Question 1

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 2

A management representation letter is obtained for audit engagements,but not for review engagements.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 5

Which of these items,discovered by the auditor during the course of an audit engagement,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) Misstatements that are trivial in nature. 
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) Misstatements that are trivial in nature.

Question 6

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 7

The primary purpose for the development of standards by the Criteria of Control Committee was to ________.

Accepted Answer

A) provide guidance for companies developing best practice control systems 
B) provide systems criteria,similar to GAAP in accounting,for reporting on controls 
C) provide detailed tests of controls for audits of financial statements 
D) provide clarity on who is responsible for controls 
A) provide guidance for companies developing best practice control systems 
B) provide systems criteria,similar to GAAP in accounting,for reporting on controls 
C) provide detailed tests of controls for audits of financial statements 
D) provide clarity on who is responsible for controls

Question 8

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 independent. 
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 independent. 
D) not be issued,since CPA is not objective

Question 9

Accounting principles require that interim financial statements be prepared.

Accepted Answer

A) True 
 B)False

Question 10

For companies under the jurisdiction of the SEC,auditors must directly inform the proper regulatory agencies when they learn that interim financial information filed with the agencies is probably misstated.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 13

Knowledge of the client's business is needed for: audit,review,and compilation services.

Accepted Answer

A) True 
 B)False

Question 14

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 15

If an accountant is engaged to compile the financial statements of a private entity and the statements are no prepared according to GAAP,which of the following alternatives is correct?

Accepted Answer

A) If the accountant concludes that the basis used is appropriate for the circumstances and such basis is appropriately disclosed in the statements,no change to the compilation report is made. 
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 basis used is appropriate for the circumstances and such basis is appropriately disclosed in the statements,no change to the compilation report is made. 
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 16

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

Accepted Answer

A) True 
 B)False

Question 17

XYZ Ltd.has prepared financial statements that contain a material departure from GAAP.The review report should ________.

Accepted Answer

A) ensure that the nature of the departure is described in the notes 
B) contain a qualification and describe 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 qualification and describe 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 18

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 19

The scope of a review engagement is ________.

Accepted Answer

A) similar to that of an audit 
B) less than that of a compilation 
C) less than that of an audit 
D) more than that of an audit 
A) similar to that of an audit 
B) less than that of a compilation 
C) less than that of an audit 
D) more than that of an audit

Question 20

A review of interim financial statements requires does not require sufficient,appropriate evidence to be gathered.

Accepted Answer

A) True 
 B)False

Exam 17: Other Public Accounting Services and Reportsreviews and Compilations

Reviews of interim financial information consist primarily of ________.

A management representation letter is obtained for audit engagements,but not for review engagements.

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

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

Which of these items,discovered by the auditor during the course of an audit engagement,need NOT be communicated to the audit committee?

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

The primary purpose for the development of standards by the Criteria of Control Committee was to ________.

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

Accounting principles require that interim financial statements be prepared.

For companies under the jurisdiction of the SEC,auditors must directly inform the proper regulatory agencies when they learn that interim financial information filed with the agencies is probably misstated.

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 ________.

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

Knowledge of the client's business is needed for: audit,review,and compilation services.

In providing guidance to accountants,which ranks highest?

If an accountant is engaged to compile the financial statements of a private entity and the statements are no prepared according to GAAP,which of the following alternatives is correct?

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

XYZ Ltd.has prepared financial statements that contain a material departure from GAAP.The review report should ________.

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

The scope of a review engagement is ________.

A review of interim financial statements requires does not require sufficient,appropriate evidence to be gathered.

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 the Audit Report

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, including Fraud Auditing

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