Accounting and Review Service Engagements Flashcards
Accepting an compilation engagement is inappropriate if the projection is to be distributed too
Widespread use (ie potential stockholders in an offering statements)
When client omits all disclosures required by gaap, the accountants report should include
Info about the omission notifying it may sway users opinions.
An accountants compilation report for a nonissuer should include a statement that
Accountant compiled the financial statements in accordance with Statements on Standards for Accounting and Reviews (SSARS)
Review VS Audit
What’s difference between preparing and compiling FS
Preparation: Put together FS’(s). No responsibility to read or verify accuracy. No report.
Compilation: Put together FS’s and required to read FS and identify obvious material misstatements, issue a report.
Neither require independance.
In a review, a standard unmodified review report is issued when nothings wrong. The report includes What sections:
A review report should conclude
When do you issue adverse opinions for review engagements?
When FS contains several material and pervasive departures from GAAP and management is unwilling to revise.
Compiling Forecasted or projected information. (Note they must state)
What is a prescribed form
Unlike audits, comps cannot provide _____ and __________
a level of assurance and issue opinions. However if misstatements are identified and management doesn’t want to correct, accountant can modify report to include a paragraph noting the departure from GAAP
A compilation of financial projection does not include
An evaluation of the the support for the assumptions underlying the projection.
Review procedures
Reviews provide limited _____
Assurance.
Obtained through inquiries and analytical procedures.
Accountants can compile financial statements that omit substantially all disclosures if they _______
disclose that there are omissions in the F/S and that report is not intended for those who are uninformed about the omitted content.
Standards and engagements
Reviews do not assist management technically in ______
Presenting financial statements, unlike compilations.
When a compilation is issued, a statement expressing ____ is the conclusion paragraph
Compilation expresses no opinion nor provides assurance on financial statements.
Difference in emphasis of matter and other matter paragraph
Emphasis of matter is used when you want to draw attention to a matter that has already been disclosed.
Other matter is for matters not disclosed or present in FS.
CPAs cannot perform audits if independence is ______
impaired.
If CPA has even an immaterial direct financial interest, independence is impaired.
Even preparations of financial statements must agree on any depature from gaap and note that in engagement letter.
A compilation is where accountant assists with the presentation on financial statements, but this service provinces no
Assurance about accuracy or completeness of information presented. Therefore it cannot be relied on to disclose errors, fraud, or illegal acts.
Here is when SSARS is Applicable
Preparation engagement
