Which of the following procedures would an accountant least likely perform during an engagement to review the financial statements of a Nonissuer?
An accountant is not required to comply with the provisions of Statements on Standards for Accounting and Review Services when Reproducing client-prepared financial statements, without modification, as an
accommodation to a client or preparing standard monthly journal entries for depreciation and expiration of prepaid expenses. 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. In reviewing the financial statements of a nonissuer, an accountant is required is required to modify the standard review report for which of the following matters? Inability to asses the risk of material misstatement due to fraud. When an accountant is not independent with respect to an entity, what type
of compilation reports may be issued? A compilation report with special wording that notes the accountant's lack of independence may be issued. Which of the following actions should an accountant take when engaged to compile a company’s financial statements in accordance
with SSARS? a. Make management inquiries and examine internal controls. Perform the engagement even though independence is compromised. Which of the following statements would be appropriate in an accountant’s report on compiled financial statements of a nonissuer prepared in accordance with SSARS? a. A compilation is performed to obtain reasonable assurance about whether the financial statements are free from material misstatements. A compilation is limited to presenting in the form of financial statements information that is the representation of management. 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? a. Providing the client with software to generate financial statements. Generating financial statements of a nonissuer. Which of the following statements is correct regarding a compilation report on financial statements issued in accordance with SSARS? The date on the report should be the date of completion of the compilation. Which of the following statements is correct regarding a review of a nonpublic entity’s financial statements in accordance with Statements on Standards for Accounting and Review Services (SSARS)? a. The accountant must be independent to issue the review report. The accountant must be independent to issue the review report. Which of the following procedures is usually the first step in reviewing the financial statements of a nonpublic entity? a. Perform a preliminary
assessment of the operating efficiency of the entity's internal control activities. Obtain a general understanding of the entity's orgainzation, its operating characteristics, and its products or services. Which of the following would be used on a review engagement? a. Recalculation of depreciation expense. Comparison of current year to prior year account balances. Which of the following procedure is ordinarily performed by an accountant during an engagement to compile the
financial statements of a nonissuer? a. Consider whether the financial statements are free from obvious material mistakes in the application of accounting principles. Consider whether the financial statements are free from obvious material mistakes in the application of accounting principles. Which of the following procedures would a CPA most likely perform when reviewing the financial statements of a non-issuer? a. Verify that the accounting estimates that could be material to the financial statements have been developed. Make inquiries about
actions taken at the board of directors meetings. Which of the following procedures would an accountant most likely perform during an engagement to review the financial statements of a non-issuer? a. Review the predecessor accountant's working papers. Inquire of management about related-party transactions. In an engagement to review the financial statements of a nonissuer, the accountant most likely would perform which of the following procedures? a. Evaluation of internal control over inventory. Analysis of inventory turnover. Which of the following statements is true regarding analytical
procedures in a review engagement? a. Analytical procedures are required to be used in the final review stage.
Analytical procedures involve the use of both financial and nonfinancial data. When providing limited assurance that the financial statements of a nonissuer require no material modifications to be in accordance with GAAP, the accountant should Understand the accounting principles of the
industry in which the entity operates. Which of the following procedures is an accountant required to perform when reviewing the financial statements of a nonpublic entity in accordance with SSARS? a. Confirm account balances. Obtain a management representation letter. An accountant has been asked to compile the financial statements of a nonpublic company on a prescribed form that omits substantially all the disclosures required by GAAP. If the prescribed form is a standard preprinted form adopted by the company’s industry trade
association, and is to be transmitted only to such association, the accountant Need not advise the industry trade association of the omission of all disclosures. An accountant’s standard report on a compilation of a projection should not include a statement that The hypothetical assumptions used in the projection are reasonable in the circumstances. An accountant agrees to the client's request to change an engagement from a review to a compilation of financial statements. The compilation report should include No reference to the original engagement. 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 compilation report is not adequate to
indicate the deficiencies. Under these circumstances, the account should Withdraw from the engagemnt and provide no further service concerning these financial statements. An accountant’s compilation report on a financial forecast should include a statement that There will usually be differences between the forecasted and actual results. An accountant has been engaged to review a nonissuer’s financial statements that contain several departures from GAAP. Management is unwilling to revise the financial statements, and the accountant believes that modification of the
standard review report is inadequate to communicate the deficiencies. Under these circumstances, the accountant should Withdraw from the engagement and provide no further service concerning these 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 procedures would a CPA ordinarily perform when reviewing the financial statements of a nonissuer in accordance with SSARS? a. Document whether control risk is assessed at or below the maximum level. Compare the financial statements with budgets or
forecasts. An accountant compiled the financial statements of a nonissuer in accordance with SSARS. If the accountant has an ownership interest in the entity, which of the following statements is correct? a. The accountant should include the disclaimer "I am an owner of the entity" in the report. The accountant should include the statements "I am not independent with respect to the entity" in the compilation report.
An accountant is required to comply with the provisions of SSARS when Compiling financial statements generated through the use of computer software. Which of the following is required of an accountant in reviewing a company’s financial statements under SSARS? a.
Observe client's physical inventory. Obtain knowledge of the client's industry. Which of the following services, if any, may an accountant who is not independent provide? a. No services. Compilations, but not reviews. Which of the following situations would preclude an accountant from issuing a review report on a company’s financial statements in accordance with Statements on Standards for Accounting and Review Services (SSARS)? a. Finished-goods inventory does not include any overhead amounts. The owner fo the company is the accountant's father. Which of the following is not typically performed when the auditors perform a review of financial statements? a. Inquiries about significant subsequent events. Confirmation of accounts receivable. What must be obtained in a review of a nonpublic company? Engagement letter
and representation letter. When performing a review of a nonpublic company, which is least likely to be included in accountant inquiries of management members with responsibility for financial and accounting matters? a. Subsequent events. Communications with related parties. In which of the following reports should a CPA not express negative (limited) assurance? a. A letter for an underwriter (a "comfort letter") A standard compilation report on financial statements of a nonpublic entity. Which of the following is correct relating to compiled financial statements when third-party reliance upon those statements is anticipated? a. An opinion on fairness of financial statement presentation is required. A compilation report must be issued. Which communication option(s) may be used when an accountant submits compiled financial statements to be used only by management? Compilation report and written engagement letter. Reviews of annual information of nonpublic companies Are designed to obtain evidence to provide a reasonable basis for obtaining limited assurance that there are no material modifications needed. Which of the following circumstance requires modification of the accountant’s report on a review of interim financial information of a publicly held entity? a. Inconsistent accounting principle application and inadequate disclosure. When performing a review of a nonpublic company, the auditors must obtain in a representation letter acknowledgement of management for its responsibility for each of the following except: a. Knowledge of any actual or suspected fraud that is material.
Responsibility for identifying all illegal acts committed by employees. Which of the following is most likely to result in modification of a compilation report? a. A lack of consistency in application of GAAP. A review of a nonpublic company’s financial statements is considered An assurance engagement and an attest engagement. A review engagement relationship for a nonpublic company ordinarily involves an accountant and A responsible party and intended users. Which of the following statements is correct concerning materiality for purpose of a review of a nonpublic company’s financial statements? a. It is an amount that could reasonably be expected to influence user economic
decisions. It is an
amount that could reasonably be expected to influence users econcomic decisions. Which of the following is included in compilation performance requirements? a. Perform tests of details of transactions only for current assets and liabilities. Obtain an understanding of the client's industry. Which statement is most accurate concerning an accountant's responsibility when evaluating management's responses to inquires when performing a review? a. The accountant ordinarily is not required to corroborate management's responses and other information; however, the accountant should consider the reasonableness and consistency of management's responses. The accountant ordinarilly is not required to corroborate management's responses with other information, however, the accountant should consider the reasonableness and consistency of management's responses. When making a review of interim financial information the auditor’s work consists primarily of Making inquiries and performing analytical procedures concerning significant accounting matters. 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 SSARS. The CPA has added a separate paragraph to the review report to describe the responsibility assumed for the prior year's audited fiancial statements. This separate paragraph should indicated The type of opinion expressed previously. Statements on Standards for Accounting and Review Services (SSARS) apply when an accountant has Generated, through the use of computer software, financial statements prepared in accordance with a comprehensive basis of accounting other than GAAP. General Retailing, a nonissuer, has asked Ford, CPA, to compile its financial statements that omit substantially all disclosures required by GAAP. Ford may comply with General’s request provided the omission is clearly indicated in Ford’s report and the Omission is not undertaken with the intention of misleading the users of
General's financial statements Davis, CPA, accepted an engagement to audit the financial statements of Tech Resources, a nonissuer. Before the completion of the audit, Tech requested Davis to change the engagement to a compilation of financial statements. Before Davis agrees to change the engagement, Davis is required to consider the Reason given for Tech's request. A company hires one of its board members, a CPA, to issue accounting reports for the company. Assuming any required disclosures are made, which of the following reports may the CPA issue without violating independence rules? a. Compilations Which of the following is not generally considered a procedure followed by an accountant in obtaining a reasonable basis for the expression of limited assurance for a review of financial statements? a. Confirmation of accounts receivable. Confirmation of accounts receivable. An accountant should obtain a management representation letter during an engagement to Review a nonissuer's financial statements. CPA is not required to comply with the provisions of SSARS when Processing financial data for clients of other CPA firms and Consulting on accounting matters. Statements on Standards for Accounting and Review Services (SSARS) establish standards and procedures for which of the following engagements? a. Processing financial data for clients of other accounting firms. Compiling an individual's personal financial statement to be used to obtain a mortgage Blue Co., a privately held entity, asked its tax accountant, Cook, a CPA in public practice, to prepare its financial statements in conjunction with preparation of Blue’s tax return. Cook should not submit these financial statements to Blue unless, as a minimum, Cook complies with the provisions of Statements on Standards for Accounting and Review Services A CPA should not submit unaudited financial statements of a nonpublic company to a client or others unless, as a minimum, the CPA complies with the provisions applicable to A CPA in public practice does not have to be independent in fact and appearance when providing which of the following services? a. Compilation of financial forecasts. Compilation of financial forecasts or Compilation of personal financial statements When an accountant is not independent, the accountant is precluded from issuing a If requested to perform a review engagement for a nonpublic entity in which an accountant has an immaterial direct financial interest,
the accountant is Not independent and, therfore, may not issue a review report. Prior to commencing the compilation of financial statements of a nonpublic entity, the accountant should Acquire a knowledge of any specialized account principles and practices used in the entity's industry When compiling a nonpublic entity’s financial statements, an accountant would be least likely to a. Read the compiled financial statements and consider whether they appear to include adequate disclosure. Perform analytical procedures designed to identify relationships that appear to be unusual. Performing 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 Before performing a review of a nonpublic
entity’s financial statements, an accountant should Obtain a sufficient level of knowledge of the accounting principles and practices of the industry in which the entity operates. Which of the following procedures is not usually performed by the accountant in a review engagement of a nonpublic entity? a. Reading the financial statements to consider whether they conform with GAAP. Communicating any material weaknesses discovered during the consideration of internal control. Which of the following procedure is usually performed by the accountant in a review engagement of a nonpublic entity? a. Comparing the financial statements with statements for comparable prior periods. Comparing the financial statements with statements for comparable prior periods. When performing an engagement to review a nonpublic entity’s financial statements, an accountant most likely would Ask about actions taken at board of directors' meetings. When AICPA professional standards relating to a review of a nonissuer’s
(nonpublic entity’s) financial statements uses the term “should” to indicate the accountant’s responsibility to perform a procedure, performance of the procedure is considered: Presumptively mandatory - The accountant is required to comply with it except in rare circumstances. An accountant’s
objective of a review of the financial statements of a nonissuer (nonpublic company) is to provide what type of assurance? Which of the following should be the first step in reviewing the financial statements of a nonpublic entity? a. Obtaining a general understanding of the entity's organization, its operating characteristics, and its products or services. Obtaining a general understanding of the
entity's organization, its operating characteristics, and its products of services. An accountant is asked to issue a review report on the balance sheet, but not on other related statements. The scope of the inquiry and analytical procedures has not been restricted, but the client failed to provide a representation letter. Which of the following should the accountant issue under these circumstances? a. Compilation report with the client's consent. An accountant’s compilation report should be dated as of the date of Completion of the compilation. When an accountant is engaged to report on a nonpublic entity’s compiled 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 uniformed about the omitted disclosures. When an accountant is not independent of a client and is requested to perform a compilation of its financial statements, the accountant May accept the engagement and should disclose the lack of independence, and may disclose the reason for the lack of independence. How does an accountant make the representations for "the financial statements have not been audited" and "the accountant has compiled the financial statements" when issuing the standard report of the compilation of a nonpublic entity’s financial statements? In performing a compilation of financial statements of a nonpublic entity, the accountant decides that
modification of the standard report is not adequate to indicate deficiencies in the financial statements taken as a whole, and the client is not willing to correct the deficiencies. The accountant should therefore Withdraw from the engagement. If an accountant submits compiled financial statements to a client that are reasonably expected to be used by a third party, which of the following is correct? a. No compilation report is required, but an engagement letter must indicate that the financial statements are to be used by a third party. A compilation report is required. Which of the following is correct relating to an accountant’s responsibility when submitting compiled financial statements to the management of a client that has informed the auditor that the financial statements are for management use only? a. A
restricted-use compilation report must be included with the financial reports. Each page of the financial statements should have a restriction such as "Restricted for Management's Use Only." Which of the following statements should not be included in an accountant’s standard report based on the compilation of an entity’s financial statements? a. A statement that the accountant has not audited or reviewed the financial
statements. A statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements. Clark, CPA, compiled and properly reported on the financial statements of Green Co., a nonpublic entity, for the year ended March 31, year 1. These financial statements omitted substantially all disclosures required by GAAP. Green asked Clark to compile the statements for the year ended March 31, year 2, and to include all GAAP disclosures for the year 2 statements only, but otherwise present both years’ financial statements in comparative form. What is Clark’s responsibility concerning the proposed engagement? Clark may not report on the comparative financial statements because the year 1 statements
are not comparable to the year 2 statements. When compiled financial statements are accompanied by a report, that report should state all of the following except a. A compilation is limited to presenting in the form of financial statements information that is representation of management. A compilation consists principally of inquiries of company personnel and analytical procedures applied to financial data. When a
compilation report is being issued, each page of the financial statements should include a reference such as See accountant's compilation report. A CPA who is not independent may issue a Which of the following should be included in an accountant’s standard report based upon the review of a nonpublic entity’s financial statements? a. A statement that the accountant is independent with respect to the entity. A statement that a review consists principally of inquiries and analytical procedures. An auditor who was engaged to perform an audit of the financial statements of a nonpublic entity has been asked by the client to refrain from performing various audit procedures and change the nature of the engagement to a
review of the financial statements in accordance with standards established by the AICPA. The client’s request was made because the cost to complete the audit was significant. Under the circumstances the auditor would most likely Honor the client's request. During a review of the financial
statements of a nonpublic entity, the CPA finds that the financial statements contain a material departure from generally accepted accounting principles. If management refuses to correct the financial statement presentations, the CPA should Disclose the departure in a separate paragraph of the report. Which of the following would not be included in a CPA’s report based upon a review of the financial statements of a nonpublic entity? a. A statement that all information included in the financial statements are the representations of management. A statement that all information included in the financial statements are the representations of management. 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 review report should not include reference to the Original engagement that was agreed to and Scope limitation that caused the change in engagement. Each page of a nonpublic entity's
financial statements reviewed by an accountant should include the follwing reference: See Accountant's Review Report. An accountant had begun to audit the financial statements of a nonpublic entity. What circumstance most likely would be considered a reasonable basis for agreeing to the entity’s request to change the engagement to a compilation? The entity's principal creditors no longer require the entity to furnish audited financial statements. 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. While performing a review, information indicating that the entity being reviewed may lack the ability to continue as a going concern has come to the accountant’s attention. The client agrees that such a situation does exist, but refuses to add disclosures relating to it. What effect is this most likely to have the accountant’s review report? a. An adverse opinion should be issued, with modification of the opinion paragraph and addition of an explanatory paragraph. The report should indicate a departure from GAAP, with modification of the report's third paragraph and
addition of an explanatory paragraph. An accountant’s standard report issued after compiling the financial statements of a nonpublic entity should state that A compilation is limited to presenting in the form of financial statements information that is the representation of management. Which of the following statement is correct regarding a review engagement of a nonpublic company’s financial statements performed in accordance with the SSARS? a. An accountant must obtain an understanding of the client's internal control when performing a review. A review provides an accountant with a basis for expressing limited assurance on the financial statements. Which of the following procedures does a CPA normally perform first in a review engagement in accordance with SSARS? a. Inquiry regarding the client's principles and practices and the method of applying them. Inquiry regarding the client's principles and practices and the method of applying them Which of the following describes how the objective of a review of financial statements differs the objective of a compilation engagement? a. In a review engagement,
accountants provide limited assurance, but a compilation expresses no assurance. In a review engagement, accountants provide limited assurance, but a compilation expresses no assurance. The standard report issued by an accountant after reviewing the financial
statements of a nonpublic entity should state that A review consists of inquiries of company personnel and analytical procedures applied to financial data. While auditing the financial statements of a nonissuer (nonpublic) entity, a CPA was requested to change the engagement to a review in
accordance with SSARS because of a scope limitation. If the CPA believes the client’s request is reasonable, the CPA’s review report should not Refer to the scope limitation that caused the change or describe the auditing procedures that have already been applied. Which of the following procedures would a CPA least likely perform when reviewing the financial statements of a client?Answer and Explanation: Obtaining confirmation of cash balances is least likely to be performed as a part of obtaining an understanding during an audit engagement of a new audit client previously audited by another CPA.
Which of the following procedures should an accountant perform during an engagement?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.
Which of the following procedures does a CPA usually perform when reviewing the financial statements of a non issuer?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.
Which of the following would not be included in an accountant's report based upon a review of the financial statements of a Nonissuer?Which of the following would not be included in an accountant's report based upon a review of the financial statements of a nonissuer? A statement that the review was in accordance with GAAS.
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