A6

Question 1

SSARS requires complied FS to be accompanied by:

Answer 1

compilation report

Question 2

an accountant is required to comply with the provisions of statements on standards for accounting and review services when engaged to:

Answer 2

prepare, compile, or review FS

Question 3

SSARS explicitly states that SSARS doesn’t apply when:

Answer 3

• an accountant prepares personal FS for inclusion in written personal financial plans
• solely for submission to taxing authorities
• in conjunction with litigation services that involve pending or potential legal or regulatory proceedings
• in conjunction with business valuation services

Question 4

knowledge of the accounting principles and practices of the industry is required to perform a compilation or review engagement. however, the auditor can:

Answer 4

obtain the required knowledge after accepting the engagement

Question 5

___________ is the authoritative body designated to promulgate standards concerning an accountant’s association with unaudited FS of a nonissuer

Answer 5

The accounting and review services committee

Question 6

_______ is responsible for auditing standards under GAAS

Answer 6

auditing standards board (ASB)

Question 7

_______ is responsible for standards under GAAP

Answer 7

Financial accounting standards board (FASB)

Question 8

SSARS applies to the preparation of FS that are presented “alongside” the entity’s tax return. SSARS would not apply if the preparation of the FS with the tax return were:

Answer 8

soley for submission to taxing authorities

Question 9

reviewing interim financial data required to be filed with the SEC is covered under:

Answer 9

PCAOB standards

Question 10

______ should be included in the documentation of a preparation of FS

Answer 10

engagement letter

Question 11

a preparation engagement doesnt require the practitioner to obtain:

Answer 11

management rep letter

Question 12

each page of FS in a preparation engagement should include a statement indicating:

Answer 12

that no assurance is provided

Question 13

_____ is considered a non-attest engagement

Answer 13

preparation engagement

Question 14

review, compilation, audit are considered:

Answer 14

attest engagements

Question 15

If an accountant is unable to include a statement indicating that “no assurance is provided” on each page of the FS, then the auditor should either:

Answer 15

• issue a disclaimer that makes clear that no assurance is provided on the FS or
• perform a compliation engagement

Question 16

in the preparation of FS, the accountant may:

Answer 16

• provide assistance to managment with significant judgements
• omit substantially all disclosures required by GAAP

Question 17

a preparation engagement involves the accountant preparing FS using:

Answer 17

the records, documents, explanations, and other info provided by managment

Question 18

an accountant is required to read the FS and consider whether such FS appear to be free from obvious material errors before:

Answer 18

issuing a compliation report under SSARS

Question 19

obtaining a management rep letter is required in a review and audit, but isnt required for:

Answer 19

a compliation

Question 20

when an accountant compliles a client’s FS accompanied by supplemental info, the accountant’s separate report on the supplemental information should include a statement that:

Answer 20

the info has been compiled from information that is the representation of management without audit or review

Question 21

when an accountant reviews a client’s FS accompanied by supplemental info, the accountant’s separate report on the supplemental info should include a statement that:

Answer 21

the accountant did not become aware of any material modifications that should be made to the information

Question 22

an accountants compliation report on the unaudited FS of a nonissuer should:

Answer 22

disclaim an opinion on FS

Question 23

a _____ report states that a _____ includes primarily appling analytical procedures to management’s financial data and making inquires of company managment

Answer 23

review

Question 24

as part of a _______, an accountant would ask about actions taken at board of directors’ meetings that affect the FS

Answer 24

review engagement

Question 25

an accountant who is not independent in a compilation report should disclose this lack of independence in:

Answer 25

the last paragraph of the report.

Question 26

the date on a compliation report should be the date of:

Answer 26

completion

Question 27

_________ should include a statement that the accountant was not required to perfomr any procedures to verify the accuracy or completeness of the info provided by mangement

Answer 27

compliation report

Question 28

the accountant may compile FS that omit substantially all disclosures provided that:

Answer 28

1. the accountant’s report clearly indicates the omission by including an addittional paragraph disclosing such ommissions. this paragraph should state that if the disclosures were included, they might influence the user’s conclusions, and should indicate that the FS are not designed for those who are uninformed about the ommitted disclosures
2. to the accountant’s knowledge, the omission is not intended to mislead any person who might be expected to use such FS

Question 29

a _________ implies that substantially all disclosures required by GAAP are included in the FS

Answer 29

standard compilation report

Question 30

CPA is engaged to compile the FS of company, a nonissuer. company FS are prepared in comformity with cash basis of accounting. If company’s FS do NOT disclose the basis of accounting used, what is CPA’s reporting responsibility?

Answer 30

CPA should modify the compliation report to disclose the basis of accounting used in the compilation report (CPA cannot modify FS)

Question 31

if an accountant performing a compliation for a nonissuer believes that the FS might be materially misstated and the client refuses to provide additional or revised info, then:

Answer 31

accountant should withdraw

Question 32

the accountant should either disclose the effects of the material misstatement (if known) in a separate paragraph of the ______ or withdraw from the engagement.

Answer 32

compliation report

Question 33

appropriate reasons for changing the engagement include:

Answer 33

a change in client requirements or a misunderstanding as to the nature of the service to be rendered

Question 34

_____ report doesnt contain a title

Answer 34

compliation

Question 35

Does SSARS require that the compilation report be printed on the accountant’s letterhead?

Answer 35

report may be presented in the accountant’s letterhead, but not required

Question 36

Does SSARS require that the compilation report be manually signed by the accountant?

Answer 36

signature is required but not manual

Question 37

if an accountant decides that a change in engagement is justified then,

Answer 37

the report should not make reference to the orignial engagement

Question 38

a compliation of a specific element, accounts, or items of a FS means the accountant is:

Answer 38

compiling info for a certain aspect of the FS

Question 39

an accountant should issue a compliation report even though review procedures were performed on the engagement because:

Answer 39

the accountant was engaged to perform a compliation engagement.

Question 40

______ issued in accordance with SSARS should state that the CPA is not aware of any material modifications that should be made to the FS

Answer 40

standard review report

Question 41

“CPA has no responsibility to update the CPA’s report for events and circumstances occurring after the report’s date” appears:

Answer 41

in reports on prospective FS under SSAE

Question 42

“CPA believes that there will usually be differences between the projected and actual results” appears:

Answer 42

in reports on projected FS under SSAE

Question 43

“assessed the accounting principles used and significant estimates made by mangement” appears:

Answer 43

an issuer standard audit report

Question 44

FS reviewed by an accountant should be accompanied by a report stating that:

Answer 44

a review is substantially less in scope than an audit

Question 45

_____ is often used to examine relationships between BS accounts

Answer 45

ratio analysis

Question 46

_____ is used to examine income statement accounts

Answer 46

trend analysis

Question 47

in a review, analytical procedures consist of:

Answer 47

• comparisions of the FS with statements for a comparable prior period
• comparisions of the FS with anticipated results (budgets and forecasts)
• a study of the relationships of the elements of the FS that would be expected to conform to a predictable pattern

Question 48

the accountant ________ restrict the use of the review report

Answer 48

would not normally

Question 49

when reviewing a nonissuer’s FS, an accountant ordinarily makes inquires concerning:

Answer 49

the entity’s procedures for recording and summarizing transactions

Question 50

each page of the FS reviewed by the accountant should include a reference:

Answer 50

“See independent accountants review report”

Question 51

when reviewing the FS of a nonpublic entity, _____ is expressed in the review report in accordance with SSARS

Answer 51

no opinion

Question 52

in a review of a nonissuer’s FS, an accountant (should/should not) inquire about the existence of related party transactions

Answer 52

should

Question 53

in a review of a nonissuer’s FS, the successor accountant __________ to communicate with the predecessor accountant

Answer 53

may decide but is not required

Question 54

an interim review (where the annual financial statements are audited) falls under _______ requirements for a nonissuer and issuer, respectively, and would require an understanding of internal control

Answer 54

SAS or PCAOB

Question 55

in a review of a nonissuer’s FS, an accountant (should/should not) inquire about material subsequent events

Answer 55

should

Question 56

if the supervising accountant becomes aware that info provided by management is incorrect, then the accountant should request that management is incorrect, then the account should:

Answer 56

request that management consider the effect of the related matters on the FS

Question 57

modifications are made to the standard review report only when:

Answer 57

theres a departure from GAAP

Question 58

if management will not capitalize the leases, the accountant should modify the report when:

Answer 58

• the modification is sufficient to disclose the departure from GAAP, if not then withdraw.
• this paragraph disclosing the departure from GAAP should appear after the accountant’s conclusion paragraph under “known departures from accounting principles generally accepted in US”

Question 59

the accountant may still provide limited assurance with respect to the entity’s FS in the review report, as long as:

Answer 59

departures from GAAP are disclosed “based on my review, except for the issue noted in the known departures from accounting principles generally accepted in US, I am not aware of any material modifications”

Question 60

If the review report on the current period includes a separate paragraph describing the responsibility assummed for the prior period’s auditied FS, the additional paragraph should state:

Answer 60

no audit procedures were performed subsequent to the previous period’s audit

Question 61

before reissuing a compilation report on the FS of a nonissuer for the prior year, the predecessor accountant should obtain a letter from:

Answer 61

successor accountants

Question 62

when the prior period has been audited, the accountant should issue the current period compilation or review report, and any additional paragraph should indicate:

Answer 62

• that prior period statements were audited
• the date of previous reports
• the opinons expressed and if other than unmodified, the reasons for the modification
• that no auditing procedures have been performed since the previous report date

Question 63

Unaudited FS for the prior year presented in comparative form with audited FS for the current year should be clearly marked to indicate their status “unaudited”, and either:

Answer 63

• the report on the prior period should be reissued or
• the report on the current period should include a separate explanatory paragraph describing the responsibility assumed for the prior period’s FS

Question 64

Prior years review of the FS and current years compilation of the FS are to be presented as comparative FS this year. What are the three reporting options?

Answer 64

1. issue a compliation report with an extra paragraph describing the responsibility assumed for the prior period statements and including a statement that no review procedures were performed after the date of the review report
2. issue two separate reports, a compilation report for the current year and a review report for the prior year
3. issue a combined report, including both full reports and a statement that no review procedures were performed after the date of the review report

Question 65

In order for the FS to be considered in appropriate form when using another basis of accounting, the FS would need to include:

Answer 65

1. description of the other comprehensive basis of accounting (OCBOA), including a summary of significant accounting policies and descriptions of the primary differences from GAAP
2. disclosures similar to those required by GAAP if the FS contain items included in FS prepared in accordance with GAAP

Question 66

an accountant asked to review FS on a comprehensive basis of accounting other than GAAP should modify the review report to:

Answer 66

reflect the fact that the financial statements were presented on another comprehensive basis of accounting

Question 67

when unaudited FS are presented in comparative form with audited FS in documents filed with the SEC, such statements should be _______, but should not be _______

Answer 67

clearly marked as unaudited, referred to in auditor’s report

Question 68

an accountant should add _______ in the review report when the accountant considers it necessary to communicate a matter that is not presented or disclosed in the FS

Answer 68

other matter paragraph

Question 69

an accountant should add _______ in the review report when the accountant considers it necessary to communicate a matter that is presented or disclosed in the FS

Answer 69

emphasis of matter paragraph

Question 70

while performing review procedures, CPA becomes aware of a significant change in the control activities at one of Andrew’s branch locations. what would the CPA consider in performing in response to this situation?

Answer 70

• making additional inquires, such as whether managment has monitored the changes and considered whether they were operating as intended
• employing analytical procedures with a more precise expecation

Question 71

as part of planning a review under auditing standards of interim financial info, CPA reads the audit documentation from the preceding year’s annual audit. What would affect the review?

Answer 71

• summary of both corrected and uncorrected misstatements
• significant weaknesses in internal control (helps identify the types of MM that may occur in interim financial info and to consider the likeihood of their occurence)
• identified risks of MM due to fraud (help identify the types of MM that may occur in interim financial info and to consider the likeihood of their occurence)

Question 72

a review of the interim financial info of a publicly held company is conducted in accordance with:

Answer 72

PCAOB

Question 73

the objective of a review of interim financial information is to:

Answer 73

provide the accountant, through inquires and analytical procedures, with a basis for reporting whether material modifications should be made to such info to conform with GAAP

Question 74

If a report on a review of interim financial info is presented in a registration statement, the prospectus should include a statement that:

Answer 74

the report is not a “report” or “part” of the registration statement.
(the accountant should also read the other portions of the registeration statement to ensure that his or her name is not used in a way that indicates greater responsibility than she intends)

Question 75

the accountants review of interim financial info is performed in accordance with PCAOB standards, as:

Answer 75

approved by SEC

Question 76

in the accountants review of interim financial info, the auditor is responsible to update the report for events occurring after the date of the report but:

Answer 76

prior to filing

Question 77

a review of ________ requires communication with the predecessor auditor while review of _______ doesn’t

Answer 77

public entity’s interim financial info, nonissuer’s unaudited FS

Question 78

a review of ________ requires an evaluation of internal control while a review of _______ doesn’t

Answer 78

public entity’s interim financial info, nonissuer’s unaudited FS

Question 79

the auditor’s report on a review of interim financial info of a public company:

Answer 79

• is similar to a review report under SSARS in that both make reference to the performance of inquiry and analytical procedures
• provides negative assurance
• includes references to professional standards in the Basis for Review section. (none for review under SSARS)

Question 80

What are the phases of a review of an audit client’s interim FS?

Answer 80

1 Understand the client
2 learning and obtaining a sufficient understanding of the entity and its environment (including IC)
3 inquiries addressed to the appropriate individuals
4. analytical procedures

Question 81

In a typical comfort letter, the accountants express an opinion (positive assurance) concerning:

Answer 81

the audited FS compliance with the pertinent accounting requirements of the SEC included in the registration statement

Question 82

a typical comfort letter is addressed to:

Answer 82

the underwriters of securities

Question 83

In a typical comfort letter, the accountants express negative assurance concerning:

Answer 83

-unaudited condensed financial info

Question 84

In a typical comfort letter, the accountants express no assurance concerning:

Answer 84

the operation of an entity’s internal control

Question 85

a comfort letter is a letter containing a negative assurance from ______ to the underwriter or certain other requesting parties just before the registration of the client’s securities

Answer 85

the CPA

Question 86

a comfort letter generally covers the period from:

Answer 86

the date of the last auditor’s report to the effective date of the registration

Question 87

when an accountant issues to an underwriter a comfort letter containing comments on data that havent been audited, the underwriter will receive:

Answer 87

negative assurance on capsule info

Question 88

comments in a comfort letter are limited to:

Answer 88

financial info

Question 89

advertising that is ________ is allowed according to the advertising and other forms of solicitation rule

Answer 89

objective and informative

Question 90

independence of a member is impaired if the CPA’s spouse is employed by the client in a position which is audit sensitive. examples of those positions are:

Answer 90

cashier, internal auditor, accounting supervisor, purchasing agent, or inventory warehouse supervisor

Question 91

the following loans don’t impair independence:

Answer 91

1. automobile loans
2. loans of the surrender value under terms of an insurance policy
3. borrowings fully collateralized by cash deposits at the same financial institution
4. credit cards and cash advances on checking accounts with an aggregate unpaid balance of $10,000 or less

Question 92

acting as an honorary trustee for a not-for-profit company:

Answer 92

doesnt impair independence

Question 93

litigation not related to the engagement for an immaterial amount:

Answer 93

doesnt impair independence

Question 94

according to the independence rule, independence requirements extend to:

Answer 94

the member’s spouse, dependent children, and dependent relatives

Question 95

according to the independence rule of the code of professional conduct, independence is impaired based on:

Answer 95

control or the appearance of control that a member can exert over the investment

Question 96

why is an investment held through a nonclient regulated mutal fund NOT a direct financial interest?

Answer 96

the member doesnt control which stocks the mutual fund is investing in

Question 97

why is an investment help through a nonclient investment club a direct finanical interest?

Answer 97

the member can exert control upon which investements are purchased by the investment club

Question 98

why is an investment help through a nonclient investment club a direct finanical interest?

Answer 98

the member can exert control upon which investements are purchased by the

Question 99

why is an investment held by the trustee of a trust a direct financial interest?

Answer 99

the member can exert control upon which investements are purchased by the trustees in trusts

Question 100

why is an investment held in a blind trust a direct financial interest?

Answer 100

the member can exert control upon which investements are purchased by the trustees in trusts

Question 101

According to the independence rule of the code of professional conduct, a member’s independence is impaired with respect to a client who is more than:

Answer 101

one year overdue in the payment of professional fees

Question 102

fees from prior work must be paid in full before:

Answer 102

the issuance of a report on the following years work

Question 103

retaining a client’s records after a demand for their return has been ruled is:

Answer 103

a discreditable act

Question 104

contingent fees are prohibited when __________, but not when _________

Answer 104

preparing a tax return, representing a client in an examination by the IRS

Question 105

exercise of due care dictates consultation or referral when:

Answer 105

a professional engagement exceeds the CPA’s personal competence. (no requirement to obtain speciality accreditation

Question 106

A CPA may ____ a product to a client

Answer 106

resell

Question 107

due care in performing an audit requires a member to:

Answer 107

plan and supervise adequately any professional activity for which he or she is responsible

Question 108

the attainment of the proper balance between professional experience and formal education is related to the:

Answer 108

training and proficiency requirement

Question 109

a CPA must maintain ______ in the performance of any professional service

Answer 109

integrity and objectivity

Question 110

_____ are fees based on a specific finding or result, and often prohibited for attest engagements, including audits

Answer 110

contingent fees

Question 111

independence is impaired if an auditor is:

Answer 111

an employee of an audit client or is able to make management decisions on behalf of an audit client

Question 112

being a promoter consitutes a business relationship that would:

Answer 112

impair independence

Question 113

the advisor doesn’t make decisions, the advisor simply gives advice that the client is free to:

Answer 113

accept or reject (doesnt impair independence of auditor)

Question 114

fees are not regarded as being contingent when they are fixed by courts or other public authorities or in tax matters, if:

Answer 114

they are based on the results of court proceedings or the findings of governmentental agencies

Question 115

contingent fees are permitted for compilations only if:

Answer 115

the member includes a statement that the member is not independent

Question 116

membership in a trade organization that is a client would not cause independence to be impaired unless:

Answer 116

the CPA served in a managment capacity of the trade organization

Question 117

A CPA auditor cannot work for the client in a key position during:

Answer 117

the audit year

Question 118

if the results of the valuation and appraisal services are material to the clients FS, the auditor’s:

Answer 118

independence is impaired

Question 119

a financial instituation client loans the auditor money to buy a car but doesnt collateralize the loan. is independence impaired? why or why not?

Answer 119

yes, since the loan isnt collateralized. if it was, then independence wouldnt be impaired

Question 120

according to the code, a close relative is defined as:

Answer 120

a parent, sibiling, or nondependent child

Question 121

brother in law as a audit client’s controller would:

Answer 121

not impair independence

Question 122

a member’s independence is impaired if a member has a loan with a client and that loan is preferential in relationship to other borrowers. since the loan was fully secured and there was no indication of a “preference”, it appears to be:

Answer 122

in the ordinary course of business

Question 123

if the CPA is no longer a debtor of the financial institution at the time of the audit engagement, then the CPA is:

Answer 123

considered independent

Question 124

the fact that the CPA had a loan with the client during the period covered in the clients FS:

Answer 124

doesnt impair independence

Question 125

purchasing a CPA firms practice based on a percentage of fees is:

Answer 125

a legitimate method of pricing the business

Question 126

an ethics ruling related to the confidential client info rule states that it is permissible for a member to disclose the name of a client without the client’s consent unless:

Answer 126

the disclosure of the name results in the release of confidential info

Question 127

examples of activities with an attestation client that impair independence would include bookkeeping activities that include:

Answer 127

authorizing, executing or consummating a transaction on behalf of a client or preparing source documents or originating data

Question 128

A CPA firm may disclose the client’s name unless:

Answer 128

disclosure would suggest that the client may be experiencing financial difficulties

Question 129

contingent fees are permitted when they involve:

Answer 129

a legal proceeding or ruling

Question 130

the accounting principles rule of the code of professional conduct of the AICPA states that if the FS or data contains a GAAP departure, the departure may be justified if:

Answer 130

the CPA can demonstrate that due to unusual circumstances, such as new legislation or the evolution of a new form of business transaction, the FS would otherwise be misleading

Question 131

if the auditor has a cash balance in a brokerage account that is fully covered by the securities investor protection corporation then:

Answer 131

independence is not impaired

Question 132

contingenet fee arrangements ____ the auditor’s independence

Answer 132

impair

Question 133

a _________ is viewed as a direct financial interest

Answer 133

contingent fee

Question 134

when a CPA solicits recent uniform CPA exam questions without written authorization from the AICPA it is considered:

Answer 134

discreditable act

Question 135

a CPA that signs a document containing immaterial false and misleading info, or permits or directs another CPA to do so, has failed to follow:

Answer 135

integrity and objectivity rule

Question 136

if a covered member learns that another member of an attest engagement team is considering employment with the client, then:

Answer 136

the member should notify an appropriate person in the firm

Question 137

The member considering employement with the client needs to:

Answer 137

disassociate and no longer participate in the attest engagement

Question 138

The AICPA code of professional conduct governs:

Answer 138

any service that a member of the AICPA performs, including reviews and compilations

Question 139

the AICPA code of professional conduct includes:

Answer 139

principles provied an overall framework and rules govern performance

Question 140

The AICPA code of professional conduct’s general standards include:

Answer 140

professional competence, due professional care, planning and supervision, and sufficient relevant data

Question 141

Using a CPA partnership name that includes the names of past owners is:

Answer 141

acceptable

Question 142

a firm ____ continue to use a partnership name for more than two years after becoming a sole practitioner

Answer 142

may not

Question 143

A CPA is under no ethical obligation to comply with subsequent requests to again provide records or copies of records unless:

Answer 143

the client experiences a loss of records due to natural disaster or an act of war

Question 144

The public company accounting oversight board was established by:

Answer 144

Sarbanes-oxley act of 2002

Question 145

Under the SEC’s rules, the lead and concurring partner must rotate off the engagement after ______ years and other audit partners must rotate after _____ years.

Answer 145

5, 7

Question 146

The IFAC code of ethics requires that the lead and engagement quality review partners on public company audits rotate after:

Answer 146

no more than 7 years

Question 147

The lead and concurring partners are subject to a _____ year time out period before they can return to an engagement.

Answer 147

5

Question 148

other audit partners are subject to a ____ year time out period

Answer 148

2

Question 149

_______ may be exempted from the partner rotation rules

Answer 149

small firms with fewer than 5 clients who are issuers

Question 150

non audit services that do not exceed 5 percent of total revenues from an audit client do not require audit committee preapproval as long as:

Answer 150

the services are brought to the audit committee’s attention and approved before the completion of the audit

Question 151

all audit, review, attestation, tax and significant non-audit services must be:

Answer 151

preapproved by the audit committee, even if provided on a recurring basis

Question 152

permitted tax services an auditor can provide are:

Answer 152

tax compliance, tax planning, and tax advice

Question 153

The PCAOB prohibits tax services related to:

Answer 153

confidential or aggressive tax transactions and tax services to corporate officers of audit clients or immediate family members of corporate officers

Question 154

Registered public accounting firms are required to maintain audit work papers and supporting documentation for a period of _____ years

Answer 154

7

Question 155

to impose a disincentive to fraud, an audit team member may not accept employment as CEO, CFO, CAO, or controller of an audit client that files reports with the SEC for:

Answer 155

one year

Question 156

The sarbanes oxley act requires the PCAPB to perform an annual inspection of each registered public accounting firm that regularly provides audit reports for more than:

Answer 156

100 issuers

Question 157

communication requirements an auditor must follow when providing tax services to an audit client who is an issuer under SOX:

Answer 157

-auditor must communicate to the audit committee, in writing regarding the proposed tax services and related fees, and must discuss with the audit committee the potiential effects of the proposed tax services on the firm’s independence

Question 158

requirements an auditor must follow when providing tax services to an audit client who is an issuer under SOX:

Answer 158

tax services related to contingent fee arrangements, confidential tax transactions, and certain aggressive tax transactions are expressly prohibited

Question 159

to participate in the preparation of audit reports for a company registered with the SEC, a CPA firm must first register with:

Answer 159

PCAOB

Question 160

Regulation S-X provides that all three conditions must be met for an auditor of an issuer to provide client non-audit services without impairing independence and without obtaining the preapproval of the audit committee:

Answer 160

• services that the issuer didnt recognize as nonaudit services at the time of the engagement
• nonaudit services with revenues in aggregate of less than 5 percent of the total revenues paid by the issuer to the auditor during the fiscal year in which the non audit services are provided
• nonaudit services that were promptly brought to the attention of and approved by the audit committee prior to the complettion of the audit

Question 161

The independence of the registered public accounting firm would not be considered impaired if:

Answer 161

the former partner has no remaining capital balance in the registered public accounting firm

Question 162

Under SEC rules, if a former partner will be in an accounting rule or financial reporting oversight role with an SEC audit client, she may not:

Answer 162

• have a captial balance with the firm
• influence over the accounting firms operations or financial policies
• financial arrangement with the accounting firm that is related to the firms current revenues, profits, or earnings

Question 163

___________ requires each annual report of an issuer to include management’s assessment fo the effectiveness of internal control over financial reporting

Answer 163

Section 404 of the SOX act of 2002

Question 164

section 404 of the Sarbanes oxley act of 2002 requires each issuer’s annual report to contain an internal control report that:

Answer 164

1. states the responsibility of managment for establishing and maintaining an adequate internal control structure and procedures for financial reporting
2. contains an assessment, as of the end of the most recent fiscal year of the issuer, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting

Question 165

section 404 of the Sarbanes oxley act of 2002 requires the company’s external auditors to:

Answer 165

attest to, and report on, the internal control assessment made by management of the issuer

Question 166

improper influence occurs when an officer or director of an issuer fraudulently influences, coerces, manipulates, or misleads the independent auditor of the FS for the purpose of:

Answer 166

rendering the FS materially missleading

Question 167

The PCAOB has the right to impose ____ monetary penalties

Answer 167

civil

Question 168

The PCAOB must conduct an inspection once every three years for registered public accounting firms that issue:

Answer 168

100 or less audit reports

Question 169

The PCAOB can impose any sanctions it approves, including:

Answer 169

financial penalties, suspension or revocation of PCAOB registration, and required CPE courses

Question 170

the PCAOB consists of:

Answer 170

2 CPAs and 3 nonCPAs

Question 171

the provision of services involving contingent fee arrangements impairs:

Answer 171

independence

Question 172

experience on an audit committee or disclosure committee of a board of directors would:

Answer 172

not enable one to acquire the attributes of a financial expert

Question 173

a person identified as an audit committee financial expert of an issuer generally must have acquired the attributes of a financial expert through:

Answer 173

involvement as a principal financial officer, principal accounting officer, controller, public accountant, auditor, or one who actively supervisers or assesses the performance of one of these financial jobs

Question 174

The Department of Labor requires:

Answer 174

auditor independence when auditing and providing an opinion on the financial info submitted annually to the DOL

Question 175

If the auditor’s firm maintains financial records for the employee benefit plan then:

Answer 175

independence is impaired

Question 176

a government internal audit function is presumed to be free from organizational independence impairments for reporting internally when:

Answer 176

the head of the organization is removed from political pressures to conduct audits objectively, without fear of political reprisal

Question 177

_____ includes independence of mind and appearance when providing audits, maintaining and attitude of impartiality, having intellectual honesty, and being free of conflicts of interest

Answer 177

objectivity

Question 178

_____ includes an auditor’s honest effort in the performance of professional services in accordance with the relevant technical and professional standards

Answer 178

professional behavior

Question 179

_____ includes auditors conducting their work with an attitude that is objective, fact-based, nonpartisan, and non-ideological with regard to the audited entities and users of the auditor’s reports

Answer 179

integrity

Question 180

____ is defined as the collective wellbeing of the community of people and entities served by the auditor

Answer 180

public interest

Question 181

_____ is the threat that a financial or other interest will inappropriately influence an auditor’s judgement or behavior

Answer 181

self interest threat

Question 182

______ is the threat that an auditor will, as a result of political, ideological, social, or other convictions, take a position that is not objective

Answer 182

bias threat

Question 183

_____ is the threat that an auditor or audit organization that has provided nonaudit services will not appropriately evaluate the results of previous judgements made or services performed as a part of the nonaudit services when forming a judgement significant to an audit

Answer 183

the self review threat

Question 184

_______ is the threat that results from an auditor’s taking on the role of management or otherwise performing managment functions on behalf of the entity undergoing an audit

Answer 184

management participation threat

Question 185

Ethics as defined by GAGAS address the topics of:

Answer 185

serving the public interest, integrity, objectivity, proper use of government info, resources and positions, and professional behavior

Question 186

______ is the threat that aspects of a relationship with managment or personnel of an audited entity, such as a close or long relationship, or that of an immediate or close family member, will lead an auditor to take a position that is not objective

Answer 186

familiarity threat

Question 187

safeguards to threats to independence identified by GAGAS are generally not effective to mitigate:

Answer 187

management participation threat

Question 188

the undue influence threat might be mitigated by:

Answer 188

having a professional staff member who was not a member of the audit team review the work performed

Question 189

the self interest threat might be mitigated by:

Answer 189

removing the individual from an audit in which that individuals finanical or other interest or relationships pose a threat to independence

Question 190

the self review threat might be mitigated by:

Answer 190

involving another audit organization to perform or reperform part of the audit

Question 191

a critical component of the determination of whether providing a nonaudit service would create a threat to independence is:

Answer 191

consideration of management’s ability to effectively oversee the nonaudit service to be performed

Question 192

A client has asked CPA to provide a comfort letter. What level of assurance is needed for conformity with the disclosure requirements of regulation S-k

Answer 192

no assurance

Question 193

A client has asked CPA to provide a comfort letter. What level of assurance is needed for the CPA’s independence?

Answer 193

positive

Question 194

the accounting principles rule of the code of professional conduct of the AICPA states that if the FS or data contains a GAAP departure, the departure may be justified if:

Answer 194

the CPA can demonstrate that due to unusual circumstances, such as new legislation or the evolution of a new form of business transaction, the FS would otherwise be misleading

Question 195

a review of a nonpublic company’s FS is conducted under:

Answer 195

SSARS

Question 196

there should be no understanding of what in a review under SSARS?

Answer 196

internal control

Question 197

Communication of inconsequential employees’ noncompliance with laws and regulations is not required for:

Answer 197

any engagement. (consequentual is and should be reported to the board of directors, appropriate level of managment and the owner)

Question 198

A revision of a material number(s) and/or disclosure in prior issued financial statements will result in the financial statements being ________. If there are no material number(s) updated and/or disclosure(s) that need to be updated, then the financial statements are reissued with ______.

Answer 198

restated, no changes

Question 199

Generally, in a ______, the accountant merely inquires of management and does not need additional detailed evidence to substantiate management’s responses.

Answer 199

review

Question 200

This question may be asked in a review, Determining whether investments are encumbered typically relates to:

Answer 200

disclosures for investments.

Question 201

If cash is used as a compensating balance or has restrictions on the availability of funds, then:

Answer 201

appropriate disclosure and presentation of the cash balance can be verified (in a review question about cash balance)

Question 202

Typically, in a review, the accountant does not perform detailed substantive testing, such as recalculation procedures, on _______ account balances.

Answer 202

individual

Question 203

Sometimes when a company obtains debt, the company has to provide collateral for the debt. This provides more security for the creditor loaning the money. Assets that have been pledged as collateral should be:

Answer 203

disclosed in the financial statements. (should ask in a review)