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AUD > Becker AUD 2 > Flashcards

Becker AUD 2 Flashcards

1
Q

Current period reviewed & prior period compiled (sic upgrade)

A

Prior period should be updated
&
issued as the last PP of current report

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2
Q

Current period compiled & PP reviewed (svc downgrade)

A
  1. Issue compilation & PP assuming responsibilities for PP
    must include:
    a. date of review in PP
    b. statement saying “no review” after date of review
  2. Reissue PP review report cobbled or seperate
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3
Q

If client is NOT responsible party

A

Report may be issued with sufficient evidence

Report should be restricted.

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4
Q

Do you need written assertion for “Agreed-upon procedures”?

A

does NOT equal written assertion

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5
Q

Who uses general use financial forecast?

A

Statements will be used by parties not negotiating directly with responsible party.

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6
Q

Examination of prospective F/S purpose

A

Express opinion:

  1. Statements are in conformity with AICPA guidelines
  2. Assumptions provide a reasonable basis for F/S
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7
Q

What are the compilation of financial projection report requirements?

A

Aside from 5 standard report requirements:

  1. Description of purpose of projection at end of 1st PP.
  2. Reference to hypothetical assumption in 2nd PP.
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8
Q

Content of compilation report for prospective F/S:

A
  1. ID prospective F/S
  2. Stmt that F/S compiled w/AICPA
  3. Limited in scope & no opinion
  4. statement that prospective results may not be achieved
  5. Practitioner has no responsibility to update report of date of report
  6. Signature
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9
Q

Practitioner is associa. w/prospective F/S by:

A
  1. Compilation (no assurance)
  2. Examination (report used by 3rd party)
  3. Agreed-upon procedures
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10
Q

Compilation of prospective F/S. Do not issue report if:

A

Entity fails to disclose summary of signification assumptions

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11
Q

Written assertion

A

Obtain from mgmt in examinations and reviews

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12
Q

Review report contains:

A
  1. Title
  2. Addressee
  3. Intro
  4. Mgmts resonsibilities
  5. Acct resp.
  6. Engagement results
  7. Sign & Date
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13
Q

Review intro:

A

A
M

I

S
A
D

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14
Q

Mgmt rep letter (for review):

A
  1. F/S are fair
  2. I/C is good
  3. Mgmt is truthful in responses
  4. Completeness
  5. Subsqeunt events disclosed
  6. Mgmts respons to detect fraud
  7. Knowledge of material fraud
  8. Add’l representation (if applicable)
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15
Q

“Review” requirements?

A

U

L
I
A
R

C
P
A

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16
Q

Plain paper report (ex. compilation not used by 3rd party)

A

Use eng. lt signed by mgmt comp report NOT required

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17
Q

Compilation of personal F/S NOT to obtain credit

A

SSARS “not” required

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18
Q

Departure from applicable financial reporting framework

A

Disclosure or withdrawal ONLY

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19
Q

Compiled F/S omitting disclosures ok if:

A
  1. F/S are in conformity with AFRF
20
Q

What is AFRF?

A

Applicable Financial Reporting Framework

21
Q

F/S in compilation MUST have:

A

Reference to “see (independent) Accountant’s compilation report”

22
Q

Accountant’s responsibility @ compilation report?

A
  1. Compilation in accordance w/SSARS

2. “Objective” of compilation is “assist” mgmt with F/S

23
Q

Compilation Report (content)

A
  1. Title
  2. Addressee
  3. Intro
  4. Mgmt Responsibility
  5. Accountants Responsibility
  6. Signature
  7. Date @ completion of compilation
24
Q

Prospective F/S cannot…

A

have review

25
Q

What is limited use financial forecast/projections?

A

F/S will only be used by responsible party

26
Q

What is agreed-upon procedures?

A

Accountant is engaged by client to issue a report of findings

27
Q

If client is responsible party, no written assertion:

A

= Scope limitation consider withdrawing

28
Q

Agreed-upon procedures

A

No assurance, but procedures & finding are listed

29
Q

What are attributes of a REVIEW?

A

Negative assurance, inquiry & analytical

30
Q

What are attributes of examination?

A

Positive opinion, high level assurance

Search, verification, inquiry & analysis

31
Q

Review of interim F/S

NONISSUERS

A

Latest F/S were audited

32
Q

Reporting on comparative F/S:

Disclosures must

A

be the same. Cannot omit on one and not on the other

33
Q

Scope limitations (change from audit to comp/review)

A
  1. Client refuses inquiry w/legal counsel
  2. No mgmt rep letter
    * consider withdrawing*
34
Q

Acceptable reasons for change from audit to review/compilation:

A
  1. Change in client requirement

2. Misunderstanding of nature of engagement

35
Q

Supplemental information for a review:

A
  1. Subjected to analytics and inquiry

OR

  1. Has not been subjected and represent mgmt. Accountant does not express opinion or assurance.
36
Q

Departures from applicable financial reporting framework:

A
  1. Modify report - add explanatory paragraph explaining

2. Withdraw

37
Q

What is the nemonic for compilation report?

A

CAR MR ARSOM

38
Q

What is the nemonic for review report?

A

AM I SAD MR FIR SALA

39
Q

What is CAR MR ARSOM?

A 
C - Compilation is neither an 
A - Audit or 
R - Review
M - Mgmts
R - Responsibility
A - Accountants
R - Responsibility, that report is in accordance with
S - SSARS
O - Objective is to assist
M - Mgmt with F/S
40
Q

What does AM I SAD MR FIR SALA?

A

A review consists of:

A- analytical procedures over 
M- mgmt financial data
I- inquiries
S- significantly less in scope than an
A- audit, therefore, we
D- do not express an opinion
M- mgmt's
R- responsibility
F-fair presentation of F/S
I- internal control
R- responsibility of accountant
S-SSARS by 
A- AICPA
L-limited
A-assurance
41
Q

Compilation requirements

A
  1. Knowledge of industry accounting principles
  2. Understanding of client’s business
  3. Reading F/S
  4. Fraud, illegal acts, going concern & subsequent events
42
Q

Understanding of client’s business:

Compilation

A

1, Staff qualifications

  1. Transaction types and frequency
  2. Accy basis used to prep F/S
  3. Form of accy records
  4. F/S form & content
43
Q

Learn &/or obtain sufficient knowledge of the entity business?

A
  1. knowledge of ace principles
  2. Understand of client’s business
  3. Not required to test:
    Internal Control
    Perform audit test
    Assess Fraud risk
    Communicate w/pred. auditor
  4. Design review procedures
44
Q

Compliance attestations for:

A
  1. Agreed upon procedures - stmt: evaluate entity’s compliance
  2. Examination - stmt: exam does NOT mean legal determination on compliance
45
Q

What are pro forma F/S requirements?

A
  1. Examined or reviewed
  2. Obtain mgmt rep letter
  3. Report should ref. F/S derived & if F/S were audited/reviewed
46
Q

When should we modify the exam opinion?

A
  1. AICPA guidelines not followed
  2. Significant assumption are NOT disclosed
  3. Basis not reasonable
  4. Scope limiation
47
Q

Agreed-upon procedure conditions:

A 
I- independence
A-agreement of parties
M-measureability & consistency
S-sufficiency of the procedures
U-use of report - restricted
R-responsibility of subject matter
E-engagement to perform agreed-upon procedures on prospective financial

AUD (3 decks)

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