(A6)M1-M7;M10 Flashcards
give 4 situations when an accountant preparing FS does not have to comply with SSARS
when the FS are solely for submission to taxing authorities
“alongside” SSARS applies
in conjunction with litigation services that involve pending legal or reg proceedings
in conjunction with business valuation services
for inclusion in written personal financial plans
what corresponds with the following: Attest- Non-attest- Assurance- No assurance-
report
no report
opinion (reasonable)/conclusion (limited)
no opinion/conclusion
does drafting FS notes constitute “preparation” that must comply with SSARS?
Nope
T or F, SSARS does not require that compilation report be printed on accountant’s letterhead?
T
in order to report on comparative FS, the statements must be ___?
comparable!
an accountant may compile FS that omit substantially all disclosures required by framework, as long as the report contains what?
additional paragraph disclosing the omissions
“if disclosures were included, they might influence the user’s conclusions”
“FS are not designed for those who are uniformed about the omitted disclosures
T or F, the accountant is required to obtain a rep letter from management when performing a review of a nonissuer’s FS?
T
in a review of a nonissuer, what is the successor accountant’s responsibility as it pertains to communication with the predecessor accountant?
no responsibility, may communicate but not required
is a management rep letter required for a compilation engagement?
no
what form is a review and compilation report required to be in?
no requirement, can either be digital or hard copy
what is the difference between restated and reissued prior issued FS?
restated- there was a revision of material numbers and/or disclosures
reissued- there were no material numbers and/or disclosures that needed to be updated (i.e., no changes were made)
a change in estimate (unsettled litigation loss, useful life, warranty cost) is accounted for ___.
prospectively; numbers are not adjusted in prior year(s) for the change
a change in accounting principle (LIFO to FIFO)/a correction of error (cash to accrual) is accounted for ___.
retrospectively; numbers are adjusted in prior year(s) for change
when reviewing a nonissuer’s FS, if there is a material departure from the applicable financial reporting framework and management refuses to revise, what are the accountant’s two options?
modify the report or withdraw from the engagement. when modification is appropriate, a paragraph with the heading “known departures from the ___” follows the conclusion paragraph and discusses the effects of the departure. The conclusion paragraph makes reference to the modification paragraph “except for”
if an independent accountant’s review report is presented in a registration statement, a prospectus should include a statement clarifying what?
that the report is not part of the registration statement within the meaning of the Securities Act of 1933
a review of a public entity’s interim financial information does not require which of the following?
- evaluation of IC
- communication with the predecessor auditor
- inquiry of the client’s attorney
3
what is the order of procedures for all 3 types of reviews (SSARS, SAS, PCAOB)? “U LIAR CPA”
Understanding with client Learn entity's business Inquiry Analytical procedures Review - other procedures Client rep letter Professional judgement Accountant communicates results
what are the ethical principles of GAGAS? “SOPPI”
serving public interest- collect well-being of community
integrity- attitude that is objective, fact-based, nonpartisan
objectivity- independence of mind and appearance
proper use of gov info, resources, position- not for personal gain
professional behavior- honest effort in performance of services in accordance with standards
what are the GAGAS general standards? (4 of them)
independence
professional judgement
competence
quality control and assurance- external peer review required once every 3 years
what are the threats to independence as identified by GAGAS? (7 of them)
self-interest: financial or other interest will influence auditor judgement
self-review: auditor will not appropriately evaluate the non-audit services he/she previously performed
bias: political, social, etc. will impair objectivity
familiarity: friendships/relationships will impair objectivity
undue influence: external pressure
management participation: auditor taking on role of management while performing an audit
structural: orgs structure may impact auditor objectivity
during a review of a public entity’s interim financial info and a review of the unaudited FS of a nonissuer, is accountant required to inquire of the client’s attorney?
no!
when issuing a comfort letter, an accountant may provide negative assurance concerning what?
the conformity of the entity’s unaudited condensed interim financial information with GAAP.
modifications are made to a standard review report only when…?
there is a departure from GAAP
When issuing letters for underwriters, commonly referred to as comfort letters, an accountant typically provides positive assurance concerning what?
the compliance of the audited financial statements and financial statement schedules included in the registration statement with the requirements of the Securities Act of 1933.
