A-2 Other Reports

Question 1

What are the two options for reports on compliance?

Answer 1

• Separate report on compliance, or

- Report on compliance included in auditor’s report

Question 2

Five elements of compilation and review engagements.

Answer 2

• Three-party relationship
• Financial reporting framework
• Financial statements or financial information
• Sufficient appropriate evidence (review only)
• Written communication or report

Question 3

An accountant performing a compilation is required to have a general understanding of the client’s business and accounting principles and practices used by the client, including what?

Answer 3

STAFF

1. Staff qualifications
2. Transaction types and frequency
3. Accounting basis used to prepare the financial statements
4. Form of the accounting records
5. Financial statements’ form and content

Question 4

What documentation is required in a compilation engagement?

Answer 4

• The engagement letter
• Any significant findings or issues
• Oral or written communication with management regarding fraud or illegal acts that came to the accountant’s attention.

Question 5

What are the components of the compilation report?

Answer 5

CAR MR ARSON

1. introductory paragraph
   - state the financials have been Compiled
   - state that the accountant has not Audited or Reviewed the financials
2. Management’s Responsibility paragraph
3. Accountant’s Responsibility paragraph
   - SSARS issued by the AICPA
   - Objective of compilation was to assist Management in presenting financial information
4. signature of accountant
5. date of accountant’s report

Question 6

When are compiled financial statements that omit GAAP disclosures acceptable?

Answer 6

If the…

• Financial statements are otherwise in conformity with GAAP
• Reason for omission was not to deceive the user
• Compilation report warns the user of missing disclosures

Question 7

What are performance requirements applicable to a review?

Answer 7

U LIAR CPA (same for nonissuer and issuer)

1. Understanding with client should be established
2. Learn and/or obtain sufficient knowledge of the entity’s business
3. Inquiries should be addressed to appropriate individuals
4. Analytical procedures should be performed
5. Review - other procedures should be performed
6. Client representation letter should be obtained from management
7. Professional judgment should be used to evaluate results
8. Accountant (CPA) should communicate results

Question 8

What is the accountant not required to do during a Review of the financial statements?

Answer 8

• Test internal control (not done)
• Perform audit tests (not done)
• Assess fraud risk (not done)
• Communicate with the predecessor accountant (use judgment)

Question 9

What are the components of a Review Report?

Answer 9

AM I SAD MR FIR SALA

1. title
2. addressee
3. introductory paragraph
   - includes primarily applying Analytical procedures to Management’s financial data and making Inquiries of company management
   - a review is Substantially less in scope than an Audit
   - accountant Does not express an opinion
4. Management’s Responsibility paragraph
   - fair presentation of the Financial statements
   - maintaining Internal control
5. accountant’s Responsibility paragraph
   - accordance with SSARS issued by AICPA
   - Limited Assurance
6. engagement results paragraph
7. signature of accountant
8. date of accountant’s report

Question 10

When the predecessor’s accountant’s compilation or review report is reissued and unchanged, what should the old accountant do?

Answer 10

1. read the statements and the report of the current period
2. compare the prior period statements with those issued previously and currently
3. obtain a letter from the successor accountants stating that they are not aware of any relevant information that might have a material effect on the prior period statements.

Question 11

What are the standards used for a review of a public company/issuer?

Answer 11

SAS or PCAOB standards. Not SSARS.

Question 12

What are the elements of an engagement letter for a review of a public company/issuer?

Answer 12

1. Objectives and scope of the engagement
2. Management’s responsibilities
3. Auditor’s responsibilities
4. Limitations of the engagement
5. Financial reporting framework

Question 13

What should the auditor not comment or provide assurance on in respect to a comfort letter?

Answer 13

• Market risk sensitive instruments

- Qualitative disclosures

Question 14

The eleven attestation standards include what three components?

Answer 14

TIPPY PASSER

1. Five general standards
2. Two fieldwork standards
3. Four reporting standards

Question 15

What are the five general standards of the attestation standards?

Answer 15

TIPPY passer

1. Training and proficiency
2. Independence
3. Performance/due professional care in planning and performing
4. Professional, adequate knowledge of subject matter
5. Your belief that the subject matter is capable of evaluation against criteria that are suitable and available to users

Question 16

What are the two fieldwork standards of the attestation standards?

Answer 16

tippy PAsser

1. Planning and supervision
2. Appropriate, sufficient evidence to provide reasonable basis for the conclusion

Question 17

What are the four reporting standards of the attestation standards?

Answer 17

tippy paSSER

1. identify Subject matter or assertion being reported on and character of the engagement
2. disclose Significant reservations about the engagement
3. Express conclusions about the subject matter or the assertion in relation to the established or stated criteria
4. Restrict use of the report to specified parties when appropriate

Question 18

When would the use of a report need to be restricted in accordance with the reporting standards of the attestation standards?

Answer 18

• The criteria are appropriate for or available to only a limited number of parties
• Reporting on subject matter and a written assertion has not been provided
• Reporting on an agreed-upon procedures engagement

Question 19

What conditions must exist in order for an agreed-upon procedures attestation engagement to be performed?

Answer 19

I AM SURE

1. Independence
2. Agreement of parties
3. Measurability and consistency
4. Sufficiency of the procedures
5. Use of the report is restricted to specified parties
6. Responsibility for the subject matter
7. Engagements to perform agreed-upon procedures on prospective financial statements

Question 20

What should the auditor’s report on summary financial statements derived from audited statements indicate?

Answer 20

1. CPA audited and expressed an opinion on the complete financial statements
2. Date of the auditor’s report
3. Type of opinion expressed
4. Whether, in the auditor’s opinion, the information set forth in the summary financial statements is consistent, in all material respects, with the audited financial statements from which it was derived

Question 21

When the prior period has been audited, the accountant should issue the current period compilation or review report, and indicate what information in any additional paragraph?

Answer 21

• That prior period statements were audited
• Date of the previous report(s)
• Opinions expressed, and, if other than unmodified, the reasons for the modification
• That no auditing procedures have been performed since the previous report date

Question 22

What are the comprehensive bases of accounting other than GAAP?

Answer 22

1. Cash basis and modified cash basis
2. Tax basis
3. Regulatory basis
4. Contractual basis

Question 23

What prospective financial statements are available for limited use and general use?

Answer 23

Financial Forecasts
- Limited Use
- General Use
Financial Projections
- Limited Use Only