Accounting Review and Other Services

Question 1

6 Elements of Quality Control

Answer 1

Human Resources
Engagement/Client Acceptance
Leadership Responsibilities
Performance of the engagement
Monitoring
Ethical Requirements

Question 2

Compiliation

Answer 2

The objective is to present in the form of financial statements information that is the representation of management without undertaking to express any assurance on the financial statements. Is an attest engagement.

Question 3

Procedures performed in a compiliation

Answer 3

1) Does not perform audit or review procedures.
2) Does not express any assurance on the financial statements.
3) Reads the financial statements for obvious error.
4) Should only make inquiries of the client. If client does not want to correct any incorrect information auditor should withdraw.

Question 4

Statement on Standards for Accounting and Review Services

Answer 4

Standards for the performance of compilation and review services.

Question 5

Compilation Requirements

Answer 5

Knowledge of client industry and understanding of clients business

Question 6

Introduction paragraph of compiliation report

Answer 6

1) ID the entity
2) State that the financial statements have been compiled.
3) Identify the financial statements.
4) Specify the date or period covered by the financial statements.
5) State that the accountant has not reviewed or audited the statements and does express an opinion or provide assurance.

Question 7

Management Responsibility paragraph in comp

Answer 7

Management is responsible for the preparation and fair presentation of the financial statements.

Question 8

Accountant Responsibility paragraph in comp

Answer 8

Accountant performed compiliation in accordance with SSARS issued by the AICPA. Objective is to assist management in presenting financial information in form of FS without providing any assurance that there are no material modifications to the financial statements.

Question 9

Requirements of a review

Answer 9

Understanding with client should be established in an engagement letter, knowledge of client’s industry, and understanding of clients business. Representation Letter must be obtained.

Question 10

Procedures not required in a Review

Answer 10

1) Test Internal Control
2) Perform Audit Tests
3) Assess Fraud Risk
4) Communcate with Predecessor Accountant

Question 11

Introductory Paragraph in a review

Answer 11

Statement that a review is substantially less in scope than an audit, the objective of which is to express an opinion on the financial statements and accordingly don’t express such an opinion. In addition, a review includes primarily applying analytical procedures to managements financial data.

Question 12

Management Responsibility Paragraph in a review

Answer 12

Management is responsible for the preparation and fair presentation of the financial statements.

Question 13

Accountant’s responsibility

Answer 13

State that the review is performed in accordance with SSARS issued by the AICPA. The standards require the accountant to perform procedures to provide limited assurance that there are no material misstatements. In

Question 14

Interim Financial Information

Answer 14

Interim financial information may be condensed or in the form of complete financial statements and may cover a period less than a full year or a twelve month period ending on a date other than the entity’s fiscal year-end.

Question 15

Comfort Letter

Answer 15

A letter from a CPA to a named underwriter which provides negative assurance with to the unaudited financial statements. Positive assurance is provided with respect to a CPA’s independence and compliance to the SEC Act if audited.

Question 16

Different Types of Attest Engagements-SSAEs

Answer 16

AUPs, Prospective FInancial Statements, Pro Forma Financial Statements, Internal Controls, Compliance, MD&A

Question 17

11 attest standards

Answer 17

1) Training and Profiency
2) Independence
3) Performance/Due Diligence
4) Professional adquete knowledge
5) Belief that the subject matter is capable of evaluation
6) Planning and Supervision
7) Appropriate sufficient audit evidence
8) Identify the subject matter
9) Disclose reservations
10) Express conclusions
11) Restrict use of report

Question 18

Conditions of an AUP

Answer 18

1) Independence of Practioner
2) Agreement of the Parties
3) Measurability and Consistency
4) Sufficiency of Procedures
5) Use of report is restricted to specified parties
6) Responsibility of subject matter
7) AUPs of prospective financial statements must include assumptions.