Audit 2

Question 1

Can you disclaim an opinion on the FS and issue an unmodified opinion on the account s receivable?

Answer 1

Yes, if they are presented separately. And if the accounts receivable does not constitute a major portion of the FS.

Question 2

Is an audit of a single FS permitted?

Answer 2

Yes, as long as it is performed separately or in conjunction with an audit of a complete set of FS.

Question 3

What to include in the auditors report when prepared on a special basis?

Answer 3

• Include that the FS are fairly presented according to that basis
• a note that describes the framework
• a statement that the audit was conducted according to GAAS

Question 4

How do you handle financial statements with a special purpose framework not suitably titled?

Answer 4

You would issue a qualified opinion with a basis for modification paragraph.

Question 5

What is a report on compliance?

Answer 5

it is issued in connection with aspects of regulatory requirements related to audited FS. It can provide only negative assurance

Question 6

What is included in the standard report for summary FS?

Answer 6

• state the opinion expressed on the complete set of FS
• the date of the auditors report
• state that you have audited the FS
• state whether the summary FS are consistent in all material respects to the FS.

Question 7

a special purpose framework is issued in conjunction with…

Answer 7

Compliance reporting requirements to be filed with a specific regulatory agency.

Question 8

What is the title in the auditors report for FS prepared on a comprehensive basis?

Answer 8

Need to include a title of the OCBOA report that states “independent Auditor’s Report”

Question 9

When are modifications made to a standard review report?

Answer 9

Only when there is a departure from GAAP.

Question 10

When FS are compiled may you not issue a compilation report?

Answer 10

No, SSARS requires that when FS are compiled they must issue a compilation report.

Question 11

What does SSARS apply to?

Answer 11

Compilations, reviews, and preparation of financial statements.

Question 12

What is explicitly stated in the intro. paragraph of a review report?

Answer 12

• primarily includes applying analytical procedures to mng. financial data
• make inquiries of company mng.
• review is substantially less in scope than an audit
• does not express an opinion

Question 13

Performance requirements for a review engagement

Answer 13

• understanding with client
• learn client’s business
• inquiry
• analytical procedures
• review other procedures
• client rep. letter
• professional judgement
• accountant communicate results

Question 14

What is included in the auditors compilation report?

Answer 14

intro: state the FS have been compiled, state that it was not reviewed or audited.
Mng. resp:
auditor resp: SSARS issued with AICPA, and objective is to assist mng. They do not provide any assurance.

Question 15

When can an accountant compile FS that omit disclosures required by GAAP?

Answer 15

If the omitted disclosures are not indented to mislead users and if it is clearly indicated in the accountant’s report.

Question 16

What type of inquiries are used in a review?

Answer 16

they ordinarily make inquiries concerning the entities procedures for recording and summarizing transactions.

Question 17

What does the Accounting and Review Service Committee do?

Answer 17

It creates standards concerning unaudited FS of a nonissuer that the entity is not required to file.

Question 18

How do you handle a subsequent event or substantial doubt of going concern in a compilation?

Answer 18

If the accountant becomes aware of these they should request management to consider the effects on the FS and evaluate management’s conclusions and how it would affect the compilation report.

Question 19

How to understand the clients business in a compilation?

Answer 19

This includes

• staff qualifications
• transaction types and frequency
• accounting basis used to prepare FS
• form of accounting records
• FS form and content.

Question 20

What is included in a representation letter?

Answer 20

statement that management has made available all financial records are related data, they are responsible for the design and implementation of programs to prevent and detect fraud, and that they have no events occurred subsequent to the BS date that they are aware of.

Question 21

List some examples of review inquiries

Answer 21

accounting principles/practices used, any unusual or complex transactions, material subsequent events, or sig. journal entries or adjustments.

Question 22

How to handle a review report on an other comprehensive basis?

Answer 22

Modify the review report to reflect the fact that it is not presented by GAAP.

Question 23

Can you issue a compilation report that omits substantially all disclosures required by GAAP?

Answer 23

yes, as long as there is a separate paragraph which alerts readers about the omission of the disclosures.

Question 24

How do you disclose supplemental information with a compilation?

Answer 24

need to include a separate report on the supplemental information that includes a statement that the information is the representation of management and has not been audited or reviewed.

Question 25

How do you clearly indicate the difference in comparable periods between unaudited and audited?

Answer 25

Either the unaudited FS should be revised or the audited FS should include a separate paragraph describing the responsibility assumed for the unaudited FS.

Question 26

Can you accept a compiled comparable FS engagement that omit substantially all disclosures.

Answer 26

If they are being compiled and compared, you cannot accept the engagement because they do not include required GAAP disclosures.

Question 27

When the prior period has been audited the accountant issuing the current period review report should indicate

Answer 27

• that the prior period was audited
• the opinion previously expressed
• the date of the prior report
• and that no auditing procedures have been performed since that report date

Question 28

a review of interim financial information of a publicly held company is conducted according to?

Answer 28

PCAOB standards are for publicly held companies

Question 29

the objective of a review of interim of a public entity is to provide the accountant with a basis for reporting whether…

Answer 29

material modification should be made to conform with GAAP

Question 30

What is included in a standard report for projected financial statements?

Answer 30

a CPA should state that they performed procedures to evaluate managements assumptions.

Question 31

What is a WebTrust engagement?

Answer 31

It is an attestation engagement in which the CPA determines the client’s website to meet defined criteria related to transactions, integrity, info. protection, etc.

Question 32

What are included in prospective financial statements?

Answer 32

• Financial projections (based on what if, limited use)

- Financial forecasts (based on expected conditions and courses of action)

Question 33

What should pro forma Financial statements reference?

Answer 33

they should reference the FS that the historical info. was derived and state whether the FS were audited or reviewed.

Question 34

Do you need sufficient understanding of Internal Controls for an attestation engagement?

Answer 34

No, an understanding of IC is not required

Question 35

What is a partial presentation?

Answer 35

prospective FS that are not appropriate for general use because they omit an essential element.
ex. omit gross profit or net income

Question 36

What is a SysTrust engagement?

Answer 36

an attest engagement that provides assurance on the reliability of the system.

Question 37

What should be disclosed for the preparation of prospective FS in an attest engagement?

Answer 37

They should disclose all significant assumptions that are used to prepare the FS.