MCQ AUD 2.2

Question 1

Review report

Answer 1

Need to be independent. Need not assess material misstatement or Required to Discover significiant deficiencies in the entitys internal control.An opinion is not issued wth the review report.If there is departure from GAAP it should be stated in a separate paragraph. Does not explicitly states about limited assurance. Should state that review is less in scope than audit. should state Review principally consists of inquiries of company personal and analytical procedures applied to financial data. An accountant may issue a review report if the scope of the inquiry and analytical procedures has not been restricted. No opinion may be given on a review engagement. Inquiring of management regarding subsequent events is an appropriate review procedure. Review report language compares review with an audit not a compiliation. Review provide negative assurance

Question 2

An accountant can compiled the issue of the financial statements

Answer 2

But he can decline a compiliation report if the report is not be used by a third party also each page of the financial statements is clearly marked to restrict its use

Question 3

A compiliation

Answer 3

Need not require management representation letter. No discussion of the scope of accountants procedures in a compiliation report. Inquiry is not a part of compiliation. Should be accompanied with accountant review stating that the accountant conducted the compiliation in accordance with statements on standerds for accounting and review services. The object of the compilation is to assist management in presenting financial information in the form of financial statements. An accountant may issue a compiliation report for a clients financial statements that omit all required GAAP disclosures provided omission is not intended to mislead financial statement users and the omission is clearly indicated in accountant report. No assurance not even negative assurance is provided in a compiliation report. Date of report should be date of completion of compiliation

Question 4

When the accountant is required to comply with PRovision of SSARS

Answer 4

When presenting to the client or third parties financial statement the accountant has prepared

Question 5

Accountant may assis in preparing personal financial statements not required to follow gaap

Answer 5

It is it is not used to obtain any credit

Question 6

Analysis of FS

Answer 6

Ratio analysis is used to review B/S accounts. Trend analysis is used to Income statement accounts. Risk analysis would not be used to evaluate relationship between B/S accounts.