A6, M1-M5 Flashcards
What are the three levels of service for unaudited financials of a non-issuer?
- preparation
- compilation
- review
What assurance is given and independence required in a preparation engagement?
- No assurance.
- No independence required.
What assurance is given and independence required in a compilation engagement?
- No assurance.
- No independence required, but must disclose lack of independence.
What assurance is given and independence required in a review engagement?
- Limited (negative) assurance.
- Independence required.
What is the objective of a preparation engagement?
prepare financial statements in accordance with a specified financial reporting framework
Is a report required in a preparation engagement?
No, because this is a non-attest engagement.
Is a report required in a compilation engagement?
Yes.
Is a report required in a review engagement?
Yes.
Anytime you are performing an attest engagement, what must be produced?
a report
Anytime you provide assurance in an engagement, what is required?
Practitioner must be independent.
What is the objective of a compilation engagement?
present information in the form of FS that is the representation of management
What is the objective of a review engagement?
(1) Express limited assurance
(2) that there are no material modifications that should be made with the financials
(3) to conform with the applicable financial reporting framework
What types of two procedures are performed in a review engagement?
- inquiry
- analytical procedures
Is external inquiry performed in a review engagement?
No, only internal.
Is external confirmation performed in a review engagement?
No, there are usually no inquiries of outside personnel.
What further procedures should be performed if actual results differ from expectations in analytical procedures (review engagement)?
Perform more inquiries.
If more than one service is perfomed by a CPA (ex: compilation and audit), what type of report should be issued? (conceptually and in the example)
- Report that is appropriate for the highest level of service rendered.
- Audit, in this example.
What standards are used for preparations, compilations, and reviews of unaudited non-issuers?
Statements on Standards for Accounting and Review Services (SSARS)
What are three parts of the definition for a non-issuer?
- securities not registered with the SEC
- not required to file reports with the SEC
- not filed a registration statement with the SEC
What if a registration statement is still pending with the SEC, is this a non-issuer or an issuer?
non-issuer
SSARS is not applicable to reviews of interim financials of nonissuers whose annual financial statements are ____. What standard applies instead?
audited; SAS
What standards are used for reviews of interim FS for issuers?
PCAOB standards
Is preparing adjusting/correcting entries (ex: depreciation, pensions) to financials part of a preparation engagement?
No, this is just a bookkeeping task.
Who are the three parties in preparation, review, and compilation engagements?
- management (responsible party)
- accountant
- intended users of the financial information (outsiders or management)
T/F: Accountant has a responsibility to identify the intended users.
False.
Intended users are presumed to understand what two things?
limitations of the engagement and the financial statements
Is an engagement letter required in a preparation? A compilation? A review?
Yes, required for all SSARS engagements.
If financials are prepared in a special purpose framework, what two things must the financial statements include?
- Description of special purpose framework
- Disclosures similiar to GAAP if contains items similar to GAAP information
What are the two components of the description of the special purpose framework?
- summary of significant accounting policies
- describe material differences from GAAP
If the report on FS prepared according to financial reporting framework accepted in another country and going to be distributed exclusively outside the US, what are the two options for the report?
- Report in accordance with SSARS, including reference to the special purpose framework used, OR
- Report in accordance with the other set of compilation or review standards.
If the report on FS prepared according to financial reporting framework accepted in another country and going to be distributed in the US (as well as other country) what are the options for the report?
Must report in accordance with SSARS, including statement on special purpose framework used.
Can you perform a preparation for a single financial statement (not the complete set)?
Yes.
Can you perform a compilation for a single financial statement (not the complete set)?
Yes.
Can you perform a review for a single financial statement (not the complete set)?
Yes, as long as the scope of inquiry and analytical procedures have not been restricted.
What should the accountant (or auditor) do if they discover a subsequent event?
Ask management to consider whether the subsequent event is appropriately reflected in the FS.
What responsibility does the auditor have if management does decide to update the FS for the subsequent event, but you already made your report (2)?
- Auditor should perform additional review procedures to ensure there are no material errors. AND
- Date the report as of the later date or dual-date the report.
What should the accountant/auditor do if management will not revise their FS, but the accountant/auditor believes the FS should be revised?
DAR them to fix it.
- Dissassociate report from the FS.
- Alert agencies to not rely on the report.
- Alert relying parties not to rely on the report.
Does an accoutant have the obligation to continue making inquiries after the report release date?
No.
When does an accountant have to take action on subsequent event information after the report release date (3)?
- Material Information
- Existed as of the date of the report (should have known about it or relates to that period)
- People are relying on or likely to rely on the FS
If an accountant performing a review, compilation, or preparation comes across information that the FS are materially misstated due to fraud and noncompliance, what should they do first?
Obtain additional and revised information.
If the entity will not provide additional or revised information in response to a material misstatement, what should the accountant do?
withdraw from the engagement
The accountant should do what two things if fraud or noncompliance involve an owner of the business?
- withdraw, or
- consult legal counsel
In a SSARS review, does an accountant need to obtain an understanding of the entity’s internal control?
No.
In a SAS review (interim review of non-issuer with annual audit), does an accountant need to obtain an understanding of the entity’s internal control?
Yes.
In a PCAOB review (interim review of issuer with annual audit), does an accountant need to obtain an understanding of the entity’s internal control?
Yes.
Is compiling financial statements generated through the use of computer software still under a compilation engagement?
Yes.
Is a management representation letter required for a preparation engagement?
No.
Is a management representation letter required for a compilation engagement?
No.
Is a management representation letter required for a review engagement?
Yes.
Preparation standards do not apply for the preparation of financial statements for what four services?
- submission to a tax authority
- personal financial plan
- litigation services
- business valuation services
In regards to submission to a tax authority, can SSARS be followed for preparation of financial statements that are presented “alongside” the entity’s tax return?
Yes, SSARS can be followed in this scenario.
How does an accountant establish an understanding with a client?
through the engagement letter
What seven components are included in the engagement letter for a preparation engagement?
- objectives of management
- management’s responsibilities
- accountant’s responsibilities
- agreement of management that each page of the FS will include a statement that no assurance is provided
- limitations of the engagement
- identify the applicable framework
- known departures/omissions
Does a preparation engagement letter explicitly state that the accountant is “not required to, and will not, verify the accuracy or completeness of the information you provide to us”?
Yes.
Does a preparation engagement letter explicitly state that the accountant is “not expressing an opinion or conclusion or provide any assurance on the FS”?
Yes.
What type of statement is provided on each page of the financial statements in a preparation engagement (2 options)?
- “No assurances is provided on the FS.”
- “These FS have not been subject to audit, review, or compilation, and no assurance is provided on them.”
What is the accountant is unable to include a statement on each page stating that no assurance is provided (preparation engagement), 3 options?
- Issue a Disclaimer, and each page says “See Disclaimer of Opinion.”
- Perform Compilation Engagement
- Withdraw
An auditor must withdraw anytime there is a risk that they are being associated with providing ___, ___, or ___ information.
false, fraudulent, deceptive
When preparing (preparation) financial statement in accordance with a special purpose framework, in what two places can a description of the framework be placed?
- face of financials
- notes to the financials
If information comes to the accountant (preparation) that the financials contain a departure from the framework, what two options does the accountant have?
- Disclose the MM in the FS, or
- Withdraw
Does an accountant in a preparation have responsibility for looking for departures from GAAP (or the financial reporting framework used)?
No.
When can an accountant prepare financial statements that omit substantially all disclosures (2 and conditions)?
- disclosure of omission, AND
- reason of omission is not to mislead
If limited disclosure is acceptable (not used to mislead), what label should be used?
Selected Information - Substantially All Disclosures Required by [applicable FR framework] Are Not Included
Is “using information in the general ledger to prepare financial statements outside an accounting software system” a preparation engagement under SSARS?
Yes.
Is “drafting financial statement notes for the client” a preparation engagement under SSARS?
No, because this is only a component of the FS.
Is “reproducing client-prepared financial statements” a preparation engagement under SSARS?
No.
Is “prepare a working trial balance” a preparation engagement under SSARS?
No.
What is the date on the compilation report?
the date of completion of the compilation
How is a compilation different than preparation?
You do all the same things, but you also issue a report (no report for preparation).
Can a public company receive a compilation of its financial statements?
No, only non-issuers can.
Can a public company receive a preparation of its financial statements?
No, only non-issuers can.
A compilation engagement (does, does not) require the accountant to verify the accuracy or completeness of information provided, unless …
does not, unless there are obvious errors
What six items are included in an engagement letter for a compilation engagement?
- objectives of the engagement
- management’s responsibilities
- accountant’s responsibilities
- limitations of the engagement
- identification of the applicable FRF
- expected form and content of compilation report, and report may differ from this
What are the headings in a compilation engagement letter?
- Introduction
- Our Responsibilities
- Management Responsibilities
- Our Report
- Other Relevant Information
What is the biggest difference in the engagement letter headings from a preparation to a compilation?
Our Report
Does the compilation engagement letter explicitly state that the accountant provides “no assurance that there are no material modifications”?
Yes.
What additional statement does the accountant include in the engagement letter about oversight of preparation engagement?
You (management) are responsible for evaluating the adequacy and results of services performed, and for designating an individual with suitable skills to oversee.
What two key things does the Our Report section of the compilation engagement letter say?
- will issue a report that will state that we did not audit or review the FS, and accordingly we do not express an opinion, conclusion, or provide any assurance on them
- management agrees to include our compilation report in any document containing the FS & ask our permission prior to inclusion of the report
What acronym is used for the steps to understand the client’s business?
STAFF
What does the S in STAFF stand for?
staff qualifications (at the client)
What does the T in STAFF stand for?
transaction types and complexity
What does the A in STAFF stand for?
accounting principles used
What does the first F in STAFF stand for?
form of accounting records (software used, how information is captures)
What does the second F in STAFF stand for?
financial statements
Is an accountant required to read the financial statements in a compilation engagement? In a preparation engagement?
Yes for both.
Why does the accountant have to read the financial statements?
to avoid being associated with false, fraudulent, or misleading FS
If the client becomes aware of noncompliance, going concern uncertainty, or subsequent events, what three steps should they take?
- request management to consider the effect on the FS
- evaluate management’s conclusions
- consider the effect on the compilation report
Can the accountant make inquires or perform other procedures to verify, corroborate, or review information provided by the client (compilation engagement)?
They CAN, but they are not required to.
Does the compilation report contain a statement that the accountant did not audit or review the financial statements and do not express an opinion?
Yes.
Does a compilation report compare the scope of a compilation engagement with that of an audit engagement?
No!
Does the compilation report contain a statement that the accountant is not required to perform any procedures to verify the accuracy and completeness of information?
Yes.
Is it acceptable for disclosures to be omitted when doing a compilation engagement?
Yes, as long as it is disclosed and not being done to mislead.
Each page of the financial statements should be marked with what statement when a compilation was performed?
“see [Independent] Accountant’s Compilation Report”
T/F: SSARS does not require that the compilation report be printed on the accountant’s letterhead.
True.
In which six scenarios may an additional paragraph be added to the standard compilation report?
- Special Purpose Framework Used
- Disclosures are Omitted
- Accountant is NOT Independent
- Disclose Known Departures
- Supplemental Information
- Emphasis of Matter Paragraph
What is the title on a standard compilation report?
There is NONE.
How many separate paragraphs are in a standard compilation report?
None, just 1 paragraph.
If a special purpose framework is used in a compilation engagement, what additional item does the report state in the first paragraph (Hint: related to management’s responsibility)?
management is responsible for determining that the applicable framework is acceptable in the circumstances
If the contractual basis of accounting is used as a special purpose framework, what extra statement needs to be added to the compilation report?
restricted use
If disclosures are acceptably omitted in a compilation engagement, what should the auditor state in the additional paragraph of the report (2)?
- If disclosures were included, they might influence the user’s conclusions.
- Financials are not designed for those who are uninformed about the omitted disclosures.
If a compilation is performed and there are material departures from GAAP (or the FRF), what two options does the accountant have?
- Disclose in report (including effects on the FS if known), OR
- Withdraw
When would an auditor withdraw in response to a departure from the FRF in a compilation?
Disclosure in the report would not be adequate to indicate the deficiencies in the FS.
T/F: The accountant can issue an adverse opinion in a compilation engagement if the departures from the FRF are material.
False. No opinion is given because there was no audit or review.
Where should a disclosure of lack of independence be included in a compilation report?
the last paragraph
Does the accountant have to disclose the reasons for the independence impairment if there is one?
No, but they can. If they do, all reasons must be included.F
What acronym is used to remember review requirements?
U LIAR CPA
What does U stand for in U LIAR CPA (review requirements)?
understanding with the client is established (engagement letter)
What does L stand for in U LIAR CPA (review requirements)?
learn and/or obtain sufficient knowledge of the entity’s business
What does I stand for in U LIAR CPA (review requirements)?
inquiries to appropriate individuals
What does the first A stand for in U LIAR CPA (review requirements)?
analytical procedures
What does R stand for in U LIAR CPA (review requirements)?
review other procedures that should be performed
What does C stand for in U LIAR CPA (review requirements)?
client representation letter should be obtained from management
What does P stand for in U LIAR CPA (review requirements)?
professional judgement used to evaluate results
What does the second A stand for in U LIAR CPA (review requirements)?
accountant (CPA) should communicate results
What all is included in the engagement letter for a review engagement?
- objectives of the engagement
- management’s responsibilities
- accountant’s responsibilities
- limitations of the engagement
- identification of applicable FRF
- expected form and content of the accountant’s review report
How does the engagement letter requirements for a review differ from a compilation (high-level)?
Not much, just differences based on the nature of the engagement (obtain limited assurance, review procedures, etc.)
What are the limitations of the review engagement described in the review engagement letter?
- review is substantially less in scope than an audit
- accountant will NOT express an opinion on the FS
Does the accountant assess fraud risk in a SSARS review engagement? What about SAS/PCAOB review?
No, there is no risk assessment.
Yes for SAS/PCAOB.
Does a review engagement letter state that “ the accountant cannot be relied on to identify or disclose any FS misstatements”? A preparation? A compilation?
Yes, this statement is in all of these reports.
Is an accountant required to communicate with the predecessor accountant in a SSARS review?
No, but they can if they want.
Is an accountant required to communicate with the predecessor accountant in a SAS/PCAOB review?
Yes.
Is a materiality level determined for the financial statements in a review?
Yes, based on the financial statements as a whole.
What three things are used to design the analytical procedures and inquiries performed in a review?
- understanding of industry
- knowledge of client
- overall risk (like audit risk)
Is the accountant in a review required to corroborate management responses with other evidence?
No, unless there is something seemingly wrong with the response.
Does an accountant in a review engagement need to inquire about the status of uncorrected misstatements from previous engagements?
Yes.
Does an accountant in a SSARS review inquire about subsequent events? What about SAS/PCAOB?
Yes to all three.
Is comparing financial information with relevant nonfinancial information an analytical procedure?
Yes.
Is looking at disaggregated revenue data an analytical procedure?
Yes.
If the accountant in a review becomes aware of information that is incorrect, what should they do (3 steps)? Is this a recurring theme?
- Discuss with mangagement.
- See what they do.
- Determine effect on review report.
Yes! You would do the same thing for a preparation or compilation.
What is the date on the client representation letter in a review?
accountant’s report daet
If management does not provide a representation letter, what is the result in a review engagement?
This results an incomplete review, which means the auditor withdraws.
What does management say about uncorrected misstatements in the rep letter for a review?
That it believes the effects of the uncorrected misstatements are immaterial in aggregate.
What does SOAP stand for?
summary of adjustments passed
What should the accountant do if they doubt management’s integrity (think the rep letter may be false)?
Discuss the matter with management/board, and likely withdraw.
What are the five “other procedures” that should be done in a review engagement?
- *Read( the financial statements.
- Obtain reports of other accountants who audited/reviewed significant components of the entity. Evaluate adequacy of their work.
- Obtain evidence that FS * agree/reconcile with the accounting records*.
- Remain alert for information about related party relationships.
- Substantial Doubt About Ability to Continue as a Going Concern
What happens if all necessary procedures cannot be performed?
The review is considered incomplete.
What happens to the review report if the review is considered incomplete?
A report cannot be issued.
What is the date of a review report?
date that accountant obtained sufficient appropriate review evidence
Each page of the financial statements should be marked with what in a review engagement?
“See Independent Accountant’s Review Report”
What should an accountant do if they determine that their independence is impaired while performing a review engagement?
Withdraw.
What are the three types of conclusions that can be made in a review engagement?
- Unmodified Conclusion
- Qualified Conclusion
- Adverse Conclusion
What does a qualified conclusion to a review indicate?
There is a material mistreatment that is not pervasive to the FS.
What does an adverse conclusion to a review indicate?
MM that is material and pervasive
What is the title of a review report?
Independent Accountant’s Review Report
What four things are included in the introductory paragraph of a review report?
- We have reviewed the financial statements of [Company Name], [financials reviewed and date]
- A review includes analytical procedures and making inquiries of the company management.
- Review is substantially less in scope than an audit, the objective of which is the expression of an opinion on the FS as a whole.
- We do NOT express such an opinion.
What is the wording for an unmodified conclusion in a review?
Based on our review, we are not aware of any material modifications that should be made to the accompanying FS in order for them to be in accordance with [applicable FRF].
How do the headings in the review report change when you have a qualified conclusion?
Add: Basis for Qualified Conclusion
Auditor’s Conclusion –> Qualified Conclusion
What is the wording for the qualified conclusion in a review?
Based on our review, except for the effect of the matter described in the Basis for Qualified Conclusion paragraph, we are not aware of any material modifications that should be made to the accompanying FS in order for them to be in accordance with [applicable FRF].
What is included in the Basis for Qualified Conclusion paragraph?
- Reference note in FS that talks about accounting principle violated
- Describe departure
- Effects of departure, or statement that they have not been determined
How do the headings in the review report change when you have an adverse conclusion?
Add: Basis for Adverse Conclusion
Auditor’s Conclusion –> Adverse Conclusion
What is the wording for the adverse conclusion in a review?
Based on our review, due to the significance the matter described in the Basis for Adverse Conclusion paragraph, the FS are not in accordance with [applicable FRF].
What is included in the Basis for Adverse Conclusion paragraph?
same as for a Basis for Qualified Conclusion paragraph
- Reference note in FS that talks about accounting principle violated
- Describe departure
- Effects of departure, or statement that they have not been determined
An emphasis of matter or other matter paragraph is required in a review report for what situations? It is okay if you do not remember all the situations, but try to at least recall the theme here.
- revised financial statements
- special purpose framework
- change in comparative financial statement departure
- comparative financials where prior period was audited
- substantial doubt and not alleviated
- supplementary information
- required supplementary information
Theme: pretty much the same as requirements for an audit report
What heading is used for an emphasis of matter paragraph in a review report?
“Emphasis of Matter” or another appropriate heading
What must the accountant in a review do if they plan on including an EoM or other matter paragraph in their report?
Communicate with management that they are going to add the paragraph.
What are four scenarios where an EoM paragraph may be added at the accountant’s discretion?
- important litigation
- usually important subsequent events
- major catastrophe
- significant transactions with related parties
Does the client need to quantify how a special purpose framework differs from GAAP in its financial statements?
No.
If the special purpose framework used is the regulatory or contractual basis of accounting, what additional items must be included in the review report?
- In Management Responsibility Paragraph: description of purpose for use of that framework (or reference note to financials)
- include other matter paragraph restricting use of review report
When a special purpose framework is used, what additional item must the accountant include in the management responsibility paragraph (review engagement)?
management is responsible for determining the applicable framework
What should the accountant do if the financial statements do not adequately describe the special purpose framework, how it differs from GAAP, or include informative disclosures for GAAP-like information?
Modify the review conclusion to qualified or adverse.
What additional disclosure does the accountant make if they decide not to assume responsibility for the audit or review performed by other accountants?
reference the other accountants, as long as their reports are not restricted
In which paragraph of the review report would other accountants be referenced?
accountant’s responsibility paragraph
Review procedures related to going concern should be performed in which two scenarios?
(1) Management has a responsibility for evaluating ability to continue as going concern, OR
(2) Accountant becomes aware of conditions raising substantial doubt about ability to continue as going concern
If going concern is alleviated through management’s plans, does the accountant in a review include an EoM paragraph?
They can, but they are not required to.
If going concern is NOT alleviated through management’s plans, does the accountant in a review include an EoM paragraph?
A section of the review report called “Substantial Doubt About Entity’s Ability to Continue as a Going Concern” is added.
When comparative financials are presented and compiled/reviewed, what should the auditor do regarding the prior year in the current report?
- Update the report on the prior period (if needed).
- Issue that report as part of the current year report.
What changes should be made to the report if the prior year was compiled and the current period is reviewed (higher level)?
(1) Update the report on prior period (if any changes),
(2) and issue the compilation report as the last paragraph of the current year review report (combined).
What changes should be made to the report if the prior year was reviewed and the current period is compiled (higher level)?
There are two options.
Option 1: Compilation Paragraph for the current year, plus describe what was done in the prior year (responsibility, date of report), and describe that no review procedures were completed after the review report date.
Option 2: Reissue review report from last year, either combined with compilation or separated.
If the review report is reissued in combination with the compilation report (current year), what does the auditor need to do?
State that no review procedures were completed after the review report date.
What changes should be made to the report if the prior year was compiled and the current period is prepared (lower level)?
Nothing, because there is no report for a preparation.
What changes should be made to the report if the prior year was reviewed and the current period is prepared (lower level)?
Nothing, because there is no report for a preparation.
What should the accountant advise the client to do if comparative financials are presented in a column format?
clearly indicate which financials have not been audited, reviewed, or compiled
If a company presents financial statements for multiple years (comparative financial statements) but leaves out almost all required disclosures for one year while including them for others, can a report still be issued for the current year?
No, because the financials are not inherently comparable.
If information comes to light that changes your opinion on a previous report/year, what type of paragraph is included (EoM or other matter)?
Other Matter, because the item does not deal directly with something in the FS.
What has to be included in the other matter paragraph when you change your opinion on a prior year?
DORCS
Date of Original Report
Original Conclusion
Reason for Change
Changes that Occured
Statement that Change Occurred
Is a predecessor accountant required to reissue their report on a prior period?
No.
What should the predecessor accountant do if they decide to reissue a report (3)?
- Read the financials and report for current period.
- Compare prior period statements with current year.
- Obtain rep letter from new accountant.
What does the predecessor accountant do if they become aware of information that may affect the FS or their report (2)?
- perform same procedures as during the previous engagement, and
- perform any additional procedures deemed necessary
When the predecessor decides to not reissue their compilation or review report, what two options does the successor accountant have?
(1) Make reference to the predecessor accountant’s report, OR
(2) Successor auditor performs that level of service themself.
What is included in a paragraph referencing a predecessor’s compilation report (5 things)?
- state that prior period compiled by other accountants
- date of their report
- describe any modifications
- did not audit or review the FS
- did not express an opinion or provide any assurance
What is included in a paragraph referencing a predecessor’s review report (4 things)?
- state that prior period compiled by other accountants
- date of their report
- describe any modifications
- other accountants are not aware of any material modifications other than those in the report
What are the two options when prior period financials are restated?
1: Predecessor or successor auditor may report on changed prior period financials in entirety.
2: Successor accountant may report on the adjustment only, with statement that predecessor looked at the prior year before restatement.
How should the report be modified if the prior period was unaudited and the current period is audited?
- Unaudited FS should be clearly marked, AND
- Reissue the prior period report, OR
- Include an other-matter paragraph in current report describing the responsibility assumed for the prior period’s statements (service performed, date, material modifications, less in scope than audit and no opinion).
How should the report be modified if the prior period was audited and the current period is unaudited?
(1) Issue the current year compilation/review report, and
(2) add an other matter paragraph indicating that prior period was audited, date of report, opinion epxressed, and no auditing procedures performed since previous date.
What is the common theme when doing a lower-level service in the current year?
State that none of the higher-level procedures from the prior period were performed past the report date.
If unaudited financial statements are presented in comparative form with audited FS in documents filed with the SEC, what two things are true about the statements?
- should be marked “unaudited”, AND
- should NOT be referred to in the auditor’s report
What is the definition of an interim period?
does not include the year end
Ratio analysis is often used to examine relationships between (IS/BS) accounts. Trend analysis is more useful for (IS/BS) accounts.
Ratio Analysis: B/S accounts
Trend Analysis: I/S accounts, because they are more predictable.
T/F: In a review, the accountant performs detailed substantive testing, such as recalculation procedures, on individual account balances.
False, only inquiry and analytical procedures are performed.
T/F: The term “presented fairly” is used in the conclusion of a review report.
False! This is used only in the opinion paragraph of the audit report.
T/F: A review does not require corroboration of key account balances.
True.
GAAP represents accounting (principles/standards).
principles
T/F: Management justifies the use of the other comprehensive basis of accounting in the management representation letter.
False, they do not need to do this in the rep letter.
T/F: Discovery of significant
deficiencies in the design of
the entity’s internal control would result in a modified review report.
False, you only modify a review report for departures from GAAP.
If unaudited in the prior year and audited this year, (both/either) the report on the prior period should be (1) reissued or the report on the current period (2) should include a separate explanatory paragraph describing the responsibility assumed for the prior period’s financial statements.
either
If an accountant becomes aware of information that may have a material effect on the prior-year’s financial statements, what should the accountant do?
perform additional procedures to determine the effect, if any, on the financial statements
An understanding of what a review consists of would likely be included in a(n) (engagement letter/representation) letter.
engagement
Can written documentation from other types of engagements be used to provide support for the review report?
Yes.
Does a compilation report contain this statement: “is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion.”
No, a review report does, however.
