inquiries concerning actions taken in meetings of stockholders,board of directors,and committees of the board.
-Additional procedures if the accountants become aware that the information may be incorrect,incomplete,or otherwise unsatisfactory.

Question 4

A "comfort letter" is ordinarily addressed to:

Accepted Answer

A) Creditor financial institutions. 
B) The client's audit committee. 
C) The Securities and Exchange Commission. 
D) Underwriters of securities. 
A) Creditor financial institutions. 
B) The client's audit committee. 
C) The Securities and Exchange Commission. 
D) Underwriters of securities.

Question 5

When performing a review of a nonpublic company,the auditors must obtain in a representation letter acknowledgement of management for its responsibility for each 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 6

Which of the following would result in a modified CPA's report on a review of the interim financial statements of a publicly held company?

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 7

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

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 8

A compilation of financial statements provides limited assurance.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

An auditor is reporting on cash basis financial statements.These statements are best referred to in his opinion by which of the following descriptions?

Accepted Answer

A) Financial position and results of operation arising from cash transactions. 
B) Assets and liabilities arising from cash transactions,and revenue collected and expenses paid. 
C) Balance sheet and income statement resulting from cash transactions. 
D) Cash balance sheet and the source and application of funds. 
A) Financial position and results of operation arising from cash transactions. 
B) Assets and liabilities arising from cash transactions,and revenue collected and expenses paid. 
C) Balance sheet and income statement resulting from cash transactions. 
D) Cash balance sheet and the source and application of funds.

Question 11

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 12

Which of the following types of association requires that accountants provide a report with no explicit assurance?

Accepted Answer

A) Compilations. 
B) Reviews. 
C) Financial statement preparation. 
D) Audits. 
A) Compilations. 
B) Reviews. 
C) Financial statement preparation. 
D) Audits.

Question 13

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 14

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 15

Which of the following is correct concerning a CPA firm's preparation of financial statements engagement?

Accepted Answer

A) The statements must only be used by management and not third parties. 
B) A written engagement letter or oral agreement is required. 
C) No accountant's report ordinarily accompanies the financial statements. 
D) At a minimum,the accountant preparing the financial statements must comply with the compilation standards. 
A) The statements must only be used by management and not third parties. 
B) A written engagement letter or oral agreement is required. 
C) No accountant's report ordinarily accompanies the financial statements. 
D) At a minimum,the accountant preparing the financial statements must comply with the compilation standards.

Question 16

A comfort letter will ordinarily include:

Accepted Answer

A) Negative assurance on whether internal control operated as designed. 
B) An opinion on compliance with Single Audit Act of 1984 requirements. 
C) An opinion on whether the audited financial statements comply in form with SEC accounting requirements. 
D) Positive assurance on whether unaudited condensed financial information complied with GAAP. 
A) Negative assurance on whether internal control operated as designed. 
B) An opinion on compliance with Single Audit Act of 1984 requirements. 
C) An opinion on whether the audited financial statements comply in form with SEC accounting requirements. 
D) Positive assurance on whether unaudited condensed financial information complied with GAAP.

Question 17

Which of the following is not correct relating to an accountant's engagement to prepare a client's financial statements?

Accepted Answer

A) The accountant should obtain an understanding of the client's financial reporting framework. 
B) The accountant should avoid assisting the client in making significant judgments relating to particular financial statement accounts. 
C) Ordinarily,each page of the prepared financial statements should include indication on each page that no CPA provides any assurance on the financial statements. 
D) Documentation requirements include a written engagement letter. 
A) The accountant should obtain an understanding of the client's financial reporting framework. 
B) The accountant should avoid assisting the client in making significant judgments relating to particular financial statement accounts. 
C) Ordinarily,each page of the prepared financial statements should include indication on each page that no CPA provides any assurance on the financial statements. 
D) Documentation requirements include a written engagement letter.

Question 18

Each page of the financial statements compiled by an accountant may include a reference such as:

Accepted Answer

A) See accompanying accountant's notes. 
B) Unaudited,see accountant's opinion. 
C) See accountant's compilation report. 
D) Subject to compilation restrictions. 
A) See accompanying accountant's notes. 
B) Unaudited,see accountant's opinion. 
C) See accountant's compilation report. 
D) Subject to compilation restrictions.

Question 19

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.

Question 20

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

Accepted Answer

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

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

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:

A "comfort letter" is ordinarily addressed to:

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

Which of the following would result in a modified CPA's report on a review of the interim financial statements of a publicly held company?

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

A compilation of financial statements provides limited assurance.

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

An auditor is reporting on cash basis financial statements.These statements are best referred to in his opinion by which of the following descriptions?

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

Which of the following types of association requires that accountants provide a report with no explicit assurance?

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:

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

Which of the following is correct concerning a CPA firm's preparation of financial statements engagement?

A comfort letter will ordinarily include:

Which of the following is not correct relating to an accountant's engagement to prepare a client's financial statements?

Each page of the financial statements compiled by an accountant may include a reference such as:

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

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

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 Reports

Integrated Audits of Public Companies

Additional Assurance Services: Other Information

Internal, operational, and Compliance Auditing

Filters

Exam 19: Additional Assurance Services: Historical Financial Information

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

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:

A "comfort letter" is ordinarily addressed to:

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

Which of the following would result in a modified CPA's report on a review of the interim financial statements of a publicly held company?

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

A compilation of financial statements provides limited assurance.

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

An auditor is reporting on cash basis financial statements.These statements are best referred to in his opinion by which of the following descriptions?

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

Which of the following types of association requires that accountants provide a report with no explicit assurance?

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:

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

Which of the following is correct concerning a CPA firm's preparation of financial statements engagement?

A comfort letter will ordinarily include:

Which of the following is not correct relating to an accountant's engagement to prepare a client's financial statements?

Each page of the financial statements compiled by an accountant may include a reference such as:

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

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

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 Reports

Integrated Audits of Public Companies

Additional Assurance Services: Other Information

Internal, operational, and Compliance Auditing

Filters