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140 Cards in this Set
- Front
- Back
- 3rd side (hint)
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A2 What are special purpose frameworks? Give 3 examples of special purpose framework? |
Special purpose frameworks is a financial reporting framework other than GAAP. Examples: Cash basis, tax basis, Regulatory basis |
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A2 What should the auditor do in the report when auditing regulatory, contractual, or other basis of accounting? |
The auditor's report should describe the purpose for which the f.s. were prepared |
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A2 How are the statements titled in special purpose framework different that f.s? |
They have to use non-gaap titles to refer to the statements in the intro paragraph and opinion paragraph. |
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A2 What is stated in Management Repsonibility paragraph regarding special purpose financial statements? |
explanation of management's responsibilty for the f.s should also make refereence to its responsibilty for determining that the applicable fin. reporting framework is acceptable |
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A2 what is include in the emphasis-of-matter paragraph for a special purpose f.statements? |
1. indicates the f.s are prepared in accordance to special purpose framework 2. refer to not in f.s taht describes that framework 3. state that the special purpose framework is other than GAAP. |
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A2 What is the exception for including an emphasis of matter paragraph in special purpose fin. statements audits? |
Always include an emphasis of matter paragraph except when special purpose fin. statements are prepared in accordance with a regulatory basis and are intended for general use. |
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A2 What is the exception for using other-matter paragraph and what is included in the paragraph? |
Do not include an other-matter paragraph for special purpose f.s that are prepared in accordance with a regulatory basis and intended for general use. The other matter paragraph should restrict the use of the auditor's report to those within the entity, the parties to the contract or agreement, or the regulatory agencies to which the entity is subject, when the special purpose fin. statement are prepared in accordance with either: a contractual basis of acounting or a regulatory basis of accounting (not general use) |
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A2 what should the auditor express for special purpose report prepared on a regulatory basis and available for general use ? |
Not restricted financial statements Use dual purpose opinions 1.adverse on GAAP, 2. umodified on regulatory basis |
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A2 Name the time that a special purpose report will not contain emphasis of matter paragraph. |
A regulatory basis (general use) will not contain an emphasis of matter paragraph. |
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A2 Can an audit be performed on o a single financial statement, specific elements, accounts, or items of a financial statement? |
Yes, an audit can be performed on a single financial statement, specific elements, accounts, or items of a financial statement as a separate engagement or in conjunction with a complete set of financial statements. |
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A2 When are Special Purpose Reports restricted? |
When the special purpose report is either a contractural basis or a regulatory basis (not general use) |
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A2 With regards to audit procedures, what should an audit do when auditing a single financial statement or a specific element or a financial statement? |
Auditor should perform audit procedures on any interrelated items as necessary. For example: sales and receivables, inventory and payables, fixed assets, and depreciation |
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A2 Can an auditor audit a single financial statement or of specific elements, accounts, or items of a f.s or of a specific element, accounts, or items of a f.s ? |
An auditor can audit in a separate engagement or in conjuction with an audit of an entity's complete set of f.s any element of f.s. |
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A2 What interrelated accounts should an auditor perform procedures on when auditing stockholder's equity? |
Balance sheet or financial position |
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A2 What should an auditor do when auditing a single f.s or specific element of a f.s? |
Auditor should perform procedures on any interrelated items as necessary. Example: interrelated items include sales an receivables, inventory and payables, fixed assets and depreciation |
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A2 What interrelated accounts should an auditor perform procedures on when auditing net income? |
Balance sheet, Income statement |
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A2 If the specific element is the stockholders equity, what should the auditor do? |
The auditor should perform procedures to express an opinion about financial position (b.s) |
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A2 How should the materiality be determined for an audit of a single financial statement? |
materiality should be determined for the single financial statement rather than the complete set of financial statements. |
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A2 When the specific item is net income or the equivalent, what should the auditor do? |
Perform procedures to express opinion about financial position and results of operation. (bs. and i.s) |
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A2 How should the materiality of specific element be determine? |
Materiality should be determined by the specific element and not the aggregate of all elements. |
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A2 How is materiality determine when auditing a single f.s? |
The materiality should be determined for the single f.s and not for the complete set of f.s. |
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A2 How does an auditor issue reports on a complete set of F.S and a single F.S or a specific element? |
Auditor should issue a separate report for each engagement. They may be published together if they are differentiated and the report on the complete set is unmodified. |
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A2 How is the materiality level determine when auditing a specific element of the f.s ? |
Materiality level is determine for each seperate element rather than an aggregate of all elements. |
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A2 What opinion should the auditor express on the specific element when the modified opinion on the complete set of f.s is due to a material misstatement of the f.s? |
The auditor should express an adverse opinion on the specific element. |
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A2 How should an auditor issue a report and an opinion when auditing a complete set of f.s and a single f.s or a specific element of those financial statements? |
Auditor should issue a separate auditor's report and express a separate opinion for each engagement. |
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A2 What opinion should the auditor express on the specific element when the modified opinion on the complete set of f.s is due to a scope limitation? |
the auditor should express an disclaimer of opinion on the specific element. |
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A2 What type of opinion should be expressed on a specific element if the auditor expressed a modified on the complete set of f.s based on the audit of the specific element? |
Express an adverse opinion on the specific element when the modified opinion on the complete set of f.s is due to a material misstatements.
Express a disclaimer opinion on the specific element when the modified opinion on the complete set of f.s is due to a scope limitation. |
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A2 T or F it is ok to issue a disclaimer/qualified of opinion on full set of f.s while rendering an modified opinion one line items? |
T. However the two reports may not accompany each other. |
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A2 When can an auditor express an adverse opinion or disclaimer of opinion on complete set of f.s and an unmodified opinion on specific element? |
When the opinion of the specific element is not published with and does not accompany the auditor's report on the complete set of financial statements. |
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A2 T or F It is ok to issue a disclaimed / qualified of opinion on full set of f.s while rendering an unmodified opinion on line items? |
T, however the two reports may not accompany each other. |
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A2 What happens if the auditor includes an emphasis of matter or other matter paragraph in the complete set of f.s relevant to the audit of the single f.s or a specific element? |
The same paragraphs should be include in the report of the single f.s or specific element. |
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A2 Can an unmodified opinion be expressed on a single f.s if the auditor has expressed an adverse opinion or a disclaimer of opinion on the complete set of f.s? |
No. an unmodified opinion should not be expressed. |
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A2 What are the two requirements in the emphasis of matter paragraph when reporting on an incomplete presentation that is in accordance with gaap? (single financial statement) |
a. states the purpose for which the presentation is prepared and refers to the note in the f.s that describes the basis of the presentation b. indicates that the presentation is not intended to be a complete presentation of the entity's assets, liabilities, revenues, or expenses. |
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A2 What should the auditor do if the complete set of f.s contains emphasis of matter or other matter paragraph that is relevant to the audit of the fingle f.s or specific element? |
The auditor should include the same emphasis of matter or other matter paragraph in the single f.s or specific element report. |
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A2 T or F it is ok to issue an unmodified opinion on one f.s (balance sheet) while rendering a disclaimer of opinion on a full set of f.s ? |
F, Reports must be unmodified to be issue together. |
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A2 What 2 parts are included in an emphasis of matter paragraphy when reporting on an imcomplete presentation that is otherwire in accordance with GAAP (single financial statement)? |
The emphasis of matter paragraph should include: a. states the purpose for which the presentation is prepared and referes to the note in the f.s that describes the basis of the presentation; and. b. indicates that the presentation is not intended to be a complete presentation of the entity's assets, liabilities, revenues, or expenses. |
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A2 can Specific element reports (e.g Report on just b.s) be combine with opinion on full set of f.s? |
Yes they can. |
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A2 T or F it is ok to issue an unmodified opinion on one f.s (balance sheet) while rendering a disclaimer of opinion on a full set of f.s |
False. Reports must be unmodified to be issue together. |
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A2 What if the specific element report is not combine w/ complete set of F.S? |
Specific element report must refer to the report on the complete set of F.S |
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A2 What if special element report is not combine with complete set of f.s? |
Specific element report must refer to report on complete set of f.s. |
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A2 When can an auditor issue a report on a client's compliance with contractual agreement or regulatory requirements? and what can the auditor issue regarding the compliance? |
The auditor must have audited the client's f.s and can only issue a negative assurance on compliance. |
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A2 What must an auditor do if they are asked to issue a report on a client's compliance with contractual agreements or regulatory requirements in connection with a f.s audit? |
Auditor must have audited the f.s and may only issue negative assurance on compliance. |
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A2 What opinion needs to be expressed on f.s for a negative assurance on compliance of contractual agreements or regulatory requirements? |
F.S needs to be an unmodified or qualified opinion |
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A2 Auditor can only issue a negative assurance statement that nothing came to the auditor's attention that caused the auditor to believe that the entity failed to comply with contractual agreement or regulatory requirement when: |
the auditor has expressed an unmodified opinion or qualified opinion on the f.s |
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A2 What happens if auditor identifies instances of noncompliance? |
the report on compliance should describe the noncompliance. |
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A2 How are the reports on compliance issued? |
Either with report on f.s or in a separate report. |
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A2 What are two necessary components if the compliance report is issued separately? |
a. a paragraph that states that the f.s were audited in accordance with US GAAS and the date of the auditor's report on the f.s b. a paragraph that restricts the use of the report to management, those charged with governance, others within the organization, the regulatory agency, or other parties to the contract or agreement. |
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A2 Where is the report on compliance included in the auditors report on f.s? and what should it reference in the paragraph? |
report on compliance should be included in an other matter paragraph and it should include; a reference tot he specific paragraphs of the contractual agreement or regulatory requirement. |
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A2 When auditor identifies one or more noncompliance on contractrual agreeemtents or regulatory requirements, the auditor should include what in the report on compliance? |
The auditor should a description of the noncompliance in the report. |
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A2 What are the two opinions that can be issue for audits of summary f.s? |
Unmodified or adverse opinion. A qualified opinion is not appropriate due to the summarized nature of the f.s. |
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A2 When the auditor issues a separate report on compliance, what should the auditor should include ? (2 important paragraphs) |
A. The paragraph should state that the f.s were audited in accordance with US. GAAS and the date of the auditor's report on the f.s. B. A paragraph that restricts the use of the report to management, those charged with governance, others within the organization, the regulatory agency, or other parties to the contracft or agreement. |
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A2 What are the 3 levels of service for unaudited f.s of a nonissuer? And what is there SSARS number? |
Preparation AR-C-70
Compliation AR-C-80 Review AR-C-90 |
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A2 If the report on compliance with contractual agreements, or regulatory requirements, is included in the auditor's report, where should it be and what should it include? |
The report on compliance is included in the auditor's report in an other-matter paragraph and it includes a reference to the specific paragraphs of the contractual agreement or regulatory requirement. |
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A2 Describe a preparation engagement and the level of independence required by an auditor. |
Prepare f.s in accordance with specified financial reporting framework. A non-attest service. no assurance and no report. Not necessary to determine independence of entity. |
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A2 What happens if client request thats accountant to omit all disclosures required by the applicable financial reporting framework? |
Accountant may prepare the fin. statements. with the omitted disclosures provided that: 1. accountant discloses such omission in the f. s. 2. to accountant's knowledge the omission is not intended to mislead any person. |
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A2 Describe a compilation engagement and level of independence required by auditor? |
present in the form of f.s information that is the representation of management without undertaking to express any assurance on f.s Compilation is not an assurance but an attest engagement. Independence is not required but determination of independence of auditor and entity is required. |
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A2 Whare are the 4 necessary documentation for a preparation engagement? |
1. the engagement letter 2. any significant findings or issues 3. oral or written communications with management 4. a copy of the financial statements prepared by the accountant. |
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A2 Describe a review engagement and level of independence required by auditor? |
Review engagement is based on inquiry and analytical procedures performed by the cpa. a review is both a assurance engagement and an attest engagement. Independence is required. (negative assurance) |
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A2 Name the 6 parts to establishing an understanding with a client in a compilation engagement? |
1. objectives of the engagement 2. manager's responsibilities 3. the accountant's responsibilities 4. the limitations of the engagement 5. identifcation of the applicable framework 6. the expected form and content of the accountant's compilation report. |
Compilation |
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A2 What are the pronouncements issued by the AICPA for unaudited f.s of nonissuers called? |
SSARS Statements on Standards for accounting and review services. |
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A2 What should the accountant do before issuing a compilation report? |
read the complied f.s and consider whether they are appropriate in forma nd free from obvious errors as well as mistakes to applicable framework. |
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A2 When does SSARS no apply? |
ssars does no apply to other accounting services provided by accountants, such as preparing one or few adjusting or correcting entries, consulting on financial matters, preparing tax returns, rendering manual or automated bookkeeping or data processing services, and processing financial data for clients of other accounting firms. |
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A2 What should accountants do when the are aware of noncompliance with laws and regulation, a strong going concern uncertainty, or a subsequent event that has occurred when in a compilation engagement? |
Request management to consider about the possible effect on f.s and evaluate managements' conclusions and consider the effect of the mater on the compilation report. |
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A2 How does all SSARS engagements establish an understanding with the client? |
require a written agreement with management regarding terms of the engagement (engagement letter) |
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A2 What are 5 documentations in a compilation report? |
1. engagement letter 2. any significant findings or issues 3. oral or written communication with management 4. a copy of the f.s 5. a copy of the accountant's report |
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A2 What must the accountant put on each page of the f.s when preparing f.s ? |
accountant must issue a disclaimer or indicate that no assurance is provided on the f.s on each page of f.s |
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A2 What is required when perform compliance or review engagements? |
Accountant must issue a report unless accountant withdraws from engagements. |
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A2 What are the 7 requirements for a preparation engagement letter? |
1. the objective of the engagement 2. Management's responsibilities 3. the agreement of management that each page of the f.s will include a statement indicating that no assurance is provided on the f.s 4. accountant's responsibilities 5. the limitations of the engagement 6. identification of the applicable financial reporting framework 7. whether the f.s are to contains a known departure/s from applicable financial reporting framework |
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A2 T or F The accountant or accountants firm name is required to be placed on each page of the f.s when in preparation engagement? |
F. no required to place name |
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A2 What should accountant do if they are unable to include a statement on each page of the f.s regarding no assurance is given. (2 things) |
1. issue a disclaimer that makes clear that no assurance is provided on the f.s 2. perform a complication engagement |
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A2 what should the accountant include regarding the preparation of f.s with a special purpose framework? |
Accountant should include description of the financial reporting framework on the face of the f.s or in a note in the f.s |
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A2 What must happen if clients refuse to provide additional information for incomplete or incorrect information to the auditor for a preparation engagement? |
Auditor must withdraw.
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A2 How should the accounts disclose the know departure/s from the applicable financial reporting when in a preparation engagement? |
accountant should disclose the material misstatement/s in the f.s. |
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A2 What is accountants responsibilty in a PREPARATION engagement when client requests that substantially of disclosures are omitted from f.s ? |
Accountants can prepared the f.s provided that: 1. discloses the omission in the f. s. 2. to the accountant''s knowledge, the omission is not intended to to mislead any person. |
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A2 Documentation required for a PREPARATION engagement? |
1. the engagement letter 2. any significant findings or issues 3. oral or written communications w/ management 4. a copy of the f.s. prepared by the accountant. |
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A2 What is included in engagement letter for a compilation engagement? |
1. the objectives of the engagement 2. managers' responsibilities 3. accountant's responsibilties 4. the limitations of the engagement 5. identification of the applicable fin. reporting framework 6. the expected form and content of the accontant's compilation report |
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A2 What should teh accountant do before issuing a compilation report? |
Read the compiled f.s for obvious and material errors, as well as mistakes misstakes related to applicable fin. reporting framework |
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A2 What should accountant do if they become aware of noncompliance with laws and regulations, a strong going concern uncertainty, and subsequent events? |
Request management to consider the effect on the f.s, evaluate management's conclusions, and consider the effect of the matter on the compilation report. |
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A2 What are the necessary documentation in a compilation engagement? |
1. the engagement letter 2. any significant findings or issues 3. oral or written communications with management 4. a copy of the f. s. 5. a copy of the accountant's report |
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A2 What is included in a compliation report (4)? |
A. include a statement that management is responsible for the f.s b. identified the f.s that is subjected to the compilation engagement c. include a statement that the accountant performed the compilation engagement in accordance with SSARS by AICPA d. include a statement that the accountant did not audit or review the f.s (call out the higher level of service) |
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A2 What are the additional requirements included in the compilation report? |
A. each page of the statements should be marked "see accountant's compilation report" or "see independent accountant's compilation report" b. SSARS does not require that the compilation report be printed on the accountant's letterhead c. the signature of the accountant or the accountant's firm may be manual, printed or digital. |
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A2 What is included compilation report prepared in accordance with a special purpose framework? |
includes an additional paragraph that indicates that the f.s are prepared in accordance with applicable speacial purpose framework. |
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A2 Three components that permits complied f.s that omit GAAP disclosures to be acceptable? |
a. fin. statements are otherwise in conformity with GAAP b. reason for omission was not to deceive the user c. compilation report warms the user of missing disclosures. |
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A2 Compared a review engagement to a compilation or preparation ? |
review is higher level of service and it requires accountant to express a negative assurance. |
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A2 What 4 parts are necessary in a review engagement letter? |
a. the objectives of the engagement b. managements responsibility c. accountant's responsibility d. the limitations of the engagement. |
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A2 What 4 things is not required of an accountant in a review engagement? |
Not required a. test internal control b. perform audit tests, c. assess fraud risk d. communicate with predecessor accountant. |
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A2 In a review engagement, what is required by the accountant (6 parts)? |
1. Accountants should make inquires to internal personnel, not external people or entities. 2. Perform analytical procedures and compare with recorded amts. 3 . Review the f.s for conformit with the applicable fin. reporting framework 4. Obtain reports of other accountants who have been engaged to audit or review significant components of the reporting entity. 5. obtain evidence that the f.s. agree or reconcile with accounting records. 6. client representation letter from management must be obtained. |
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A2 What is the content of the client representation letter from management? |
A. management has responded fully and truthfully to all inquires B. all transactions have been recorded and are reflected in the f.s C. management have disclose of knowledge of fraud that has a material effect on f.s D. management has disclosed fraud affecting the entity's f.s E. management has disclose all known instances of noncompliance with laws and regulations F. disclosed whether it believes that the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the f.s as a whole. G. disclose all actual or possible litigation accounted for H. disclose identity of related parties I. All events subsequent to date of f.s that require adj. |
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A2 What happens if cccountants are not able to performed whatever procedures deems necessary for the review? |
review is considered incomplete and accountant must withdraw from engagement. |
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A2 What is the content of the documentation for a review engagement? |
a. engagement letter b. significant findings, actions taken c. analytical procedures performed d. the management representation letter e. a copy of the review f.s and accountant's review report. |
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A2 What is included in the inductory paragraph of a review report? |
A. a statement that a review is primarily applying analytical procedures to management's financial data and making inquiries of company management. b. a statement that a review is less in scope than an audit, and accountant does not express such an opinion |
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A2 What is included in a management's responsibiliy paragraph of a review report? |
Management is responsible for f.s prepared in accordance with applicable fin. reporting framework, and; managment is responsible for design , implementation, and maintenance of internal control |
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A2 What is included in an accountant's responsibility paragraph? |
a. state accountant conduct review in accordance with SSARS by ACIPA b. state SSARS require accountants to perform procedures to obtain negative assurance of f.s. |
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A2 What in paragraph is included in a review report on f.s prepared in accordance with a special purpose framework? |
include an emphasis of matter paragraph stating that f.s. is prepared in accordance with a special purpose framework tht is a basis of accounting other than gaap. describe the special purpose framework. |
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A2 what should be included on each page of f.s in a review engagement? |
a statement "see independent accountant's review report" |
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A2 Why would an accountant performing a review reference any or all accountants who audited or reviewed significant components in a review report? |
accountant does not want to assume responsibility for work performed by other accountants. |
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A2 What should accountant do if they aware of a material departure from applicable fin. reporting framework? |
Accountant should decided whether to modified the report or withdraw from engagement if fs is not revised. |
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A2 What happens if accountant decides that modication of report is appropriate for a material departure from applicable fin. reporting framework? |
include a paragraph disclosing a departure after the accountant's conclusion paragraph under the heading, "known departure from [applicable fin. reporting framework] |
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A2 what happens if the report modification for a material departure from the applicable fin. reporting framework is not adequate in a review engagement? |
withdraw from the engagement. |
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A2 Passkey for procedures performed in SSARS engagement. |
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A2 Who does the accountant communicate with regarding fraud or noncompliance with laws and regulations in a SSARS engagement? |
Communicate to appropriate level of management. |
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A2 T or F Inconsequential matters need to be communicated to management. |
F Inconsequential matters need not be communicated. |
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A2 What are the steps that an accountant must take for subsequent discovery of facts exisiting at date of compilation or review report? |
1. notify board of directors 2. notify client that the accountants report must no longer be assoicated with f.s 3. notify, any regulatory agencies having jurisdiction over the client that the accountant's report should no longer be relied on 4. notify persons known to be relying or likely to rely on the f.s. that the accountant's report should no longer be relied on. |
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A2 What should the other matter paragraph state when the accountant has compiled or reviewed both the basic f.s. and the supplementary information? |
for reviews: The information was subject to the review engagement, and based on the accountant's review, the accountant is not (or is) aware of any material modifications that should be ade to the information in order for it to be in accordance with the applicable fin. reporting framework. The accountant has not audited the information , and accordingly, does not expresss an opinion on such information. |
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A2 What should the other matter paragraph include when the basic f.s is complied or review and the supplementary information is not complied or reviewed? |
For compilations -- the information was not subject to the compilation engagement, and accordingly, the accountant does not express an opinion, a conclusion, nor provide any assurance on such data. For reviews -- the accountant has not audited or reviewed the information and, accordingly, does not express an opinion, a conclusion, not provide any assurance on such data. |
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A2 What should account consider before accepting a change of engagement? (3) |
a. reason for the request, especially if there are scope limitations b. effort required to complete the engagement; and c. estimated additional cost to complete the engagement |
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A2 What are two unacceptable reasons for change of engagement request by client? |
A. the engagement would uncover errors or fraud b. the client is attempting to create misleading or deceptive f.s. A |
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A2 Auditors must consider the implications of a scope restriction in deciding whether a change in engagement is reasonable. what two reasons are unacceptable for accepting a change? |
a. the client refuses to allow correspondence with legal counsel b. the client refuses to provide a signed representation letter. |
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A2 What should a 2016 complied report state with combine with a 2015 review? |
If a combine report used, the report should state: " No review procedures were the performed in connection with the review engagement after the date of the review report." |
Reporting on Comparative Fin. Statement |
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A2 What procedures should a predecessor accountant perform if they decide to reissue their report? (3) |
A. read the statements and the report of the current period B. compare the prior period statements c. obtain a letter from the successor accountants. |
Reporting on Comparative Fin. Statements. |
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A2 What should a successor accountant do if predecessor's report is not reissued in with comparative fin. state.? (2) |
A. make reference to the report of the predecessor accountants in the current report. b. or perform that level of service themselves |
Reporting on Comparative Fin. Statements. |
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A2 What should an accountant include in the other matter paragraph in the current period compilation or review report when presented with an audited report from prior year? |
Include "that no auditing procedures have been performed since the previous report date." |
Reporting on Comparative Fin. Statements. |
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A2 During review of interim fin. information, should an accountant make inquires with client's lawyer regarding litigation, claims, and assessments? |
Generally, inquires of client's lawyer is not required but may be appropriate in certain circumstances. |
Review on interim fin. information |
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A2 What are th analytical procedures (4) performed during a review of interim fin. information? |
A. comparisons over time of interim fin. information.
B. considered relationships between financial and relevant nonfin. information
C. comparison of recorded amounts (related ratios) to auditor's expectations.
D. comparison of disaggregated revenue data. |
Review on Interim Financial Information |
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A2 (3) Report requirements for review report on interim fin. information? |
a. each page of interim fin. information be marked "unaudited" b. a section w/ heading "management's reponsibility for the fin. statements" that sates the preparation and fair presentation of the interim fin. information... c. a section w/ heading "auditor's responsibilty" that inludes a statement that auditor's responsibilty is to conduct the review of interim fin. information... |
Review of interim fin. information |
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A2 How is the review report on interim fin. information modified if there is a known departure from the applicable fin. reporting framework? |
The report is modified by adding a "BASIS of MODIFICATION paragraph (preceding the conclusion), and by modifying the conclusion to read" "Based on our review, with the of the matter described in the preceding paragraph(s), we are not aware of any material modification." |
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A2 How does an auditor dead with a going concern issue and lack of consistency in a review on internim fin. information? |
Auditor may choose to include an emphasis of matter paragrah in the auditor's review report to discuss these issues. |
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A2 What opinion should an auditor issue when interim fin. information is included in a note to the fin. statements is not marked "unaudited"? |
issue a disclaim of opinion on the interim fin. information. |
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A2 What are attest engagements? |
Independent examination of an expression of assurance subject matters other than basic f.s. |
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A2 What are the two types of Trust services that is possible in an attest engagement? |
A. webtrust engagements (provide assurance related to e-commerce_
b. systrust engagements (provide assurance related to reliability of any defined electronic system) |
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A2 What are the two options for reporting on assertions? |
option 1 issue report on assertion (managements) itself option 2 issue report on the subject matter |
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A2 how should the report be modified of there are material misstatements or deviations from the critiera with attest engagement on assertions ? |
modified report and the conclusion should be expressed directly on the subject matter |
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A2 What should accompany a report on the assertion (managements, option 1)? |
managements report should accompany and be clearly stated in the report |
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A2 What is the consequence of a restriction on the scope of an examination engagement? |
A qualified opinion, disclaimer of opinion, or withdrawal |
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A2 What is the consequence for a restrictions on the scope of a review engagment the prevent necessary procedures from being performed? |
withdrawal from the engagement |
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A2 if client failed to provide a written assertion, how should the report be modified in an examination engagement? |
The report should be modified based on the scope limitation, and its use should be restricted. |
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A2 if client failed to provide a written assertion in a review engagement, how should the report be modified? |
failed to provided written assertion is a scope limitation is complete and practitioner should withdraw. report does need to by modified because is not issued.
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A2 What is an AGREED-UPON procedures engagement? |
agreed-upon procedures engagement is one in which the practioner is engaged by a client to issue a report of findings based on specfic agreed-upon procedures. |
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A2 What are conditions (5) for accepting an agreed-upon procedures engagement? |
1. independence of the practioner 2. agreement of the parties 3. mesurrablitiy and consistency 4 sufficiency of the procedures 5. use of the report is restricted to specified parties. |
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A2 What is (4) requirements included in agreed-upon procedures engagement? |
A. a statement that the sufficiency of the procedures is solely the responsibilty of the specified parties and a disclaimer of responsibility for the sufficiency of those procedures B. a statement that the engagement was conducted in accordance with attestation standards established by AICPA C. a list of the procedures performed and related findings (the practioner should not proved negative assurance) D. a statement of restrictions on the use of the report because it is intended to be used solely by the specified parties. |
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A2 Is a review on prospective fin. statement allowed? |
No, a its not allowed on a prospective statement. |
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A2 compare financial forecast and projection. |
Financial forecast based on expected courses of actions. is ok for general use and limited use. financial projects are based on hypothetical assumptions are ok for limited use only. |
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A2 Why would a practitioner not issue compilation report of prospective fin. statements? |
If entity fails to disclose a summery of the significant assumptions that are used in the prospective fin. statements. |
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A2 What is the contents of a compilation report? (3) |
- A statement that the practitioner has compiled the prospective fin. statements. in accordance with attestation standards established by the AICPA - A caveat that the prospective results may not be achieved. - A statement that the practitioner has no responsibility to update the report for events and circumstances occurring after the date of the report. |
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A2 What are the (2) purposes of examination of prospective fin. statements? |
1. The statements are presented in conformity with AICPA guidelines, and 2. the underlying assumptions provide a reasonable basis for the prospective statements. |
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A2 T or F Evidence is not needed in examination of prospective fin. statements engagements? |
False, evidence is required for examination of prospective fin. statements. |
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A2 What are two necessary components of in a report based on examination of prospective. fin. statements? |
- a statement that the practitioner's responsibility is to express an opinion on the prospective financial statements based on his or her examinations - a statement that the examination was conducted in accordance with attestation standards established by th AICPA - an opinion that the prospective fin. statements are presented in conformity with AICPA guidelines - a caveat that the prospective results may not be achieved - a statement that practitioner assumes no responsibility to update the report due to subsequent events. - for a projection, the report should also include a description of the projection's purpose and a restrictive use paragraph. |
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A2 T or F Both fin. forecast and projection reports contain caveat statements and hypothetical assumption and use restricted in use. |
False Both contain caveat statement but not hypothetical assumptions. only projection contains hypo and are restricted in use. |
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A2 T or F Pro Forma fin. statements can be examined but not reviewed. |
False, can be both examined and reviewed. (check for mathematical reasonableness) |
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A2 What is CPA's attest function regarding MD&A (management's discussion and analysis)? |
CPA my examine or review the MD&A. CPA must obtain understanding of these requirements established by the SEC before undertaking the engagement. |
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