Homework Help This preview shows page 32 - 35 out of 104 pages. Which of the following representations does an accountant make implicitly when issuing the standardreport for the compilation of a nonissuer's financial statements?a. The financial statements have not been audited.b.The accountant is independent with respect to the entity. c. A compilation consists principally of inquiries and analytical procedures.d. The accountant does not express any assurance on the financial statements.ExplanationChoice "b" is correct. If the accountant is not independent, he should specifically disclose the lack ofindependence. Otherwise, independence is implied.Choice "a" is incorrect. The report accompanying compiled financial statements explicitly states that thefinancial statements have not been audited.Choice "c" is incorrect. Inquiry and analytical procedures are not performed in a compilation engagement.Choice "d" is incorrect. The report accompanying compiled financial statements explicitly states that theaccountant provides no assurance on the financial statements.Which of the following inquiry or analytical procedures ordinarily is performed in an engagement to reviewa nonissuer's financial statements? Get answer to your question and much more d.Tests of theaccountingrecords.a.Tests ofmanagement'sassertionsregardingcontinuedexistence.b.Inquiries ofthe entity'sattorneyconcerningcontingentliabilities. Which of the following procedures is usually performed by the accountant in a review engagement of anonissuer performed in accordance withStatements on Standards for Accounting and Review Services? Get answer to your question and much more Upload your study docs or become a Course Hero member to access this document Upload your study docs or become a Course Hero member to access this document End of preview. Want to read all 104 pages? Upload your study docs or become a Course Hero member to access this document CPA Auditing and Attestation You can start the exam to practice all questions related to this exam. Question No. 1 Choose the correct option from the given list. Inquiring about actions taken at meetings of the board of directors that may affect the financial statements. Issuing a report stating that the review was performed in accordance with standards established by the AICPA. Reading the financial statements to consider whether they conform with generally accepted accounting principles. Communicating any material weaknesses discovered during the consideration of internal control. 0 DiscussionsTrending ExamsLast Updated on February 1, 2022 by Admin 3
Explanation: Choice “b” is correct. Comparing the financial statements with statements for comparable prior periods (analytical procedures) is a procedure that is usually performed by the accountant in a review engagement of a nonissuer. Choice “a” is incorrect. Sending a letter of inquiry to the entity’s lawyer is a procedure generally performed only in an audit of an entity’s financial statements. Choice “c” is incorrect. Confirming a significant percentage of receivables by direct communication with debtors is a procedure generally performed only in an audit of an entity’s financial statements. Choice “d” is incorrect. Communicating significant deficiencies discovered during the study of the internal control structure is a procedure generally performed only in an audit of an entity’s financial statements. (The internal control structure is generally not evaluated in a review engagement.) Which of the following procedures should an accountant perform during an engagement to review the financial statements of a non issuer? An accountant performing a review should obtain a client representation letter from the owner, manager, or chief executive officer, and, if appropriate, the chief financial officer. A compilation engagement is an attest engagement, although it is a nonassurance engagement. Which of the following procedures is more likely to be performed in a review engagement of a nonpublic entity than in a compilation engagement? Obtaining a representation letter from the chief executive officer. Which of the following procedures is not usually performed by the accountant in a review engagement of a nonpublic entity? Communicating any material weaknesses discovered during the study and evaluation of internal control. The review procedures that the practitioner is required to perform include:. Inquiries on the accounting practices used by the company.. Representations from management on the accuracy of the financial statements.. Management responsibility for internal control systems.. Management responsibility to detect and prevent fraud.. Audit 7 - Compilation and Reviews - Part 1Performing inquiry and analytical procedures is the primary basis for an accountant to issue a Review report on comparative financial statements for a nonpublic entity in its second year of operations. Which of the following procedures is ordinarily performed by an accountant during an engagement to compile the financial statements of a nonissuer? Consider whether the financial statements are free from obvious material mistakes in the application of accounting principles. An accountant has been engaged to compile the financial statements of a nonpublic entity. The financial statements contain many departures from GAAP because of inadequacies in the accounting records. The accountant believes that modification of the compil Withdraw from the engagement and provide no further service concerning these financial statements. Which of the following procedures should an accountant perform during an engagement to compile prospective financial statements? Make inquiries about the accounting principles used in the preparation of the prospective financial statements. Moore, CPA, has been asked to issue a review
report on the balance sheet of Dover Co., a nonpublic entity. Moore will not be reporting on Dover's statements of income, retained earnings, and cash flows. Moore may issue the review report provided the Scope of the inquiry and analytical procedures has not been restricted. When engaged to review the financial statements of a nonpublic entity, an accountant is required to possess a level of knowledge of the entity's accounting principles and practices. This requirement most likely will include obtaining a general understandi Stated qualifications of the entity's accounting personnel. An accountant is required to comply with the provisions of the Statements on Standards for Accounting and Review Services when performing which of the following tasks? Generating financial statements of a nonissuer. An accountant has been asked to issue a review report on the balance sheet of a nonpublic entity without reporting on the related statements of income, retained earnings, and cash flows. The accountant may issue the requested review report only if The scope of the accountant's inquiry and analytical procedures has not been restricted. A CPA is performing a review of the interim financial statements of a publicly-held company. The CPA performed the annual audit for the most recent fiscal year and has already been engaged to perform the audit of the current fiscal year's financial statem Auditing standards issued by the Public Company Accounting Oversight Board [PCAOB]. May an accountant accept an engagement to compile or review the financial statements of a not-for-profit entity if the accountant is unfamiliar with the specialized industry accounting principles, but plans to obtain the required level of knowledge before Compilation [Yes] Review [Yes] Gole, CPA, is engaged to review the 20X4 financial statements of North Co., a nonpublic entity. Previously, Gole audited North's 20X3 financial statements and expressed an unqualified opinion. Gole decides to include a separate paragraph in the 20X4 revie No auditing procedures were performed after the date of the
20X3 auditor's report. An accountant has compiled the financial statements of a nonpublic entity in accordance with Statements on Standards for Accounting and Review Services [SSARS]. Does SSARS require that the compilation report be printed on the accountant's letterhead and t Printed
on the Accountant's the letterhead [No] Manually signed by Accountant[NO] Which of the following procedures would an accountant most likely perform when reviewing the financial statements of a nonissuer? Ask management about the entity's procedures for recording transactions. A CPA is reporting on comparative financial statements of a nonissuer. The CPA audited the prior-year's financial statements and reviewed those of the current year in accordance with Statements on Standards for Accounting and Review Services [SSARS]. The The type of opinion
expressed previously A CPA was engaged to compile pro forma financial information that will be presented in a document that also contains historical financial information. The CPA may accept the engagement if the historical financial
statements have been compiled, reviewed, or audited. The inability to complete which of the following activities most likely would prevent an accountant from accepting and completing an engagement for a review of financial statements performed in accordance with Statements on Standards for Accounting and Re Performing
inquiries and analytical procedures. Which of the following accounting services may an accountant perform without being required to issue a compilation or review report under the Statements on Standards for Accounting and Review Services? Both
I and II Jones Retailing, a nonpublic entity, has asked Winters, CPA, to compile financial statements that omit substantially all disclosures required by generally accepted accounting principles. Winters may compile such financial statements provided the Omission is not undertaken to mislead the users of the financial statements and is properly disclosed in the accountant's report. Statements on Standards for Accounting and Review Services establish standards and procedures for which of the following engagements? Compiling
an individual's personal financial statement to be used to obtain a mortgage. Which of the following representations does an accountant make implicitly when issuing the standard report for the compilation of a nonpublic entity's financial statements? The accountant is independent
with respect to the entity. Which of the following inquiries or analytical procedures ordinarily is performed in an engagement to review a nonpublic entity's financial statements? Inquiries concerning the entity's procedures for recording and summarizing
transactions. An accountant is required to comply with the provisions of Statements on Standards for Accounting and Review Services whenI] Reproducing client-prepared financial statements, without modification, as an accommodation to a client. 2] Preparing standard mo Neither I
nor II. Which of the following is a nonattest engagement?1]An engagement to prepare financial statements.2]The work of preparing unprepared client financial statements prior to an engagement to perform a compilation of the statements. 3]A compilation engagement I and II only. Which of the following procedures is more likely to be performed in a review engagement of a nonpublic entity than in a compilation engagement? Obtaining a representation letter from the chief executive officer. When an independent CPA is associated with the financial statements of a publicly held entity but has not audited or reviewed such statements, according to PCAOB requirements, the appropriate form of report to be issued must include a [an] Disclaimer of opinion. Which of the following procedures would be generally performed when evaluating the accounts receivable balance in an engagement to review financial statements in accordance with Statements on Standards for Accounting and Review Services? Perform a reasonableness test of the balance by computing days' sales in receivables. Which of the following statements would not normally be included in a representation letter for a review of interim financial information? We
understand that a review consists principally of performing analytical procedures and making inquiries about the interim financial information. When planning a review of an audit client's interim financial statements, which of the following procedures should the accountant perform to update the accountant's knowledge about the entity's business and its internal control? Consider the results of audit procedures performed with respect to the current-year's financial statements. An accountant's standard report issued after compiling the financial statements of a nonpublic entity should state that The objective of a compilation is assist
management in presenting financial information in the form of financial statements. Before reissuing a compilation report on the financial statements of a nonissuer for the prior year, the predecessor accountant is required to Compare the prior year's financial statements with those of the current year. Which of the following is an attest engagement?1]A review.2]An engagement to prepare financial statements. 3] A compilation. I and III only. When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP, the accountant should indicate in the compilation report that the financial statements are Not designed for those who are uninformed about the omitted disclosures. A CPA started to audit the financial statements of a nonissuer. After completing certain audit procedures, the client requested the CPA to change the engagement to a review because of a scope limitation. The CPA concludes that there is reasonable justific Statement that a review is substantially less in
scope than an audit. Clark, CPA, compiled and properly reported on the financial statements of Green Co., a nonpublic entity, for the year ended March 31, 20X1. These financial statements omitted substantially all disclosures required by generally accepted accounting principl Clark may not report on the comparative financial statements because the 20X1 statements are not comparable to the 20X2 statements that include the GAAP disclosures. While auditing the financial statements of a nonpublic entity, a CPA was requested to change the engagement to a review in accordance with Statements on Standards for Accounting and Review Services [SSARS] because of a scope limitation. If the CPA believe Neither I nor II. Compiled financial statements should be accompanied by a report stating that The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the finan According to Statements on Standards for Accounting and Review Engagements, in which of the following situations would the accountant be required to issue a report?1]A compilation engagement where the accountant is independent of the client. 2]A review e I only. The objective of a review of interim financial information of an issuer [public entity] is to provide an accountant with a basis for reporting whether Material modifications
should be made to conform to generally accepted accounting principles. An accountant who had begun an audit of the financial statements of a nonpublic entity was asked to change the engagement to a review because of a restriction on the scope of the audit. If there is reasonable justification for the change, the accountant's Original Engagement that was agreed to [No]Scope limitation that cause the change engagement [No] If there is justification for downgrading an engagement, the auditor would not need to modify the report. In this case, a standard review report would be is Which of the following would not be found in an engagement letter for a financial statement preparation engagement performed in accordance with SSARS? A
statement indicating that management will designate someone, preferably from senior management, to oversee and take responsibility for the accountant's services. Statements on Standards for Accounting and Review Services [SSARS] would govern the conduct of which of the following?1]Beck, CPA, prepares financial statements as a necessary step prior to Beck's engagement to compile the financial statements. 2]Prepara II and III only Which of the following statements is true regarding analytical procedures in a review engagement? Analytical procedures involve the
use of both financial and nonfinancial data. An accountant may compile a nonpublic entity's financial statements that omit all of the disclosures required by GAAP only if the omission isI. Clearly indicated in the accountant's report. II. Not undertaken with the intention of misleading the financia Both I and II Which of the following statements is correct regarding a compilation report on financial statements issued in accordance with Statements on Standards for Accounting and Review Services [SSARS]? The date on the report should be the date of completion of the compilation. In an engagement to review the financial statements of a nonissuer, the accountant most likely would perform which of the following procedures? Analysis of inventory turnover. Which of the following procedures is usually performed by the accountant in a review engagement of a nonissuer? Comparing the financial statements with statements for comparable prior periods. The review procedures that the practitioner is required to perform include:. Inquiries on the accounting practices used by the company.. Representations from management on the accuracy of the financial statements.. Management responsibility for internal control systems.. Management responsibility to detect and prevent fraud.. Which of the following inquiries or analytical procedures ordinarily is performed in an engagement to review a nonpublic entity's financial statements? Inquiries concerning the entity's procedures for recording and summarizing transactions. |
Which of the following procedures is not included in a review engagement of a nonpublic entity?
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