AUD 1 Flashcards
The standard report issued by a CPA after reviewing the financial statements of a nonissuer in accordance with Statements on Standards for Accounting and Review Services (SSARS) should state that the CPA:
is not aware of any material modifications that should be made to the financial statements
A practitioner is engaged to express an opinion on management’s assertion that the square footage of a warehouse offered for sale is 150,000 square feet. The practitioner should refer to which of the following sources for professional guidance?
Statements on Standards for Attestation Engagements
The objective of a Section 70, Preparation of Financial Statements, engagement in accordance with the Statements on Standards for Accounting and Review Services (SSARS) is:
to prepare the financial statements in accordance with an applicable financial reporting framework
What is the definition of fraud in an audit of financial statements?
An intentional act that results in a material misstatement in financial statements that are the subject of an audit
The inability to complete which of the following activities most likely would prevent an accountant from accepting and completing an engagement for a review of financial statements performed in accordance with the Statements on Standards for Accounting and Review Services (SSARS)?
Performing inquiries and analytical procedures
How do the OMB’s Uniform Guidance rules define a subrecipient?
As a nonfederal entity that expends federal awards received from another entity to carry out a federal program
The regulatory body that has the primary authority to develop requirements for performing federal program compliance audits in accordance with the Single Audit Act is:
the Office of Management and Budget (OMB)
The standard compilation report includes which statement or phrase?
The objective of a compilation is to assist management in presenting financial information in the form of financial statements
An accountant is required to comply with the provisions of the Statements on Standards for Accounting and Review Services (SSARS) when performing which of the following tasks?
Preparing financial statements of a nonissuer
An exception to the “percentage of coverage” rule in the OMB’s Uniform Guidance rules allows an auditor to reduce the scope of the audit when the entity is determined to be low risk. For an entity that meets the criteria for a low-risk entity, the percentage of federal expenditures covered by the audit can be reduced as low as:
20%
The OMB’s Uniform Guidance rules contain a “percentage of coverage” rule that requires the auditor of entities receiving federal financial support who do not meet the criteria for low risk to test major programs that, in the aggregate, encompass at least:
40% of federal expenditures.
In an audit of a nonprofit organization under the Uniform Guidance rules, an auditor must comply with all of the following, except:
correspond with all individuals or entities that have received or made use of the federal award funds and determine the appropriateness of such distributions.
When performing a financial statement audit of a nonpublic, nonprofit entity in conformance with generally accepted government auditing standards, which of the following best describes the standards that the independent auditor must comply with on the engagement?
Generally accepted government auditing standards and generally accepted auditing standards issued by the AICPA
Which of the following statements is correct regarding a review engagement of a nonpublic company’s financial statements performed in accordance with the Statements on Standards for Accounting and Review Services (SSARS)?
A review provides an accountant with a basis for expressing limited assurance on the financial statements.
A compilation of financial statements in accordance with the Statements on Standards for Accounting and Review Services is limited to presenting:
information in the form of financial statements that is the representation of management.
