Chapter 2 Set 2 Flashcards
What does the word DISCLAIM mean?
it means DENY, so for example a “disclaim of opinion” is DENYING giving an opinion
An accountant asked to review financial statements on a comprehensive basis of accounting other than generally accepted accounting principles should do what?
modify the review report to reflect the fact that the financial statements were presented on another comprehensive basis of accounting
A standard compilation report implies that?
substantially all disclosures required by GAAP are included in the financial statements
The accountant’s report in a compilation engagement should include a statement that states?
the accountant was not required to perform any procedures to verify the accuracy or completeness of the information provided by management
When audited financial statements are presented in comparative form with unaudited financial statements from a prior year, the auditor should either?
issue his or her report on the unaudited statements or include a separate paragraph in the current year report describing the responsibility assumed for the unaudited statements
A review of the interim financial information of PUBLICLY held company is conducted in accordance with?
PCAOB
What accordance applies to reviews of the financial statements of NONISSUERS?
SSARS (Statements on Standards for Accounting and Review Services)
The objective of a review of interim financial information of a public entity is to provide an accountant with a basis for reporting whether?
Material modifications should be made to conform with generally accepted accounting principles.
An independent accountant’s report is based on a review of interim financial information. If this report is presented in a registration statement, a prospectus should include a statement clarifying that the?
If a report on a review of interim financial information is presented in a registration statement, the prospectus should include a statement that the report is not a “report” or “part” of the registration statement. The accountant should also read the other portions of the registration statement to ensure that his or her name is not used in a way that indicates greater responsibility than s/he intends.
What are letters for underwriters, commonly referred to as comfort letters?
Comments concerning the unaudited interim financial information provide negative assurance as to whether any material modifications should be made to the unaudited interim financial information in order for it to be in conformity with GAAP.
What is usually covered in a typical comfort letter?
In a typical comfort letter, the accountants express an opinion (i.e., positive assurance) concerning the financial statements’ compliance (as to form) with the pertinent accounting requirements of the SEC.
Comfort letters ordinarily are signed by the client’s?
Independent auditor.
When an accountant issues to an underwriter a comfort letter containing comments on data that have not been audited, the underwriter most likely will receive?
Negative assurance on capsule information
Comfort letters are ordinarily addressed to the clients?
Underwriter of securities
When issuing letters for underwriters, commonly referred to as comfort letters, an accountant may provide negative assurance concerning?
The conformity of the entity’s unaudited condensed interim financial information with generally accepted accounting principles (GAAP)
