Chapter 2 Set 1 Flashcards
If a CPA auditor has been asked to report on a single financial statements, can they accept this engagement?
An audit of a single financial statement is permitted under U.S. GAAS. An audit of a single financial statement can be performed as a separate audit or in conjunction with an audit of the complete set of financial statements.
When reporting on financial statements prepared in conformity with a basis of accounting other than GAAP, the auditor should include what?
emphasis-of-matter paragraph that states that the special purpose framework is a basis of accounting OTHER than GAAP
Financial statements prepared in accordance with a comprehensive basis of accounting other than GAAP that are not suitably titled require a what?
qualified opinion with a basis for modification paragraph
The auditor’s report on summary financial statements derived from audited statements should indicate what?
(1) that the CPA audited and expressed an opinion on the complete financial statements
(2) the date of the auditor’s report on the complete financial statements
(3) the type of opinion expressed
(4) whether, in the auditor’s opinion, the information set forth in the summary financial statements is consistent, in all material respects, with the audited financial statements from which it was derived.
What title would be considered suitable for financial statements that are prepared on a cash basis?
Non-GAAP statements should be suitably titled. For example, instead of an income statement, an appropriate cash basis financial statement title might be “statement of revenues collected and expenses paid.”
A report on a client’s compliance with a regulatory requirement, assuming the report is prepared based on a financial statement audit of the complete financial statements, would contain what language?
Restricted language
SSARS requires compiled financial statements to be accompanied by what?
a compilation report
When is an accountant required to comply with the provisions of Statements on Standards for Accounting and Review Services?
when engaged to prepare, compile, or review the financial statements
Is an opinion issued with a review report?
No
Financial statements reviewed by an accountant should be accompanied by a report stating that?
a review is substantially less in scope than an audit
Situations where SSARS does not apply is when the accountant prepares financial statements…?
- when an accountant prepares personal financial statements for inclusion in written personal financial plans
- solely for submission to taxing authorities,
- in conjunction with litigation services that involve pending or potential legal or regulatory proceedings,
- in conjunction with business valuation services.
An accountant may issue a compilation report for a client’s financial statements that omit what?
all required GAAP disclosures, provided the omission is not intended to mislead financial statement users and the omission is clearly indicated in the accountant’s report
The authoritative body designated to promulgate standards concerning an accountant’s association with unaudited financial statements of an entity that is not required to file financial statements with an agency regulating the issuance of the entity’s securities is the?
Accounting and Review Services Committee
How does the objective of a review of financial statements differ from the objective of a compilation engagement?
In a review engagement, accountants provide limited assurance, but a compilation expresses no assurance
The standard report issued by an accountant after reviewing (a review report) the financial statements of a nonissuer states that what?
the review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management
