6

Question 1

Review report and compilation

Answer 1

Review
-required written representation letter
-Limited assurance provided
-Report issued
-NOT required to substantive testing to detect material misstatements

Compilation
-Not required
-Report issued

Question 2

Measurement scales

Answer 2

-Named (Qualitative)
Nominal, Ordinal, Interval, Ratio
-Ordered
Ordinal, Interval, Ratio
-Put into equal intervals, added, and subtracted
Interval, Ratio
-True zero point as origin
Ratio

Question 3

Safeguard against unauthorized sale of marketable equity securities

Answer 3

assigning two company officials

Question 4

Critical audit matters (CAM) section needed?

Answer 4

Qualified or unqualified audit opinion - Always required

Adverse or disclaimer opinion - Not allowed

Question 5

Unmodified opinion on entity’s IC over FR

Answer 5

Auditors do not address whether audit committee criteria have bene met.

Question 6

Reporting on comparative FS when the audit audited both years
Uncertainty existed in the previous period but has since been alleviated

Answer 6

No reason for auditor to reference it in the report

Question 7

Receiving clerk

Answer 7

Manage custody of inventory and is provided “blank’ copy of purchase order.
Notes the condition of items received on the receiving report.

Question 8

Can be reviewed FS?

Answer 8

SSARS
Annual FS
Single FS

SSAE
Pro forma FS

SAS/SSARS
Interim FS

NO!!!
Prospective FS
Internal control
Compliance

Question 9

Comparative FS

Answer 9

Updating the report on the previous FS regardless of the opinion previously issued

Question 10

Compilation report on financial forecast

Answer 10

Include forecasts may not be achieved and accountant assumes no responsibility to update the report

Question 11

Audit purposes for observing physical inventory count

Answer 11

Evaluate management’s procedures for conducting and recording the inventory count

Question 12

Projection

Answer 12

LImited use only -group of investors
Hypothetical assumptions might be misconstrued

Question 13

High assessed risk of material misstatement at the FS

Answer 13

Decrease reliance on controls
Provide more supervision of audit team

Question 14

Tax service prohibited for issuers audit clients

Answer 14

Recommending an aggressive tax position
Providing any Individual tax service for key position with client
Using contingent fee arrangements

Question 15

completeness assertion for inventory

Answer 15

Performing cutoff procedures for shipping and receiving

Question 16

If component auditor lacks independence

Answer 16

Group engagement team must obtain sufficient audit evidence without making reference to or using work of component auditor

Question 17

Variable sampling vs attribute sampling

Answer 17

Variable sampling
Tests of detail
Dollar amount (quantitative)

Attribute sampling
Tests of control
Rate of occurrence (qualitative)

Question 18

Advisory services for nonissuers

Answer 18

Advisory services do not impair independence from nonissues

Question 19

Internal control - Monitoring

Answer 19

Operating effectively

Question 20

SEC prohibits many non audit services

Answer 20

Including preparation of FS, footnote disclosures

Excluding tax preparation

Question 21

Disclaimer of opinion

Answer 21

Non of the sections are omitted

Question 22

SSAE

Answer 22

Examination - Opinion (positive assurance)

Review -Conclusion (Negative assurance)
Review MD&A

Agreed-upon procedures - Findings (no assurance)