Question 1

Auditors are obligated to search for "reportable matters."

Accepted Answer

A) True 
 B)False

Question 2

Few, if any, procedures are performed during a compilation engagement.

Accepted Answer

A) True 
 B)False

Question 3

In providing guidance to accountants, which ranks highest?

Accepted Answer

A)  Research study. 
B)  Criteria of Control guidance. 
C)  CPA Canada Handbook Recommendation. 
D)  CPA Canada Handbook Guideline. 
A)  Research study. 
B)  Criteria of Control guidance. 
C)  CPA Canada Handbook Recommendation. 
D)  CPA Canada Handbook Guideline.

Question 4

Review engagements involve both substantive and compliance testing.

Accepted Answer

A) True 
 B)False

Question 5

In a compilation engagement, the financial statements must at least comply with GAAP.

Accepted Answer

A) True 
 B)False

Question 6

List three matters which the auditor is responsible for reporting on to the audit committee of a public company.

Accepted Answer

Any three of:
i. Independent auditors' r

Question 7

Snow, CPA, was engaged by Master Limited to examine and report on management's written assertion about the effectiveness of Master's internal control system over financial reporting. Snow's report should state that ________.

Accepted Answer

A)  because of the inherent limitations in any system of internal control, errors or irregularities may occur and not be detected. 
B)  management's assertion is based on criteria established by the Chartered Professional Accounts of Canada. 
C)  the results of Snow's tests will form the basis for Snow's opinion on the fairness of Master's financial statements in conformity with GAAP. 
D)  the purpose of the engagement is to enable Snow to plan an audit and determine the nature, timing, and extent of tests to be performed. 
A)  because of the inherent limitations in any system of internal control, errors or irregularities may occur and not be detected. 
B)  management's assertion is based on criteria established by the Chartered Professional Accounts of Canada. 
C)  the results of Snow's tests will form the basis for Snow's opinion on the fairness of Master's financial statements in conformity with GAAP. 
D)  the purpose of the engagement is to enable Snow to plan an audit and determine the nature, timing, and extent of tests to be performed.

Question 8

Which of the following procedures should an accountant perform during an engagement to review the financial statements of a private company?

Accepted Answer

A)  Communicate internal control system weaknesses that were discovered during the assessment of control risk. 
B)  Obtain a letter of representation signed by top-level management. 
C)  Send bank confirmations to the company's financial institutions. 
D)  Examine cash disbursements in the subsequent period for evidence of unrecorded liabilities. 
A)  Communicate internal control system weaknesses that were discovered during the assessment of control risk. 
B)  Obtain a letter of representation signed by top-level management. 
C)  Send bank confirmations to the company's financial institutions. 
D)  Examine cash disbursements in the subsequent period for evidence of unrecorded liabilities.

Question 9

Personal financial planning has become a big source of business for professional accounting firms.

Accepted Answer

A) True 
 B)False

Question 10

When should reviews of interim financial information be performed?

Accepted Answer

review procedures should be performed at

Question 11

When compiling the financial statements of a private company, an accountant should ________.

Accepted Answer

A)  review agreements with financial institutions for restrictions on cash balances 
B)  study and understand the client's business 
C)  enquire of key personnel concerning related parties and subsequent events 
D)  perform ratio analyses of the financial data of comparable prior periods 
A)  review agreements with financial institutions for restrictions on cash balances 
B)  study and understand the client's business 
C)  enquire of key personnel concerning related parties and subsequent events 
D)  perform ratio analyses of the financial data of comparable prior periods

Question 12

CPA is a minority shareholder in ABC Co., and has just completed a compilation engagement for the company. The Notice to Reader should ________.

Accepted Answer

A)  disclaim an opinion 
B)  provide negative assurance 
C)  include a statement that CPA is not objective 
D)  not be issued, since CPA is not objective 
A)  disclaim an opinion 
B)  provide negative assurance 
C)  include a statement that CPA is not objective 
D)  not be issued, since CPA is not objective

Question 13

An auditor is most concerned that interim financial statements are not misleading relative to ________.

Accepted Answer

A)  the prior year's interim financial statements 
B)  the annual report 
C)  pro forma financial statements 
D)  the prior year's annual financial statements 
A)  the prior year's interim financial statements 
B)  the annual report 
C)  pro forma financial statements 
D)  the prior year's annual financial statements

Question 14

Review engagement standards require that the accountant performing the engagement have an objective state of mind.

Accepted Answer

A) True 
 B)False

Question 15

Auditing standards apply to work on all audited financial statements but not to work on other assurance engagements.

Accepted Answer

A) True 
 B)False

Question 16

Accounting principles require that interim financial statements be prepared.

Accepted Answer

A) True 
 B)False

Question 17

Reviews of interim financial information consist primarily of ________.

Accepted Answer

A)  substantive procedures 
B)  recalculation 
C)  external confirmations 
D)  enquiry and analytical procedures 
A)  substantive procedures 
B)  recalculation 
C)  external confirmations 
D)  enquiry and analytical procedures

Question 18

If an accountant is engaged to compile the financial statements of a private entity and the statements omit substantially all disclosures required by GAAP, which of the following alternatives is correct?

Accepted Answer

A)  If the accountant concludes that the omissions result in misleading financial statements and the matter cannot be resolved, the accountant should withdraw from the engagement. 
B)  The report should be amended to state that the financial statements have been prepared in accordance with a comprehensive basis of accounting other than GAAP. 
C)  The report should be amended to state that the financial statements have not been compiled in accordance with standards for compilation and review engagements. 
D)  The report should indicate that the statements are special-purpose financial statements that are not comparable to those of prior periods. 
A)  If the accountant concludes that the omissions result in misleading financial statements and the matter cannot be resolved, the accountant should withdraw from the engagement. 
B)  The report should be amended to state that the financial statements have been prepared in accordance with a comprehensive basis of accounting other than GAAP. 
C)  The report should be amended to state that the financial statements have not been compiled in accordance with standards for compilation and review engagements. 
D)  The report should indicate that the statements are special-purpose financial statements that are not comparable to those of prior periods.

Question 19

When unaudited financial statements are presented in comparative form with audited financial statements, such statements should be ________.

Accepted Answer

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

Question 20

With a compilation service, the procedures performed by a professional accountant can be described as ________.

Accepted Answer

A)  extensive 
B)  few, if any 
C)  comparable to a review service 
D)  comparable to an audit 
A)  extensive 
B)  few, if any 
C)  comparable to a review service 
D)  comparable to an audit

Exam 17: Other Public Accounting Services and Reportsreviews and Compilations

Auditors are obligated to search for "reportable matters."

Few, if any, procedures are performed during a compilation engagement.

In providing guidance to accountants, which ranks highest?

Review engagements involve both substantive and compliance testing.

In a compilation engagement, the financial statements must at least comply with GAAP.

List three matters which the auditor is responsible for reporting on to the audit committee of a public company.

Snow, CPA, was engaged by Master Limited to examine and report on management's written assertion about the effectiveness of Master's internal control system over financial reporting. Snow's report should state that ________.

Which of the following procedures should an accountant perform during an engagement to review the financial statements of a private company?

Personal financial planning has become a big source of business for professional accounting firms.

When should reviews of interim financial information be performed?

When compiling the financial statements of a private company, an accountant should ________.

CPA is a minority shareholder in ABC Co., and has just completed a compilation engagement for the company. The Notice to Reader should ________.

An auditor is most concerned that interim financial statements are not misleading relative to ________.

Review engagement standards require that the accountant performing the engagement have an objective state of mind.

Auditing standards apply to work on all audited financial statements but not to work on other assurance engagements.

Accounting principles require that interim financial statements be prepared.

Reviews of interim financial information consist primarily of ________.

If an accountant is engaged to compile the financial statements of a private entity and the statements omit substantially all disclosures required by GAAP, which of the following alternatives is correct?

When unaudited financial statements are presented in comparative form with audited financial statements, such statements should be ________.

With a compilation service, the procedures performed by a professional accountant can be described as ________.

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

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