Question 1

Which of the following types of association with financial statements is least likely to result in a report by the CPAs?

Accepted Answer

A) Compilation. 
B) Review. 
C) Preparation. 
D) Audit. 
A) Compilation. 
B) Review. 
C) Preparation. 
D) Audit.

Question 2

Accountant prepared or compiled financial statements must include note disclosures.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Is independence required when an accountant is engaged to either prepare or compile a client's financial statements?  
$\begin{array} { c c c } 
&\quad\quad\quad  \text { Prepare } & \text { Compile } \\end{array}$ 
A- $\begin{array} { c c c }  \quad\quad\quad\text { Yes } &\quad\quad\quad\quad \text { Yes } \\end{array}$ 
B-  $\begin{array} { c c c }\quad\quad\quad \text { Yes } &\quad\quad\quad\quad \text {  No } \\end{array}$
C-  $\begin{array} { c c c } \quad\quad\quad\text {  No } & \quad\quad\quad\quad\text {Yes } \\end{array}$
D-   $\begin{array} { c c c }\quad\quad\quad \text { No } &\quad\quad\quad\quad \text {  No }
\end{array}$

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 5

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 6

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 7

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 8

Which of the following is accurate relating to audit reports on tax basis financial statements?

Accepted Answer

A) No emphasis-of-matter paragraph is included in the audit report. 
B) Use of the report need not be restricted. 
C) The purpose of the financial statements should be described in the audit report. 
D) Only reports with modified opinions are appropriate. 
A) No emphasis-of-matter paragraph is included in the audit report. 
B) Use of the report need not be restricted. 
C) The purpose of the financial statements should be described in the audit report. 
D) Only reports with modified opinions are appropriate.

Question 9

If compiled financial statements presented in conformity with the cash receipts and disbursements basis of accounting do not disclose the basis of accounting used,the accountant should:

Accepted Answer

A) Disclose the basis in the notes to the financial statements. 
B) Clearly label each page "Unaudited." 
C) Disclose the basis of accounting in the accountant's report. 
D) Recompile the financial statements using generally accepted accounting principles. 
A) Disclose the basis in the notes to the financial statements. 
B) Clearly label each page "Unaudited." 
C) Disclose the basis of accounting in the accountant's report. 
D) Recompile the financial statements using generally accepted accounting principles.

Question 10

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 11

A "comfort letter" to an investment banking firm will normally not:

Accepted Answer

A) Express negative assurance. 
B) Be included with the registration statement for the securities. 
C) Include the CPA's opinion as to whether the audited financial statements comply in all material respects with applicable requirements of the related securities acts. 
D) Include a statement as to the auditors' independence. 
A) Express negative assurance. 
B) Be included with the registration statement for the securities. 
C) Include the CPA's opinion as to whether the audited financial statements comply in all material respects with applicable requirements of the related securities acts. 
D) Include a statement as to the auditors' independence.

Question 12

An accountant has been engaged to prepare a nonpublic client's financial statements.While preparing the financial statements,the accountant finds a number of material misstatements related to journal entries.The client refuses to correct the misstatements.Which of the following is correct?

Accepted Answer

A) A report with an adverse opinion should be issued. 
B) All regulatory agencies should immediately be notified. 
C) The accountant should prepare the financial statements and present them using the misstated journal entries. 
D) The accountant should withdraw from the engagement. 
A) A report with an adverse opinion should be issued. 
B) All regulatory agencies should immediately be notified. 
C) The accountant should prepare the financial statements and present them using the misstated journal entries. 
D) The accountant should withdraw from the engagement.

Question 13

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.

Question 14

Which of the following is correct when a company is issuing summary financial statements developed from audited financial statements?

Accepted Answer

A) Such summary statements should always have a CPA's report associated with them when audited financial statements exist. 
B) The CPA may issue a report on whether the summary information is fairly stated in all material respects in relation to the basic financial statements. 
C) The CPA should perform a compilation and review of the summary financial statements. 
D) The CPA who has audited the financial statements who is asked to report on the summary statements should decline the engagement because the summary statements do not include all disclosures necessary under generally accepted accounting principles. 
A) Such summary statements should always have a CPA's report associated with them when audited financial statements exist. 
B) The CPA may issue a report on whether the summary information is fairly stated in all material respects in relation to the basic financial statements. 
C) The CPA should perform a compilation and review of the summary financial statements. 
D) The CPA who has audited the financial statements who is asked to report on the summary statements should decline the engagement because the summary statements do not include all disclosures necessary under generally accepted accounting principles.

Question 15

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 16

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 17

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 18

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 19

Which of the following statements is correct with respect to an audit report issued for financial statements to be used primarily outside of the United States?

Accepted Answer

A) The report should follow the U.S.format,modified as appropriate. 
B) The report should follow the format of the other country. 
C) The report may follow either the U.S.format,modified as appropriate,or may follow the format of the other country. 
D) The report should follow the attestation examination report format. 
A) The report should follow the U.S.format,modified as appropriate. 
B) The report should follow the format of the other country. 
C) The report may follow either the U.S.format,modified as appropriate,or may follow the format of the other country. 
D) The report should follow the attestation examination report format.

Question 20

The income statement for an individual may be titled a Statement of Changes in Net Worth.

Accepted Answer

A) True 
 B)False

Exam 19: Additional Assurance Services: Historical Financial Information

Which of the following types of association with financial statements is least likely to result in a report by the CPAs?

Accountant prepared or compiled financial statements must include note disclosures.

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

Is independence required when an accountant is engaged to either prepare or compile a client's financial statements? Prepare Compile A- Yes Yes B- Yes No C- No Yes D- No No

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

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

Which of the following requires modification of a review report?

Which of the following is accurate relating to audit reports on tax basis financial statements?

If compiled financial statements presented in conformity with the cash receipts and disbursements basis of accounting do not disclose the basis of accounting used,the accountant should:

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:

A "comfort letter" to an investment banking firm will normally not:

An accountant has been engaged to prepare a nonpublic client's financial statements.While preparing the financial statements,the accountant finds a number of material misstatements related to journal entries.The client refuses to correct the misstatements.Which of the following is correct?

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

Which of the following is correct when a company is issuing summary financial statements developed from audited financial statements?

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

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

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

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:

Which of the following statements is correct with respect to an audit report issued for financial statements to be used primarily outside of the United States?

The income statement for an individual may be titled a Statement of Changes in Net Worth.

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

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