AUD 6.4 - Review Engagements

Question 1

A higher level of service than a preparation or compilation because it results in an expression of limited assurance:

Answer 1

Review engagement

Question 2

In this report it states that the accountant is not aware of any material modifications necessary for the statements to conform with the applicable financial reporting framework:

Answer 2

Review report

Question 3

In this engagement the accountant is not required to obtain an understanding of internal control or assess control risk:

Answer 3

Review engagement

Question 4

What is the objective of an accountant when performing a review engagement?

Answer 4

Obtain limited assurance as a basis for reporting whether the accountant is aware of any material modifications that should be made to the financial statements

Question 5

In a review engagement is an accountant required to be independent?

Answer 5

Yes

Question 6

Who governs the review engagements for issuers?
Who governs the review engagements for nonissuers?
Who governs the review engagements for nonissuers who also perform an annual YE audit?

Answer 6

1. PCAOB
2. SSARS
3. SAS

Question 7

What are the performance requirements applicable to a review? (ULIARCPA)

Answer 7

Understanding with the client
Learn the entity’s business
Inquiries
Analytical procedures
Review
Client representation letter
Professional judgement
Accountant should communicate results

Question 8

To gain an understanding with the client before a review engagement commences, what should be obtained by the accountant?

Answer 8

An engagement letter

Question 9

What does the engagement letter include?

Answer 9

Objectives of the engagement
Management and accountants responsibilities
Limitations of the engagement
Applicable financial reporting framework
Expected form and content of the accountants review report

Question 10

What is the accountant not required to do in a review engagement?

Answer 10

Test internal controls
Perform audit tests
Assess fraud risk
Communicate with the predecessor accountant

Question 11

What are the main areas inquiries with the client should cover?

Answer 11

Significant journal entires or adjustments
Ability to continue as a going concern
Existence of related party transactions

Question 12

These procedures involve developing an expectation based on plausible relationship and comparing recorded amounts or ratios based on recorded amounts to that expectation:

Answer 12

Analytical procedures

Question 13

These procedures are designed to detect relationships and individual items that appear to be unusual nd may indicate material misstatement

Answer 13

Analytical procedures

Question 14

What other procedures belong inquiry and analytical procedures should an accountant also do during a review?

Answer 14

Read the financial statements
Obtain reports of other accountants who have been engaged
Obtain evidence
Consider the effects of any going concern uncertainties or subsequent events

Question 15

Managements failure to provide a representation letter results in…

Answer 15

An incomplete review

Question 16

If accountants cannot perform whatever procedures they deem necessary and therefore those procedures are not accomplished what happens to the review?

Answer 16

The review is incomplete and no review report is issued

Question 17

Documentation of a review should include:

Answer 17

Engagement letter
Significant findings, actions taken, and the bass for the conclusion reached
Inquiry and responses
Communications with other accountants
Management representation letter
Copy of the review financial statements

Question 18

What is not included in documentation of a review?

Answer 18

Tests of internal controls
Audit test work

Question 19

Is the accountants report in a review engagement titled?

Answer 19

Yes, titled: independent accountants review report

Question 20

What two important statements should be included in the introductory paragraph of the accountants review report?

Answer 20

statements that analytical procedures and inquiries were performed and that a review is substantially less in scope than an audit therefore no opinion is expressed

Question 21

What statements are included in managements responsibilities section of the accountants review report?

Answer 21

That they are responsible for the preparation of the financials and the design, implementation, and maintenance of internal controls

Question 22

What should be included in the accountants responsibility paragraph of the accountants review report?

Answer 22

That they conducted the review in accordance with SSARS
That they obtained limited assurance
And that they are independent

Question 23

What key terms are used in the conclusion paragraph of the accountants review report?

Answer 23

That they are not aware of any material modifications

Question 24

Each page of the financial statements in a review report should be marked:

Answer 24

See independent accountants review report