Question 1

What does the extent of review procedures of interim financial information depend on?

Accepted Answer

The extent of these procedures depends on the auditor's professional judgment about problem areas in the system of internal control, the severity of the unique accounting principle problems, and the errors that have occurred in the past.

Question 2

The auditor learned the following in the course of an audit engagement. Which of the items, discovered by the auditor, need NOT be communicated to the audit committee?

Accepted Answer

A)  The theft of several items of inventory by warehouse employees. 
B)  Management's significant accounting policies. 
C)  Significant audit adjustments recommended by the auditors. 
D)  All of these items should be communicated to the audit committee. 
A)  The theft of several items of inventory by warehouse employees. 
B)  Management's significant accounting policies. 
C)  Significant audit adjustments recommended by the auditors. 
D)  All of these items should be communicated to the audit committee. D

Question 3

With compilation engagements, the minimum standard is that financial statements ________.

Accepted Answer

A)  not be false or misleading 
B)  be accurate 
C)  be fairly presented 
D)  be prepared in accordance with GAAP 
A)  not be false or misleading 
B)  be accurate 
C)  be fairly presented 
D)  be prepared in accordance with GAAP A

Question 4

Donna Prima, CPA, was engaged to review the financial statements of Rooster Restaurants, Inc., a private company. During her review, Donna found that Rooster had not capitalized leases as required under GAAP. The result was so material, that Donna modified the standard review report to state that "the financial statements are not in accordance with GAAP."
Required:
Is Prima's report in accordance with professional standards? If not, what should she have done under the circumstances? Explain.

Accepted Answer

Prima's report is not strictly in accord

Question 5

The level of assurance provided by a review engagement can best be described as ________.

Accepted Answer

A)  comparable to that of an audit 
B)  moderate 
C)  high 
D)  nonexistent 
A)  comparable to that of an audit 
B)  moderate 
C)  high 
D)  nonexistent

Question 6

An auditor has been engaged to report on management's report on internal control. Management's report points to a material weakness in its system of internal controls over inventory. The auditor's report should be a(n) ________.

Accepted Answer

A)  adverse opinion 
B)  qualified opinion for a GAAP departure 
C)  clean opinion 
D)  clean opinion with an emphasis of matter paragraph 
A)  adverse opinion 
B)  qualified opinion for a GAAP departure 
C)  clean opinion 
D)  clean opinion with an emphasis of matter paragraph

Question 7

In a compilation engagement, the accountant performs no audit procedures.

Accepted Answer

A) True 
 B)False

Question 8

George Wilson CPA is on the board of directors of a small manufacturing company, Smith Plastics, Inc. The president of the company, John Smith, has asked George to prepare financial statements for the company to be submitted to Vancouver Dominion Bank as part of a loan request. Mr. Smith tells George that the bank would like a review or an audit, but would settle for a compilation from a CPA. He would like George to do the compilation.
Required:
Under what conditions, if any, would George Wilson be allowed to compile the financial statements of Smith Plastics, Inc.?

Accepted Answer

George Wilson is not independent of Smit

Question 9

XYZ Ltd. has prepared financial statements that are not in accordance with GAAP. The review report should ________.

Accepted Answer

A)  ensure that the nature of the departure is described in the notes 
B)  contain a reservation describing the nature of the departure from GAAP 
C)  be a standard review report, since a review is not an audit 
D)  indicate the dollar effect of restatement for each account affected 
A)  ensure that the nature of the departure is described in the notes 
B)  contain a reservation describing the nature of the departure from GAAP 
C)  be a standard review report, since a review is not an audit 
D)  indicate the dollar effect of restatement for each account affected

Question 10

An accountant who is not independent can compile financial statements for a private company as long as the fact of lack of independence is disclosed in the body of the report.

Accepted Answer

A) True 
 B)False

Question 11

A review engagement consists primarily of enquiry, analytical procedures, and discussion.

Accepted Answer

A) True 
 B)False

Question 12

According to the Guidance on Criteria of Control (CoCo), control is effected by ________.

Accepted Answer

A)  senior management 
B)  the board of directors 
C)  people throughout the organization 
D)  the audit committee 
A)  senior management 
B)  the board of directors 
C)  people throughout the organization 
D)  the audit committee

Question 13

An accountant's review engagement report would NOT include a statement that ________.

Accepted Answer

A)  the engagement was performed in accordance with generally accepted auditing standards (GAAS) 
B)  an accountant reviews information supplied by the company 
C)  a review does not constitute an audit and an audit opinion is not expressed on the financial statements 
D)  the accountant is not aware of any material departure from generally accepted accounting standards (GAAP) 
A)  the engagement was performed in accordance with generally accepted auditing standards (GAAS) 
B)  an accountant reviews information supplied by the company 
C)  a review does not constitute an audit and an audit opinion is not expressed on the financial statements 
D)  the accountant is not aware of any material departure from generally accepted accounting standards (GAAP)

Question 14

Financial statements must be presented fairly as a result of a compilation engagement.

Accepted Answer

A) True 
 B)False

Question 15

Substantive and compliance testing are applicable to ________.

Accepted Answer

A)  audits only 
B)  reviews and audits 
C)  compilations and audits 
D)  reviews and compilations 
A)  audits only 
B)  reviews and audits 
C)  compilations and audits 
D)  reviews and compilations

Question 16

Interim financial information is a basic and necessary element of financial statements that conform to GAAP.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following procedures would not be performed in a review of the financial statements of a private company?

Accepted Answer

A)  Enquire about the accounting system and bookkeeping procedures. 
B)  Perform analytical procedures to identify relationships and individual items that appear to be unusual. 
C)  Obtain a lawyer's letter about claims and possible claims. 
D)  Study the financial statements for indications that they conform to generally accepted accounting principles. 
A)  Enquire about the accounting system and bookkeeping procedures. 
B)  Perform analytical procedures to identify relationships and individual items that appear to be unusual. 
C)  Obtain a lawyer's letter about claims and possible claims. 
D)  Study the financial statements for indications that they conform to generally accepted accounting principles.

Question 18

The review of interim financial information should ideally take place ________.

Accepted Answer

A)  at or near year-end 
B)  just after the cutoff date 
C)  at or near the date of the interim information 
D)  six months into the fiscal year 
A)  at or near year-end 
B)  just after the cutoff date 
C)  at or near the date of the interim information 
D)  six months into the fiscal year

Question 19

Which of the following best describes a CPA's engagement to report on an entity's internal controls over financial reporting?

Accepted Answer

A)  An assurance engagement to examine and report on management's written assertions about the effectiveness of its internal control system. 
B)  An audit engagement to render an opinion on the entity's internal control system. 
C)  A prospective engagement to project, for a period of time not to exceed one year, and report on the expected benefits of the entity's internal control structure. 
D)  A consulting engagement to provide constructive advice to the entity on its internal control system. 
A)  An assurance engagement to examine and report on management's written assertions about the effectiveness of its internal control system. 
B)  An audit engagement to render an opinion on the entity's internal control system. 
C)  A prospective engagement to project, for a period of time not to exceed one year, and report on the expected benefits of the entity's internal control structure. 
D)  A consulting engagement to provide constructive advice to the entity on its internal control system.

Question 20

Ordinarily, which of the following procedures should be applied when an independent accountant conducts a review of interim financial information of a publicly held company?

Accepted Answer

A)  Verify changes in key account balances. 
B)  Read the minutes of the board of directors' meetings. 
C)  Inspect the open purchase order file. 
D)  Perform cutoff tests for cash receipts and disbursements. 
A)  Verify changes in key account balances. 
B)  Read the minutes of the board of directors' meetings. 
C)  Inspect the open purchase order file. 
D)  Perform cutoff tests for cash receipts and disbursements.

What does the extent of review procedures of interim financial information depend on?

The auditor learned the following in the course of an audit engagement. Which of the items, discovered by the auditor, need NOT be communicated to the audit committee?

With compilation engagements, the minimum standard is that financial statements ________.

The level of assurance provided by a review engagement can best be described as ________.

An auditor has been engaged to report on management's report on internal control. Management's report points to a material weakness in its system of internal controls over inventory. The auditor's report should be a(n) ________.

In a compilation engagement, the accountant performs no audit procedures.

XYZ Ltd. has prepared financial statements that are not in accordance with GAAP. The review report should ________.

An accountant who is not independent can compile financial statements for a private company as long as the fact of lack of independence is disclosed in the body of the report.

A review engagement consists primarily of enquiry, analytical procedures, and discussion.

According to the Guidance on Criteria of Control (CoCo), control is effected by ________.

An accountant's review engagement report would NOT include a statement that ________.

Financial statements must be presented fairly as a result of a compilation engagement.

Substantive and compliance testing are applicable to ________.

Interim financial information is a basic and necessary element of financial statements that conform to GAAP.

Which of the following procedures would not be performed in a review of the financial statements of a private company?

The review of interim financial information should ideally take place ________.

Which of the following best describes a CPA's engagement to report on an entity's internal controls over financial reporting?

Ordinarily, which of the following procedures should be applied when an independent accountant conducts a review of interim financial information of a publicly held company?

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters

Exam 17: Other Public Accounting Services and Reportsreviews and Compilations

What does the extent of review procedures of interim financial information depend on?

The auditor learned the following in the course of an audit engagement. Which of the items, discovered by the auditor, need NOT be communicated to the audit committee?

With compilation engagements, the minimum standard is that financial statements ________.

The level of assurance provided by a review engagement can best be described as ________.

An auditor has been engaged to report on management's report on internal control. Management's report points to a material weakness in its system of internal controls over inventory. The auditor's report should be a(n) ________.

In a compilation engagement, the accountant performs no audit procedures.

XYZ Ltd. has prepared financial statements that are not in accordance with GAAP. The review report should ________.

An accountant who is not independent can compile financial statements for a private company as long as the fact of lack of independence is disclosed in the body of the report.

A review engagement consists primarily of enquiry, analytical procedures, and discussion.

According to the Guidance on Criteria of Control (CoCo), control is effected by ________.

An accountant's review engagement report would NOT include a statement that ________.

Financial statements must be presented fairly as a result of a compilation engagement.

Substantive and compliance testing are applicable to ________.

Interim financial information is a basic and necessary element of financial statements that conform to GAAP.

Which of the following procedures would not be performed in a review of the financial statements of a private company?

The review of interim financial information should ideally take place ________.

Which of the following best describes a CPA's engagement to report on an entity's internal controls over financial reporting?

Ordinarily, which of the following procedures should be applied when an independent accountant conducts a review of interim financial information of a publicly held company?

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters