a-6

Question 1

Levels of service

Answer 1

Unaudited financial statements. Preparation (no assurance, no independence). Compilation (no assurance, independence required or disclose lack of). Review (limited assurance, independence required)

Question 2

Preparation

Answer 2

Prepare financial statements in accordance with a specific financial reporting framework

Question 3

Compilation

Answer 3

Present information in the form of financial statements that is the representation of management. Report required (attestation)

Question 4

Review

Answer 4

Expressing limited assurance that no material modifications that should be made to the financial statements to conform with the applicable financial reporting framework. (inquiries and analytical procedures)

Question 5

SSARS

Answer 5

Statements on Standards for Accounting and Review Services. Applicable for accounting, not audits

Question 6

Type 1 subsequent event

Answer 6

Require an adjusting journal entry to the financial statements

Question 7

Type 2 subsequent event

Answer 7

Events that did not exist prior to the year end date but need to be disclosed

Question 8

What standards are applicable for a compilation of a nonissuer?

Answer 8

SSARS

Question 9

Preparation engagements should be performed in accordance with

Answer 9

SSARS

Question 10

U LIAR CPA

Answer 10

review requirements
UNDERSTANDING with the client should established (through engagement letter)
LEARN and/ or obtain sufficient knowledge of the entity’s business
INQUIRIES should be addressed to appropriate individuals
ANALYTICAL procedures should be performed
REVIEW other procedures that should be performed
CLIENT representation letter
PROFESSIONAL judgment should be used to evaluate results
ACCOUNTANT should communicate results

Question 11

Consider

Answer 11

Used when the member is required to think about several matters

Question 12

Evaluate

Answer 12

Used when the member must asses and weigh the significance of a matter

Question 13

Determine

Answer 13

Used when the member has to come to a conclusion and make a decision on a matter

Question 14

Direct Financial interest

Answer 14

Ownership interests held directly in a client: stock ownership, partner when the member is a general partner, financial interest in a trust

Question 15

Indirect Financial Interest

Answer 15

Involves a removed relationship where a member owns: shares in a mutual fund that invests heavily in an attest client, direct interest in company a and company a has direct interest in client

Question 16

When can you disclose information without client permission?

Answer 16

1. to comply with validly issues subpoena or summons
2. as part of a quality review of the members professional practices authorized by the AICPA
3. In response to any inquiry made by the ethics division or trial board of the AICPA
4. For legal defense against a lawsuit filed by a client

Question 17

Contingent fees are permitted when

Answer 17

1. fees are fixed by a court or a judicial proceeding
2. fees are mandated by a law and legislation

Question 18

The conceptual framework approach

Answer 18

1. Identify threats to compliance with the fundamental principles (seven threats)
2. Evaluate the significance of each identified threat
3. Apply safeguards to eliminate threats or reduce threats to an acceptable level

Question 19

Threats to Compliance with the Fundamental Principles

Answer 19

1. Adverse interest threat (litigation)
2. Advocacy threat
3. Familiarity threat
4. Management participation
5. Self-interest threat
6. Self-review threat
7. Undue influence

Question 20

Cool off period

Answer 20

The audit form cannot have the employed the issuers CEO, CFO, Controller etc for a 1 year period preceding the audit

Question 21

The PCAOB consists of

Answer 21

2 CPA’s and 3 non CPA’s