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Which of the following items is not contained in the standard report on a review of separately issued interim financial statements of public companies?


A) A description of the information reviewed.
B) A statement indicating that the standards of the PCAOB were followed in performing the review.
C) A description of the nature of the review.
D) Positive assurance that the auditor is not aware of any material departures from GAAP.

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Pro forma financial information is often used to illustrate the effects of various types of transactions. Pro forma financial information would be least likely to be used with which of the following transactions?


A) Setting up a bond sinking fund.
B) Disposing of a significant segment of a business.
C) Proposing the sale of securities and applying the proceeds to a project.
D) Business combinations.

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Which of the following activity is not part of the compilation of prospective financial statements?


A) Assembling prospective financial statements based on the responsible party's assumptions.
B) Performing compilation procedures, including reading the prospective financial statements, along with their assumptions and accounting policies, and considering whether they appear to be presented in conformity with AICPA presentation guidelines and that they are not obviously inappropriate.
C) Issuing a compilation report.
D) Providing assurance on the prospective financial statements.

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A state insurance commission requires an insurance company to prepare its financial statements in accordance with Statutory Accounting Principles. This situation may prevent an auditor from issuing a special report on the financial statements as the Statutory Accounting Principles are not a recognized alternative comprehensive basis.

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Review reports issued by auditors give positive assurance as to the fair presentation of financial statements.

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The subject matter of a non-audit attestation engagement can be quite varied.

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Which of the following services provides limited assurance?


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

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Which of the following statements is false regarding responsibilities associated with agreed-upon procedures engagements?


A) The responsibility of the practitioner is to conduct the procedures and report the findings in accordance with applicable professional standards.
B) The practitioner must have adequate knowledge of the subject matter.
C) The practitioner is required to determine if there exists a difference between the agreed-upon procedures requested by the specified parties and the procedures that the practitioner would have decided to conduct if the practitioner would have been engaged to perform another form of engagement.
D) The practitioner should not agree to perform agreed-upon procedures that are overly subjective.

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It is common for an auditor to issue a compilation report on financial statements that omit all of the disclosures required by GAAP.

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Which of the following procedures is not a review procedure for interim financial information?


A) Making inquiries.
B) Performing analytical procedures.
C) Reading the minutes of the board of directors' meetings
D) Obtaining oral assurance from management that there are no subsequent events.

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What does the review service provided by the CPA firm require?


A) It requires the CPA to make inquiries concerning matters affecting the financial statements.
B) It requires the CPA to confirm accounts receivable.
C) It requires the CPA to test internal controls.
D) It requires the CPA to provide reasonable assurance.

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Which of the following guidelines is not a presentation that pro forma financial information should adhere to?


A) It should describe the transaction or event that is reflected in the pro forma financial information.
B) It should describe significant assumptions used to develop the pro format adjustments.
C) It should make clear that the pro forma financial information is indicative of results that would have been achieved had the transaction or event actually taken place at an earlier time.
D) It should describe any significant uncertainties about those assumptions.

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Pro Forma Financial Information. What is the difference between historical financial information and pro forma financial information? Discuss the guidelines that should be adhered to when presenting pro forma financial information.

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Historical financial information describ...

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A compilation report provides the user with which one of the following types of assurance?


A) No assurance.
B) Absolute assurance.
C) Limited assurance.
D) Negative assurance.

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The International Auditing and Assurance Standards Board's term assurance engagement means the same as The American Institute of Certified Public Accountants' term attestation engagement.

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One procedure that is common to an audit engagement, as well as to both the compilation and review engagement, is obtaining an engagement letter.

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The subject matter of an attestation engagement has to be as of a point in time.

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When a public accounting firm issues a report on financial statements that are issued on an other comprehensive basis of accounting, this special report includes an opinion paragraph identical to an adverse opinion.

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Which of the following situations is least likely to initiate a forensic accounting engagement?


A) Where management suspects a fraud is occurring within the organization.
B) Where strong internal controls exist.
C) Where an auditor recommends a separate forensic engagement due to hints of fraud uncovered during an audit.
D) Where auditors deem there are situations of heightened fraud risk.

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The SEC requires publicly owned corporations to have their quarterly financial information reviewed by their independent auditors before it is issued, but does not require that the auditor's review report be included with the quarterly information, although many companies do include the auditor's report.

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