Missed CPA Questions

Question 1

For SSARS, A section is relevant to the engagement when

Answer 1

the section is in effect and the circumstances addressed by it exist

Question 2

For SSARS, an accountant should comply with each requirement of the relevant section unless

Answer 2

the requirement is not relevant because it is conditional, and the condition does not exist

Question 3

Rare Circumstance: relevant presumptively mandatory requirement is for a specific procedure and that procedure would be ineffective in achieving the intent of the requirement. In these circumstances, the accountant should ___

Answer 3

perform alt procedures to achieve intent of requirement.

Question 4

For audit procedures related to the inspection of significant contracts or agreements the auditor should ___

Answer 4

include abstracts (summaries) or copies of those contracts or agreements in the audit documentation.

Question 5

The auditor should include ___or copies of those ____ in the audit documentation whether or not they would be needed by an experienced auditor.

Answer 5

Abstracts

Copies of contracts/agreements

Question 6

PCAOB adopted ____ as its interim standards

Answer 6

GAAS

Question 7

Interim Standards are authoritative

Answer 7

False - they are not

Question 8

Interim standards were issued by

Answer 8

AICPA

Question 9

The office issuing the auditor’s report on a public company is required to obtain records of all internal controls over financial reporting found to be ineffective by other auditors

Answer 9

False – they are not

Question 10

Documentation regarding all ______and ______in internal control over financial reporting including______ is required

Answer 10

Sig Deficiencies
Material Weaknesses
Distinction between the two categories

Question 11

documentation related to the work performed by ____ ____ must be obtained, and reviewed and retained, prior to the report release date by the office issuing the auditor’s report

Answer 11

Other auditors

Question 12

Direct or indirect Financial Interest?

An investment held in a retirement plan
An investment held in a blind trust
investment held through a regulated mutual fund
An investment held through participation in an investment club

Answer 12

Direct
Direct
Indirect
Direct

Question 13

In explaining the potential effects of the significant deficiencies and material weak­nesses, how does the auditor explain the effects

Answer 13

Only potential effects – don’t quantify (go in depth)

Question 14

Due professional care is ordinarily interpreted to require

Answer 14

Critical review of judgment at every level of supervison

Question 15

a member who serves as a client’s stock transfer or escrow agent, registrar, general counsel or its equivalent is independent

Answer 15

NO THEY AINT

Question 16

General rule of thumb question: Capital leases mean you are independent

Answer 16

no – its operating leases

Question 17

To evaluate such judgments and conclusions, the engagement quality reviewer should

Answer 17

hold discussions with the engagement partner and other members of the engagement team and review documentation.

Question 18

Complying w/ laws & regulations is an element of CPA firm’s quality control system

T/F

Answer 18

False

Question 19

Relevant ethical requirements is an element of what

Answer 19

quality control system

Question 20

An engagement quality review and concurring approval of issuance are required for ___

Answer 20

Engagements & Reviews

Question 21

An engagement quality review and concurring approval of issuance are required for engagements are conducted pursuant to the standards of the _____

Answer 21

PCAOB

Question 22

For PCAOB, A complete and final set of audit documentation should be assembled for retention not more than ____

Answer 22

45 days

Question 23

Independence is not impaired if a member obtains a loan from an entity that, at the time of obtaining the loan, is a client requiring independence,

Answer 23

False - it would be impaired

Question 24

If a cpa obtains a loan during a period where he doesn’t have to be independent during the time obtaining the loan and he is then asked next yr to audit those F/S - is he independent

Answer 24

Yes, because the CPA was not required to be independent at the time the loan was granted

Question 25

Nonaudit services with revenues in aggregate of ___ do NOT need approval from audit committee and without impairing independence

Answer 25

less than 5%

Question 26

When do you need to understand the company’s industry

Answer 26

after accepting engagement

Question 27

A close relative who is not an immediate family member may have an ____ in an auditor’s client without imparing the auditor’s independence.

Answer 27

immaterial direct financial interest

Question 28

A first cousin is considered a close relative by the interpretations for purposes of independence issues.

Answer 28

FALSE - no they aint

Question 29

A sibling’s ____ to an employee of a client generally is not considered a financial interest in the client.

Answer 29

loan

Question 30

An auditor would evaluate the reasonableness of a client’s accounting estimates and inquire of a client’s attorney regarding unrecorded claims when ____

Answer 30

collecting evidence

Question 31

US GAAS are codified into ___ sections

Answer 31

AU

Question 32

US GAAS addresses the responsibilities of the auditor that may exist in legislation or regulations

Answer 32

FALSE - no they dont

Question 33

If a partner leaves to work at a different place and the firm audits that place 2 years later, the partner must disclose ___

Answer 33

nothing. they dont have to disclose shit

Question 34

An auditor doesn’t have to obtain knowledge of the intended users

Answer 34

FALSE

Question 35

The auditor is _____ to have an understanding of the certification required by the appropriate auditing or accountancy board of the other country.

Answer 35

not required

Question 36

The auditor’s opinion on whether a previously reported material weakness continues to exist may be expressed as the

Answer 36

material weakness no longer exists

Question 37

The PCAOB’s guidance does not use the terms ____ opinion or ____ opinion it just uses ______

Answer 37

It just uses opinion or the auditors opinion

Question 38

To discover understated (unrecorded) sales, the auditor would most likely trace transactions from ___ to ____

Answer 38

from shipping documents to sales invoices

Question 39

Vouching from sales invoices to shipping documents (the opposite direc­tion) is a test to substantiate that sales are not _____

Answer 39

Overstated

Question 40

A compilation does include performing inquiries, analytical procedures

Answer 40

false

Question 41

When determining whether related-party transactions have been properly accounted for in the financial statements, the auditor should be most concerned that

Answer 41

he financial statements recognize the substance of the transactions

Question 42

The payroll clerk distributes signed payroll checks. Undistributed checks are returned to the payroll department. is what

Answer 42

weakness in I/C

Question 43

In an audit of financial statements, an auditor’s primary consideration regarding an internal control policy or procedure is whether the policy or procedure

Answer 43

Affects management’s financial statement assertions

Question 44

The word ____ is used to impose a requirement in the IESBA Code of Ethics for Professional Accountants.

Answer 44

shall

Question 45

Opportunities for on-the-job training as well as continuity and periodic rotation of personnel are all valid factors of

Answer 45

Engagement personnel requirements

Question 46

The AICPA’s Code of Professional Conduct states that a distinguishing mark of a profession is its

Answer 46

acceptance of responsibility to the general public.

Question 47

The AICPA’s Code of Professional Conduct states that a distinguishing mark of a profession is its

Answer 47

acceptance of responsibility to the general public.

Question 48

express opinion in agreed upon procedure?

Answer 48

no

Question 49

A CPA’s report on agreed-upon procedures should contain An acknowledgment of responsibility for the sufficiency of the procedures

Answer 49

False

Question 50

A CPA’s report on agreed-upon procedures related to management’s assertion about an entity’s compliance with specified requirements should contain a restricted or unrestricted report

Answer 50

restricted

Question 51

An engagement to prepare financial statements in accordance with SSARS is what type of service

Answer 51

non-attest

Question 52

Obtaining an understanding of the entity sufficient to identify areas in the financial statements where there is a greater likelihood that material misstatements may arise is part of the knowledge requirement for a compilation engagement.

Answer 52

false - review

Question 53

All SSARS engagements require the agreed-upon terms of the engagement to be documented in an

Answer 53

engagement letter

Question 54

as a condition for accepting any engagement to be performed in accordance with SSARS, an accountant is required to do all of the following except

Answer 54

determining independence – compilation you dont have to be independent

Question 55

If independence is impaired during a compilation you should ____

Answer 55

modify the report

Question 56

What three things are included in explanatory material codified in SSARS?

Answer 56

Understanding of requiremnet/defintion
What its intended to cover
examples of procedures

Question 57

Explanatory material in SSARS codifications will impose additional requirements

Answer 57

false

Question 58

The authoritative body designated to promulgate standards for Review/compilation is the FASB

Answer 58

False – its AICPA

Question 59

The authoritative body designated to promulgate standards for audits for issuer are ____ — non issuers?

Answer 59

Issuer - PCAOB

Nonissuer - GAAS

Question 60

When can you not opine on supplemental f/s?

Answer 60

when they’re not readily available.

Question 61

Is available upon request supplemental f/s ok to opine on?

Answer 61

No – they’re not readily available

Question 62

If the auditor issued an audit report on the financial statements that contained an adverse opinion nor a disclaimer of opinion, you CANNOT do what regarding supplemental f/s

Answer 62

opine on the supplemental f/s

Question 63

The correction of a material misstatement in the previously issued financial statements of an issuer should be recognized where

Answer 63

explanatory paragraph following the opinion paragraph

Question 64

The correction of a material misstatement in the previously issued financial statements of a non-issuer should be recognized where

Answer 64

explanatory paragraph after the opinion paragraph if the correction involved an error in accounting principle

Question 65

If a CPA concludes that unaudited financial statements on which the CPA is disclaiming an opinion also lack adequate disclosure, the CPA should suggest appropriate revision. If the client does not accept the CPA’s suggestion, the CPA should

Answer 65

Describe the appropriate revision to the financial statements in the accountant’s disclaimer of opinion

Question 66

Where should the cpa describe appropriate reivisons to the F/S in the audit report

Answer 66

accountants disclaimer of opinion

Question 67

Where should the cpa describe appropriate reivisons to the F/S in the audit report

Answer 67

accountants disclaimer of opinion

Question 68

uditor most likely would be required to report findings directly to outside parties when

Answer 68

management fails to satisfy legal or regulatory requirements to report such information to external parties specified

Question 69

ield work requirements for performance audits include

Answer 69

planning the audit; supervis­ing staff; obtaining sufficient, appropriate evidence; and preparing audit documentation. Reasonable assurance, significance, and audit risk

Question 70

When developing the group audit plan, the group engagement team is required

Answer 70

to determine whether to reference each component auditor

Question 71

An auditor reads the cover letter accompanying the document containing the audit report and audited financial statements and identifies a material inconsistency with the financial statements. The auditor determines that the financial statements do not require revision. Which of the following actions should the auditor take?

Answer 71

nothing

Question 72

The factors affecting sample size when using classical variables sampling are

Answer 72

(1) desired precision, (2) desired sample reliability, (3) variability among item values in the population (the estimate of the population’s standard deviation) and (4) population size.

Question 73

___plans require special design to deal with negative balances and zero balances because sample selection is based on the cumulative sum of dollars of the population

Answer 73

PPS

Question 74

____ techniques are unaffected by either zero balances or negative balances.

Answer 74

Classical Variable

Question 75

The number of items in the population has virtually___ on the sample size unless the population is ____

Answer 75

No effect

Very small

Question 76

An increase in the tolerable rate of deviation would allow a ___ in sample size

Answer 76

Smaller

Question 77

Sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate., you do what

Answer 77

Modify control risk - increase sample size

Question 78

Increase in tolerable misstatement does what to sample size

Answer 78

decrease

Question 79

The clock card or time ticket would provide evidence for the __assertion

Answer 79

completeness

Question 80

Payroll registry would provide evidence for the ___ assertion

Answer 80

existence

Question 81

Published dividend records provide the strongest evidence supporting dividends earned on publicly-held investments. from ____ companies

Answer 81

investment services

Question 82

___involves the theft of one customer’s payment and subsequently crediting the customer with payment made by another customer.

Answer 82

Lapping

Question 83

comparison of remittance dates would detect the scheme __

Answer 83

lapping

Question 84

he retention period should not be shorter than five years from the ____

Answer 84

report release date;

Question 85

___ provide a psychological deterrent to employees considering defalcations (stealing)

Answer 85

fidelity bonds

Question 86

bank safe-deposit box prefer what type of control

Answer 86

dual-control (two people have access)

Question 87

the auditor should or should not communicate their effect on the auditor’s overall risk assessment.

Answer 87

should not

Question 88

how do auditors communicate overall risk assesssment to gov

Answer 88

they dont

Question 89

Management and governance are are mutually exclusive.

Answer 89

no they are not

Question 90

Why does GAAS establish two categories of laws and regulations?

Answer 90

GAAS requires a different auditing approach for each category because the auditor has different responsibilities for each.

Question 91

or the provisions of those laws and regulations generally recognized to have a direct effect on the determination of material amounts and disclosures in the financial statements, the auditor’s responsibility

Answer 91

is the same as that for misstatements caused by fraud or error—to obtain sufficient appropriate audit evidence

Question 92

risk factor that relates to misstatements arising from misappropriation of assets?

Answer 92

A lack of independent checks

Question 93

Performance materiality is only 1 amount

Answer 93

False, can be more than 1

Question 94

During the planning phase of an audit the auditor should not consider whether specialize skills are needed in certain arease

Answer 94

false - yeah they should

Question 95

Written rep letter is in the performance part of the audit, not planning

Answer 95

true

Question 96

Make inquiries of the client’s in-house legal counsel us during what phase of the audit

Answer 96

planning

Question 97

Confirm that the financial statements can be reconciled to the accounting records is during the planning phase

Answer 97

false

Question 98

US generally accepted auditing standards measures

Answer 98

Measures of the audit quality and the objectives to be achieved

Question 99

US GAAS must be followed by CPAs per the

Answer 99

AICPA’s Code of Professional Conduct

Question 100

auditor strives to achieve independence in appearance in order to

Answer 100

serve public interest

Question 101

Sucsessor Auditor should review wp relating to ___ and ___

Answer 101

Contingencies & I/c

Question 102

an accountant not have a duty to disclose that fraud or noncompliance with laws and regulations may have occurred to parties outside of the entity to a predecessor

t/f

Answer 102

false

Question 103

an accountant not have a duty to disclose that fraud or noncompliance with laws and regulations may have occurred to parties outside of the entity when receiving a subpoena

t/f

Answer 103

true

Question 104

PCAOB can issue / adopt ___ relating to the ____

Answer 104

standards relating to prep of audit reports

Question 105

Issuer’s audit committee is responsible for the public accounting firms Compensation

T/F

Answer 105

True

Question 106

Members of issuer’s audit committee can engage independent ___ to carry out their ___

Answer 106

counsel - duties

Question 107

A member of an issuer’s audit committee may NOT accept ____

Answer 107

fee outside being a member of the board from the CPA firm - even consulting/advisory

Question 108

A member of a group engagement team will not be subject to discipline if a foreign component auditor departed from the ethics requirement as long as:

Answer 108

the foreign component auditor accordance w/ requirements set forth in the IESBA’s Code of Ethics for Professional Accountants.

Question 109

can a firm disclose confidential info to an insurance carrier if its regarding a claim

Answer 109

yes

Question 110

Significant deficiencies related to the internal control design exist, but none is deemed to be a material weakness. - should this be in an audit report?

Answer 110

yes

Question 111

An auditor’s report on significant deficiencies should include a ____ on the distribution of the report.

Answer 111

restriction

Question 112

What type of opinion can you express during a review?

Answer 112

no opinions

Question 113

where in the audit report contain a statement that the engagement is substantially less in scope than an audit.

Answer 113

No where - you cant do that

Question 114

Low level management fraud you report this to ____

Answer 114

appropriate level of management

Question 115

Factors to consider regarding the integrity of a client include

Answer 115

the nature of the client’s business/practice

info towards attitudes of management/gov/owners

Question 116

The AICPA states that you cannot follow another country’s rules if practicing outside USA

Answer 116

FALSE - yeah you can

Question 117

Officer commits fraud - who do you talk to

Answer 117

gov

Question 118

who takes responsibility for Agree upon procedure

Answer 118

management/client

Question 119

any disclosure of a client company name by a CPA specializing in _____procedures is a violation of client confidentiality under the AICPA Code of Professional Conduct

Answer 119

bankruptcy

Question 120

The auditor’s engagement letter should address such matters as the ____

Answer 120

objective

Question 121

A compilation areport to the audit committee that is not sent to the stockholders.is OK

Answer 121

True

Question 122

Accepting an engagement to compile an entity’s financial projection most likely would be inappropriate if the projection is to be included in:

Answer 122

on offering statement of the entity’s initial public offering of common stock

Question 123

For compilations, you need a written management rep letter

Answer 123

false

Question 124

a firm does not need to consider this when adopting policies for retention of engagement documentation?

Answer 124

ability to retrieve and access the engagement documentation in perpetuity

Question 125

ach issuer disclose whether or not the audit committee is comprised of at least one member who is a ___

Answer 125

financial expert

Question 126

Segregation of duties between receiving cash and posting the accounts receivable ledger would stop what

Answer 126

lapping

Question 127

Part of gaining an understanding of an entity’s accounting practices is obtaining an adequate understanding of the qualifications of

Answer 127

accounting personnel

Question 128

Preventative controls are

Answer 128

more cost beneficial than detective controls

Question 129

Preventive controls place ___ on and require ____ of employee activities to reduce the occurrence of errors or deviations

Answer 129

restrictions

documentation

Question 130

extent and nature of the risks to internal controls associated with IT, an auditor should consider Whether IT controls are automated or manual in nature

Answer 130

FALSE

Question 131

who should approve AR write offs

Answer 131

treasurer

Question 132

An auditor tests an entity’s policy of obtaining credit approval before shipping goods to customers in support of management’s financial statement assertion of:

Answer 132

valuation

Question 133

An auditor who uses a transaction cycle approach to assessing control risk most likely would test control activities related to transactions involving the sale of goods to customers with the:

Answer 133

collection of AR

Question 134

A service auditor’s report expressing an opinion on a description of controls placed in operation at a service organization should contain a description of the

Answer 134

scope & nature of service auditor’s procedures

Question 135

Observing an entity’s employee prepare the schedule of past due accounts receivable is a test of controls that would help an auditor in assessing the level of control risk.

Answer 135

true

Question 136

Which of the following could be difficult to determine because electronic evidence may not be retrievable after a specific period?

Answer 136

timeing of procedures

Question 137

During the audit of a new client, the auditor determined that management had given illegal bribes to municipal officials during the year under audit and for several prior years. The auditor notified the client’s board of directors, but the board decided to take no action because the amounts involved were immaterial to the financial statements. Under these circumstances, the auditor should:

Answer 137

consider withdrawing

Question 138

an inherent limitation of internal controls is

Answer 138

collusion

Question 139

A compilation accountant is required to gain an understanding of related to the entity and its environment to plan the engagement in conformance with the Statements on Standards for Accounting and Review Services (SSARSs), including:

Answer 139

sig. accounting policies

Question 140

inherent limitation in i/c includes

Answer 140

management override
collusion
mistakes

Question 141

Two assertions for which confirmation of accounts receivable balances provides primary evidence are

Answer 141

right and obligation , existence

Question 142

After determining that a related party transaction has, in fact, occurred, an auditor should:

Answer 142

obtain understanding

Question 143

For relate party transactions, the auditor should substantiate that the transaction was consummated on terms equivalent to an arm’s-length transaction

Answer 143

false - its impossible

Question 144

If a practitioner does not possess an understanding of the client’s business and the industry, he/she can review information obtained from external sources such as:

Answer 144

trade and economic journals; reports by analysts, banks, or rating agencies; or regulatory or financial publications.

Question 145

. If a practitioner does not possess an understanding of the client’s business and the industry, the auditor should issue a disclaimer, because the scope of work was not sufficient to express an opinion.

Answer 145

false

Question 146

In order to assess control risk at a low level would mean there is an effective functioning of _____ and thus the auditor would initially focus on the _____

Answer 146

application controls

general controls

Question 147

knowledge of the client’s “industry, regulatory, and other factors” includes an understanding of all of the following, except entities accounting polices

Answer 147

true

Question 148

acceptable level of detection risk increases means what

Answer 148

you can emphasize more reliance on it. This is a good thing.

Question 149

As the acceptable level of detection risk increases, an auditor may change the:

Answer 149

timing of substantive procedures from YE to interim

Question 150

Sound internal control procedures dictate that immediately upon receiving checks from customers by mail, a responsible employee should:

Answer 150

prepare a duplicate listing of checks received

Question 151

A type 2 report

Answer 151

is a service auditor’s report on whether controls were suitably designed to achieve specified control objectives,

Question 152

n understanding the control environment, the auditor should concentrate on the implementation of controls because

Answer 152

controls may be established, but not acted upon

Question 153

In an audit of financial statements, an auditor’s primary consideration regarding an internal control policy or procedure is whether the policy or procedure:

Answer 153

affects management f/s assertations

Question 154

When performing risk assessment procedures to obtain an understanding of internal controls, you perform analytical procedures

Answer 154

false

Question 155

Which of the following is most likely to be a response to a pervasive risk at the financial statement

Answer 155

ssigning more experienced staff or those with specialized skills such as specialists, providing more supervision, or incorporating additional elements of unpredictability

Question 156

Which of the following is the primary reason that many auditors hesitate to use embedded audit modules?

Answer 156

auditor has to be involved w/ the system design of the application

Question 157

An embedded audit module is a section of program code that is included in the client’s application program in order to collect audit data for the auditor.

Answer 157

true

Question 158

The nature of an entity refers to the entity’s

Answer 158

operations

Question 159

The entity’s industry is experiencing declining customer demand would cause the auditor a heignted risk of

Answer 159

RMM

Question 160

Inherent risk (IR) is the____to a misstatement that could be material, before I/C

Answer 160

susceptibility of a relevant assertion

Question 161

The use of ____requires the auditor to use a computer simulation that mimics the client’s production programs.

Answer 161

parallel simulation

Question 162

an event that could introduce or change financial reporting risks?

Answer 162

New or revamped information systems

Question 163

Materiality levels are generally considered in terms of the smallest aggregate level of misstatement that could be considered material to any one of the financial statements.

Answer 163

true

Question 164

What is the overall primary objective of developing a detailed audit plan on a financial statement audit?

Answer 164

Design procedures to reduce risk to an acceptably low level.

Question 165

Comparing daily sales summaries with control totals of invoices is the best procedure for ensuring that invoices for goods shipped are recorded in the ____

Answer 165

Sales Journal

Question 166

Planning memo & I/C questionnaire are required ocumentation for auditors to keep

Answer 166

nope

Question 167

. Restrictions on retained earnings resulting from loans, agreements, or state law are items that should be described or disclosed in the financial statements. This deals with what assertion

Answer 167

disclosure & presentation

Question 168

What is the name of the common procedure applied to test the reasonableness of significant accounting estimates in a financial statement audit?

Answer 168

Retrospective look-back

Question 169

Application controls can be performed by IT (automated) or by individuals

Answer 169

True

Question 170

Who is responsible for the prevention and detection of fraud?

Answer 170

management/gov

Question 171

The acceptable level of detection risk is inversely related to the:

Answer 171

assurance provided by substantive tests.

Question 172

Thus, the acceptable level of detection risk relates to the auditing procedures applied through

Answer 172

substantive tests

Question 173

As the assurance provided by substantive tests becomes or is expected to become ____, the acceptable level of detection risk decreases, or vice versa

Answer 173

higher

Question 174

What is the primary purpose of reviewing conflict-of-interest statements signed by members of management?

Answer 174

identify related parties

Question 175

An auditor who initially detects fraud ultimately makes the legal determination of whether fraud has actually occurred.

Answer 175

false

Question 176

The classes of transactions in the issuer’s operations that are significant to the issuer’s financial statements

this is an example of what component of I/C

Answer 176

Information and Communication

Question 177

The specialist does not need to be independent of the client

Answer 177

True

Question 178

The auditor should be concerned with the professional credentials, reputation, and experience of the specialist.

Answer 178

true

Question 179

. In other words, the auditor should assess the risk that the actuary’s ____might be impaired.

Answer 179

objectivity

Question 180

Personnel with responsibilities that impact financial reporting systems, management, those charged with governance, and regulatory authorities should be understood when understanding the information and communication component of internal control for the purpose of having a basis for assessing risk of material misstatement on a financial statement audit of a nonissuer

Answer 180

true

Question 181

Processes and data may be altered or manipulated to generate fraudulent results. is what primary risk

Answer 181

primary risk of IT

Question 182

To compile financial statements, the accountant should possess a general understanding of the nature of the entity’s operations. This most likely not include understanding the Stated qualifications of the entity’s accounting personnel

Answer 182

false - yes it will

Question 183

An auditor may choose to rely or not rely on the work of another auditor, In either case, the auditor should inquire as to the reputation of the other auditor.

Answer 183

True

Question 184

An inherent limitation to internal control is the fact that controls can be circumvented by management override.

Answer 184

true

Question 185

Inquiring of the client’s legal counsel concerning pending litigation is performed during the field work phase

Answer 185

true

Question 186

Comparing the financial statements to anticipated results is done at the planning phase

Answer 186

true

Question 187

Stratified and variable sampling are used in the substantive testing of account balances and details of transactions.

Answer 187

true

Question 188

he sample size of a test of controls varies inversely with:

Answer 188

Tolerable rate

Question 189

The auditor should obtain representations from management stating its compliance with all contractual agreements that may affect the financial statements

Answer 189

TRUE

Question 190

Applying substantive tests at an interim date, rather than at the balance sheet date, increases ___that a misstatement may occur between the interim and year-end dates and exist at the balance sheet date.

This increase in risk is the

Answer 190

audit risk

incremental audit risk.

Question 191

A portion of a client’s inventory is in public warehouses. Evidence of the existence of this merchandise can most efficiently be acquired through which of the following methods?

Answer 191

confirmation

Question 192

Analytical procedures used in planning an audit generally use data aggregated at a low level.

Answer 192

false – high level

Question 193

The primary source of information to be disclosed regarding litigation, claims, and assessments is:

Answer 193

client’s management.

Question 194

The procedure, “The accountant should perform specific procedures to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern,” is:required for what type of engagement(s)

Answer 194

audit only

Question 195

Population size is not an important factor in determining sample size for attribute sampling.

Answer 195

true

Question 196

Tolerable error rate and the expected error rate are important factors in determining sample size.

Answer 196

true

Question 197

e procedures an auditor performs to obtain evidence about the existence, ownership, and completeness of investments will vary depending on both the type of investments involved and the auditor’s assessment of audit risk.

Answer 197

True

Question 198

A faxed reply directly to the auditor may qualify as a positive confirmation, assuming it is received directly by the auditor. is sufficient enough for a confirmation.

Answer 198

No – have to determine the validity of the fax. . After validation, auditor can use the confirmation

(fax, e-mail, oral, or other electronic means applies)

Question 199

the choice of analytical procedures as a substantive test, when compared to the use of the tests of details of transactions and amount balances, depends “on the auditor’s professional judgment about the expected effectiveness and efficiency of the available audit procedures.”

Answer 199

true

Question 200

For analytical procedures, Relationships involving only balance sheet accounts tend to be more predictable than relationships involving income statement accounts.

Answer 200

False - Income statements are more predictable

Question 201

The absence of the original insurance policy on plant equipment most likely indicates the existence of a

Answer 201

lien on the plant equipment.

Question 202

Audit tests must be performed on a____ basis throughout the year in an audit of an entity that processes most of its financial data in____ without any paper documentation.

Answer 202

continual

electronic form

Question 203

Analytical procedures used in planning an audit should focus on: enhancing the auditor’s understanding of the .

Answer 203

client’s business

Question 204

Analytical procedures performed in the overall review stage of an audit suggest that several accounts have unexpected relationships. The results of these procedures most likely would indicate that: additional ___

Answer 204

tests of details are required. / more testing is needed

Question 205

Read the file of correspondence from taxing authorities would help identify __

Answer 205

litigation, claims, and assessments

Question 206

There are three common types of classical variables sampling estimators: mean-per-unit, ratio, and difference.

Answer 206

True

Question 207

mean-per-unit, ratio, and difference. is what

Answer 207

classical variable samples

Question 208

n auditor has responsibility for identifying and responding to risks that there is substantial doubt about the entity’s ability to continue as a going concern for: one year after the date the financial statements are issued or available to be issued. or the amount of time required by the AFRF

Answer 208

true

Question 209

The analysis of repairs and maintenance primarily tests which assertion of property and equipment in a financial statement audit?

Answer 209

Completeness

Question 210

A management representation letter is required for the issuance of a review report. Without this letter from management, the review report will be disclaimed

Answer 210

Flase – you cannot do a review report

Question 211

After issuing an auditor’s report, an auditor becomes aware of facts that existed at the report date that would have affected the report had the auditor known of the facts at the time. What is the first thing the auditor should do?

Answer 211

Determine whether there are persons currently relying on, or likely to rely on, the financial statements and whether those persons would attach importance to the information

Question 212

probability-proportional-to-size (PPS) sampling, also known as dollar-unit sampling controls what

Answer 212

risk of incorrect acceptance/rejection

Question 213

all such mat weaknesses / sig def must be communicated in writing to all stockholders.

Answer 213

NOPE

Question 214

An entity may request an accountant to compile financial statements that omit substantially all the required disclosures

Answer 214

true

Question 215

Management rep letter required for compilation?

Answer 215

Nope

Question 216

Attorney letters are for review and audits only

Answer 216

flase – only audits

Question 217

A CPA has been requested by a former audit client to reissue the auditor’s report for the prior period. Before reissuing the report, the CPA should obtain a

Answer 217

management rep letter

Question 218

A CPA has been requested by a former audit client to reissue the auditor’s report for the prior period. Before reissuing the report, the CPA should:
make inquiries of the former client’s attorney regarding pending litigation., consider whether there is substantial doubt about the former client’s ability to continue as a going concern.

Answer 218

false

Question 219

A management representation letter is written representation from management which affirms
the fair presentation of the financial statements and management’s responsibility for them,

Answer 219

True

Question 220

A management representation letter is written representation from management which affirms’
the completeness of all information provided to the auditor and in the financial statements,

Answer 220

True

Question 221

A management representation letter is written representation from management which affirms
representations relating to recognition, measurement, and disclosure (including the absence of knowledge of fraud or suspected fraud),

Answer 221

True

Question 222

A management representation letter is written representation from management which affirms
information concerning subsequent events.

Answer 222

True

Question 223

Before issuing an unmodified report on a compliance audit, an auditor becomes aware of an instance of material noncompliance occurring after the period covered by the audit. The least appropriate response by the auditor would be to:
issue a qualified compliance report describing the subsequent noncompliance.

Answer 223

true

Question 224

If management refuses to furnish a written representation as part of an examination engagement, the auditor may either withdraw or

Answer 224

disclaim opinion

couldnt issue review report w/o a management rep letter

Question 225

n testing long-term investments, an auditor ordinarily would use analytical procedures to ascertain the reasonableness of the:
completeness of ____

Answer 225

investment income

Question 226

An auditor may achieve audit objectives related to particular assertions by performing ___ proceures

Answer 226

analytical

Question 227

An auditor may achieve audit objectives related to particular assertions by: prepping workpapers

Answer 227

false

Question 228

Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries?

Answer 228

Personnel

Question 229

he personnel department is charged with planning, controlling, and coordinating employees

Answer 229

true

Question 230

cogs/avg inventory is what

Answer 230

inventory turnover

Question 231

What is the most likely course of action that an auditor would take after determining that performing substantive tests on inventory will take less time than performing tests of controls?

Answer 231

only do substantive tests

Question 232

he procedure of an accountant making inquiries concerning actions taken at the board of directors’ meeting is:required for a compilation

Answer 232

false – only review

Question 233

The purpose of the management representation letter is to serve as corroborating evidence with other evidence gathered during the audit. is more than likely from a management representation letter.

Answer 233

true

Question 234

In determining the number of documents to select for a test to obtain assurance that all sales returns have been properly authorized, an auditor should consider the tolerable rate of deviation from the control activity. The auditor should also consider the:
likely rate of deviations and
allowable risk of assessing control risk too high.

Answer 234

Only Rate of deviations

Question 235

“In connection with an audit of our financial statements, management has prepared, and furnished to our auditors, a description and evaluation of certain contingencies.” The foregoing passage most likely is from:

Answer 235

an audit inquiry letter to legal counsel.

Question 236

Key Co. plans to present comparative financial statements for the years ended December 31, 20X1 and 20X2, respectively. Smith, CPA, audited Key’s financial statements for both years and plans to report on the comparative financial statements on May 1, 20X3. Key’s current management team was not present until January 1, 20X2. What period of time should be covered by Key’s management representation letter?

Answer 236

January 1, 20X1, through May 1, 20X3

Question 237

Which of the following management roles would typically be acknowledged in a management representation letter?

Answer 237

Management has the responsibility for the design of controls to detect fraud.

Question 238

n testing controls for operating effectiveness, the risk of assessing control risk too low is called _______, which impacts __________.

Answer 238

beta - effectiveness

Question 239

Management makes representations to the auditor through the audit process. Such representations:can be verbal

Answer 239

yes they can

Question 240

After obtaining an understanding of the internal control and assessing control risk at maximum, an auditor did not want to perform additional tests of controls. The auditor most likely concluded that the:additional evidence to support a reduction in control risk was

Answer 240

not cost beneficial

Question 241

In auditing payroll, the crucial audit concern is: “Are recorded payroll costs accurate and as expected?”

Answer 241

true

Question 242

In auditing payroll, the crucial audit concern is: “Are recorded payroll costs accurate and as expected?”
A comparison of actual to expected is the basis of analytical procedures.

Answer 242

True

Question 243

The auditor’s consideration relating to management’s plans may include the following:
Plans to dispose of assets
Plans to borrow money or restructure debt
Plans to reduce or delay expenditures
Plans to increase ownership equity

Answer 243

yep

Question 244

A weakness in internal control over recording retirements of equipment may cause an auditor to:
select certain items of equipment from the accounting records

Answer 244

and locate them in the plant.

Question 245

Walstone CPA is engaged to audit financial statements of a nonissuer prepared in accordance with a national variant of International Financial Reporting Standards (IFRS). These financial statements are intended to be used in the United States. Which of the following is true related to the form of the audit report?

Answer 245

US Report only

Question 246

If financial statements prepared in accordance with a financial reporting framework generally accepted in another country, the auditor should include in the auditor’s report an emphasis-of-matter paragraph that identifies the financial reporting framework

Answer 246

true

Question 247

For agreed-upon procedures engagements on prospective financial information, the prospective financial statements include a summary of

Answer 247

significant assumptions.

Question 248

violations of provisions of contracts or grant agreements and abuse that could have a material effect on the financial statements. should included in what

Answer 248

the auditor’s report

Question 249

Reporting standards for financial audits under Government Auditing Standards (the “Yellow Book”) differ from reporting under generally accepted auditing standards in that Government Auditing Standards require the auditor to present the results of the auditor’s

Answer 249

test of controls

Question 250

The objective of a review of interim financial information of an issuer is to provide the CPA with a basis for reporting whether _____ should be made to the interim information to comply with the applicable financial reporting framework.

Answer 250

material modifications

Question 251

An auditor notes significant deficiencies in a financial statement audit conducted in accordance with Government Auditing Standards. In reporting on internal control, the auditor should state that the auditor considered the entity’s internal control over financial reporting (internal control) to determine the____

Answer 251

audit procedures that are appropriate.

Question 252

Which of the following statements should be included in a practitioner’s report on the application of agreed-upon procedures? A statement referring to standards established by the ___

Answer 252

AICPA

Question 253

The company issues financial statements that purport to present financial position and results of operations, but refuses to include the related statement of cash flows – should disclaim opinion

Answer 253

false - The auditor should issue a qualified opinion.

This situation is a type of departure from an applicable financial reporting framework because the financial statements do not include all of the disclosures

Question 254

_____ the date of distribution, circulation, or submission of the exempt offering document is when the auditor should review subsequent events procedures that should be performed when an auditor is complying with AU-C 945

Answer 254

At or shortly before

Question 255

In a review, a departure from AFRF happens. What do you do disclose the departure from the applicable financial reporting framework in _____ of the accountant’s review report.

Answer 255

a separate paragraph

Question 256

In a reivew, a departure from AFRF happens. The effects of the departure on the financial statements should be disclosed in the separate paragraph

What if management hasn’t determined the effects?

Answer 256

1. true
2. if management didn’t analyze effects, the CPA doesn’t have to determine effects given the CPA disclose that hte effects haven’t been determined

Question 257

If information accompanying the basic financial statements has been subjected to auditing procedures, the auditor may include in the auditor’s report on the financial statements an opinion that the accompanying information is fairly stated in:_____ in relation to the basic financial statements taken as a whole.

Answer 257

all material respects

Question 258

SAS is created by who

Answer 258

AICPA

Question 259

For financial statement audits, Government Auditing Standards (GAS) incorporate the AICPA Statements on Auditing Standards (SAS) and prescribe additional standards on:
Reporting on I/C
Noncompliance w/ laws & reg

Answer 259

True

Question 260

A compilation is performed in accordance with the

Answer 260

Statements on Standards for Accounting and Review Services established by the AICPA. (SSARS)

Question 261

who established ssars

Answer 261

aicpa

Question 262

Nonissuer
When the auditor expresses a qualified opinion, the auditor should disclose _____ one or more separate paragraph(s) in the report in a paragraph entitled ____ ____ the opinion section.

Answer 262

all of the substantive reasons in
“basis for qualified opinion”
Precedeing(after)

Question 263

A qualified opinion should include the word except or exception in a phrase such as ____

Answer 263

“except for” or “with the exception of.”

Question 264

an unjustified accounting change. – unqualified opinion

Answer 264

false - qualifeid

Question 265

the statement :because of inherent limitations of any internal control, internal control may not prevent, or detect and correct, misstatements. is included in integrated audits

Answer 265

true

Question 266

“____and ____ of Internal Control Over Financial Reporting” is the ____ section of the audit report should include 2 elements:
1.
2.

Answer 266

Defintions & Limitations
third
1. Definiton of I/C
2. because of inherent limitations, internal control may not prevent, or detect and correct, misstatements

Question 267

An auditor is engaged to report on selected financial data that are included in a client-prepared document containing audited financial statements. If the auditor is engaged to report on the selected financial data, the auditor’s report should be ______

Answer 267

Limited to data derived from F/S

Cant include data outside of the audited F/S b/c that data wasn’t audited

Question 268

An auditor is engaged to report on selected financial data that are included in a client-prepared document containing audited financial statements. – you should restrict teh report

Answer 268

false - dont restrict

Question 269

West, CPA, is engaged to compile the financial statements of Lake Co., a nonissuer. Lake’s financial statements are prepared in conformity with the cash basis of accounting. If Lake’s financial statements do not disclose the basis of accounting used,
West should disclose the basis of accounting used in the notes to Lake’s financial statements. T/F

Answer 269

False - west should disclose the basis of accounting used in West’s compilation report.

Question 270

If a company wants a compilation w/o disclosures, the auditor must not compile unless he knows that the omission isnt for

Answer 270

misleading

Question 271

The objective of pro forma financial information is to show what the significant effects on ____ financial information

Answer 271

Historical

Question 272

When supplementary information accompanies the reviewed financial statements, the accountant should clearly indicate the ______ the review accountant is taking with respect to the supplementary information in an ____ paragraph in the review report or in a ____ on the supplementary information.

Answer 272

degree of responsibility
other-matter
separate report

Question 273

A practitioner has examined a client’s compliance with debt covenants associated with a bank loan and is ready to issue a report. Which of the following standards apply to the report?
____ standards

Answer 273

Compliance attestation

Question 274

Compliance engagements are either used to determine (1) an entity’s compliance with requirements of specified laws, regulations, rules, contracts, or grants or (2) the effectiveness of an entity’s internal control over compliance with specified requirements.

Answer 274

true

Question 275

Compliance engagements should be conducted in accordance with attestation standards established by ___the AICPA.

Answer 275

the AICPA.

Question 276

An auditor may not issue a qualified opinion when the auditor is independent. t/f

Answer 276

You disclaim

Question 277

a scope limitation prevents the auditor from completing an important audit procedure. - only disclaim

Answer 277

false you can qualify too

Question 278

When a prior year’s financial statements being used for comparative purposes were audited by another auditor, who expressed a qualified opinion:
__ of the successor’s report is changed to include a statement that the prior year’s statements were ____, the ____of the other auditor’s report, the ___issued, and an explanation if the opinion was other than unmodified. The name of the predecessor auditor ___ be mentioned if his or her ____.

Answer 278

Auditor Responsibility Paragraph
Audited by another auditor
Date of other auditor's report
Opinion issued
Should not be
report is not presented

Question 279

In the “Basis for Opinion” section of an audit report of an issuer, the auditor must disclose: That the auditor is a public accounting firm registered with the ____ (United States), and the auditor is required to be independent with respect to the company in accordance with U.S. _____ and the applicable rules and regulations of the ___ and the ____

Answer 279

PCAOB
federal securities laws
SEC and the PCAOB

Question 280

The financial statements fail to disclose information that is required by generally accepted accounting principles. you should issue an ____ or ___ opinion

Answer 280

adverse or qualifeid

Question 281

Which of the following items should be included in an auditor’s report for financial statements prepared in conformity with a special-purpose framework? A title that includes the word ___

Answer 281

independent

Question 282

A report on an issuer’s integrated audit must include a statement that:
the auditor believes the ___ provides a reasonable basis for the issued opinion.

Answer 282

audit

Question 283

The practitioner’s report on agreed-upon procedures on an entity’s compliance with specified requirements should include which of the following?
A representation regarding the sufficiency of the procedures

Answer 283

FALSE

Question 284

The practitioner’s report on agreed-upon procedures on an entity’s compliance with specified requirements should include which of the following?
____ of the responsible party

Answer 284

Identification

Question 285

In performing an audit of internal controls over financial reporting integrated with an audit of financial statements, the auditor uses what standard

Answer 285

an audit standard specifically designed for an integrated audit of internal controls.

Question 286

In drafting an audit report for an issuer, which of the following would be the first section of the report?
Basis for Opinion T/F

Answer 286

False - Opinion on the F/S, THEN Basis for Opinion

Question 287

required procedure that an auditor must perform when complying with AU-C 945, Auditor Involvement with Exempt Offering Documents?
Perform a _____from the date of the ___ through the date of the ____

Answer 287

subsequent events review
Auditor’s report
Exempt offering

Question 288

Which of the following would be an appropriate addressee for an audit report of an issuer?

Answer 288

Shareholders & Board of directors

Question 289

In an independent accountant’s review report on interim financial information included in a registration statement, a prospectus should include a statement clarifying that the accountant’s review report is _____ within the meaning of the____

Answer 289

not a part of the registration statement

Securities Act of 1933.

Question 290

a prospectus should include a statement clarifying that the accountant’s review report is not a part of the registration statement within the meaning of the Securities Act of 1933. This is in what report, included in what statement?

Answer 290

In an independent accountant’s review report on interim financial information included in a registration statement,

Question 291

AT-C 315 states that a practitioner should not perform a review of an entity’s ___ with requirements of specified ___

Answer 291

compliance

laws, regulations, rules, contracts, or grants.

Question 292

___agreements require entities to furnish compliance reports by independent auditors.

Answer 292

Contractual

Question 293

Negative assurance means that the auditor is ____

Answer 293

unable to acquire specific documentation for an account in the financial statements.

Question 294

An entity’s compliance with aspects of contractual agreements or regulatory requirements related to audited financial statements is specifically listed as a special report. Green audited the financial statements in accordance with generally accepted auditing standards and concluded that the financial statements were fairly pre­sented on the prescribed basis. Green should issue an audit report:

Answer 294

on special-purpose financial statements.

Question 295

A Type 1 report addresses management’s description of a service organization’s system and a service auditor’s report on that description and on the suitability of the ___ of controls.

Answer 295

design

Question 296

A Type 2 report addresses management’s description of a service organization’s system and a service auditor’s report on that description and on the suitability of the ___ of controls

Answer 296

design and operating effectiveness

Question 297

An auditor most likely would be responsible for communicating significant deficiencies in the design of internal control: to shareholders with significant influence (more than 20% equity ownership) when the significant deficiencies are deemed to be material weaknesses

Answer 297

FALSE

Question 298

An auditor most likely would be responsible for communicating significant deficiencies in the design of internal control:

to specific legislative and regulatory bodies when reporting under Government Auditing Standards.

Answer 298

TRUE

Question 299

when reporting under Government Auditing Standards., n auditor most likely would be responsible for communicating significant deficiencies in the design of internal control to ____

Answer 299

Legislative and regulatory bodies

Question 300

When reporting on Big City’s internal controls used in administering a federal program, the CPA should:
communicate ____ that are ___in relation to the ____

Answer 300

weaknesses
material
federal program.

Question 301

The auditor report is required to contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. The objective is to prevent:

Answer 301

misinterpretations regarding the degree of responsibility the auditor is assuming.

Question 302

After considering management’s plans, an auditor concludes that there is substantial doubt about a client’s ability to continue as a going concern for a reasonable period of time. The auditor’s responsibility includes:

Answer 302

considering disclosure about the client’s possible inability to continue as a going concern.

Question 303

After considering management’s plans, an auditor concludes that there is substantial doubt about a client’s ability to continue as a going concern for a reasonable period of time. The auditor’s responsibility includes:

The auditor also need not communicate with the client’s audit committee regarding whether management’s plans for dealing with the adverse effects can be effectively implemented.

Answer 303

FALSE

Question 304

The practitioner’s examination report on compliance should include which of the following? A list of the procedures performed and related findings

Answer 304

FALSE

Question 305

A list of procedures performed and related findings would be included in a practitioner’s report on ____ on compliance.

Answer 305

agreed upon proedures

Question 306

The practitioner’s examination report on compliance should include which of the following
A statement that the practitioner believes the examination provides a reasonable basis for his or her opinion

Answer 306

True

Question 307

When auditing financial statements of an entity that receives financial assistance from a governmental agency, the auditor should report on compliance with provisions of laws, regulations, contracts, or grant agreements that have a ____on the financial statements.

Answer 307

material effect

Question 308

hat is an auditor’s responsibility for supplementary information, such as the disclosure of pension information, which is outside the basic financial statements but required by the GASB?

Answer 308

Limited Procedures

Question 309

The auditor has an obligation to apply limited procedures to and report deficiencies in the required supplementary information (RSI) T/F

Answer 309

True

Question 310

The auditor should also consider whether or not the RSI should be covered in the representation letter from management.

Answer 310

True

Question 311

It is required to apply substantive tests of transactions to the supplementary information.

Answer 311

False

Question 312

Reporting on internal control under Government Auditing Standards differs from reporting under generally accepted auditing standards in that Government Auditing Standards require a:
written report describing each ___ observed, including identification of those considered material weaknesses.

Answer 312

significant deficiency

Question 313

Block CPA Firm is engaged to perform a financial statement audit of BIG Company (an issuer). BIG Company is required to report on the company’s internal control over financial reporting (ICFR), but that report is not required to be audited. Which of the following would be a required element of the audit report of BIG Company?

____ language in the “_____” section noting that no audit of internal controls over financial reporting is required, although management is required to report on the company’s internal control over financial reporting

Answer 313

Explanatory Lang

Basis of Opinion

Question 314

if the auditor issues separate reports on ICFR and the financial statements, under PCAOB, the required paragraph referencing the separate report should appear in the “______” section, immediately following the______

Answer 314

Opinion on the Financial Statements

opinion paragraph

Question 315

Block CPA Firm signs an initial engagement letter in 20X8 to audit the financial statements of ABC Company (an issuer) for fiscal years ending 20X6, 20X7, and 20X8. The work began in 20X9. In the audit report of the issuer, what year would Block CPA Firm disclose as the year that it began serving consecutively as the company’s auditor?

Answer 315

20X8

Question 316

AICPA AS 3101.10 requires a statement in the auditor’s report containing the year the auditor began serving consecutively as the company’s auditor. T/F

Answer 316

FALSE - PCAOB

Question 317

In determining the year the auditor began serving consecutively as the company’s auditor, the auditor would look to the year when the firm signs an initial _____to audit a company’s financial statements (which is 20X8 in this question) or ____ whichever is ___.

Answer 317

engagement letter
when the firm begins performing audit procedures,
earlier

Question 318

independent for agreed upon procedures?

Answer 318

yes

Question 319

The standard accountant’s report issued after reviewing the financial statements of a nonissuer in accordance with SSARS should state that the:

Answer 319

accountant is not aware of any material modifications that should be made to the financial statements for them to be in conformity with GAAP.

Question 320

The auditor’s responsibilities in a governmental audit are modified under generally accepted auditing standards.

Answer 320

false

Question 321

Which of the following is correct about reporting on compliance with laws and regulations in a financial audit under Government Auditing Standards (the “Yellow Book”)?
In some circumstances, auditors are required to report fraud and noncompliance with laws and regulations directly to parties external to the audited entity.

Answer 321

true

Question 322

In the following circumstances, the auditor should recognize the need to disclose the fraud to parties outside the entity:

Answer 322

To comply with legal and regulatory requirements
To a successor auditor when the successor makes inquiries
In response to a subpoena
To a funding agency or other specified agency in accordance with requirements for the audits of entities that receive governmental financial assistance

Question 323

An accountant has compiled the financial statements of a nonissuer in accordance with Statements on Standards for Accounting and Review Services (SSARS). Does SSARS require that the compilation report be printed on the accountant’s letterhead and that the report be manually signed by the accountant?

Answer 323

Doesnt require either one, but they CAN (optional)

Question 324

When an entity changes its method of accounting for income taxes, which has a material effect on comparability, the auditor should refer to the change in an emphasis-of-matter paragraph added to the audit’s report. In addition to indicating that the matter does not modify the opinion, this paragraph should describe the change and:

Answer 324

reference a disclosure & Describe change

Question 325

When there has been a change in accounting principles, but the effect of the change on the comparability of the financial statements is not material, the auditor should:

Answer 325

dont refer to the change at all

Question 326

If a control would not present a risk of material misstatement to the financial statements, even if the control were deficient, you still have to test it

Answer 326

false - no you dont

Question 327

Assertions about account balances at the period-end include that the entity ____holds or controls the rights to assets, and liabilities are obligations of the entity.

Answer 327

holds or controls the rights to assets, and liabilities are obligations of the entity.

Question 328

AR = IR × CR × DR, or AR = RMM × DR

Answer 328

Yep

Question 329

If control risk is high, this means that the auditor must have a ____detection risk

Answer 329

low

Question 330

Make inquiries prior to the date of the report about possible future transactions that may impact the forecast once the report is issued is a common compilation procedure

Answer 330

false - you dont inquire about future events in compilations

Question 331

Material, corrected misstatements that were identified by the auditor’s procedures should be communicated to who

Answer 331

gov

Question 332

If all members of governance are management, Material, corrected misstatements that were identified by the auditor’s procedures should be communicated to who

Answer 332

False - you communicate this to management & therefore do not need to repeat yourself

Question 333

The CPA can review the B/S only. Reviewed financial statements are often intended for third-party use (for obtaining credit, for instance) and the use of the review report in this manner would not affect the accountant’s decision to issue the report

Answer 333

true

Question 334

Examples of general controls are program change controls, controls that restrict access to programs or data, controls over the implementation of new releases of packaged software applications, and controls over system software that restrict access to or monitor the use of system utilities that could change financial data or records without leaving an audit trail.

Answer 334

yep their are a lot

Question 335

When an auditor submits a document that contains information in addition to audited financial statements to a client or to others, his responsibility:

Answer 335

includes reporting on all the information included in the document.

Question 336

Send a letter of inquiry to the entity’s attorney regarding pending litigation in a review

Answer 336

NOPE

Question 337

he standard compilation report explicitly states that the accountant has not ____ or ___ the financial statements.

Answer 337

reviewed or audited

Question 338

An accountant compiles the financial statements of a nonissuer and issues the standard compilation report. Although not specifically stated in this report, it is implied that:

Answer 338

substantially all disclosures required by GAAP are included in the financial statements.

Question 339

Which of the following components of internal control would be considered the foundation for the other components?

Answer 339

control environment

Question 340

Control environment provides discpline and structure

Answer 340

true

Question 341

Variables sampling is the sampling procedure used to measure, or reach a conclusion about, the continuously variable dollar amounts of the sample, which provide the quantitative estimates required for substantive testing.

Answer 341

True

Question 342

Which of the following sampling methods would be used to estimate a numerical measurement of a population, such as a dollar value?

Answer 342

variable

Question 343

Stop-or-go and random number sampling are sampling methods can be used with either variables or attribute sampling.

Answer 343

Truw

Question 344

In evaluating the overall effect of audit findings on the auditor’s report, the auditor should document all of the following except:

Answer 344

a summary of all uncorrected misstatements related to known and likely misstatements. (this includes trivial – trivial amounts are not required)

Question 345

Lake, CPA, is auditing the financial statements of Gill Co. Gill uses the EDP Service Center, Inc., to process its payroll transactions. EDP’s financial statements are audited by Cope, CPA, who recently issued a report on management’s description of EDP’s system and the suitability of the design and operating effectiveness of controls. Lake is considering Cope’s report on EDP’s system in assessing control risk on the Gill engagement. What is Lake’s responsibility concerning making reference to Cope as a basis, in part, for Lake’s own opinion?
Lake may not refer to Cope under the circumstances above. — why?

Answer 345

Gill uses EDP

EDP is audited by Cope

Question 346

ensure the entity’s operations are conducted in accordance with the provisions of laws and regulations. is an objective of the auditor

Answer 346

FALSE

Question 347

The internal auditor’s competence and objectivity are assessed by using information from ____, external ___, and previous experience with the internal auditor

Answer 347

discussions with management personnel

quality reviews

Question 348

In assessing the competence and objectivity of an entity’s internal auditor, an independent auditor least likely would consider information obtained from Analytical procedures

Answer 348

false

Obviously, the internal auditor’s competence and objectivity cannot be assessed by using analytical procedures.

Question 349

Which of the following should a practitioner perform as part of an engagement for agreed-upon procedures in accordance with the Statements on Standards for Attestation Engagements (SSAEs)?
Issue a report on ____based on specified procedures performed

Answer 349

findings

Question 350

Agreed upon procedures mainly focus on what

Answer 350

findings

Question 351

A CPA may serve on a corporate board of directors if:

the CPA____ the corporation.
the CPA has no other business connections to the corporation.

Answer 351

doesn’t audit (no attest engagements)

Question 352

In order to verify that marketable securities are correctly valued as of the balance sheet date, the auditor must compare the ______ to the recorded value on the balance sheet.

Answer 352

published closing price

Question 353

The more indirect the relationship, the less effective that control may be.

Answer 353

true

Question 354

When an auditor is asked to report on the fair presentation of financial statements prepared in conformity with a regulatory basis of accounting, he or she is required to issue _______from GAAP

Answer 354

a standard report modified for the departures

Question 355

The auditor is unable to determine the amounts associated with an employee fraud scheme. - disclaim opinon

Answer 355

yes

Question 356

Payroll Data Co. (PDC) processes payroll transactions for a retailer. Cook, CPA, is engaged to express an opinion on management’s description of PDC’s system and suitability of the design of controls. PDC’s system is relevant to the retailer’s internal control, so Cook’s report may be useful in providing the retailer’s independent auditor with information necessary to plan a financial statement audit. Cook’s report should:

Answer 356

Cook’s report is only a description of PDC’s system and the suitability of the design of controls and therefore he must disclaim an opinion on the operating effectiveness of PDC’s controls. He did not test whether the controls were operating with sufficient effectiveness to provide reasonable assurance that the related control objectives were achieved during the period under audit

Question 357

A practitioner may be engaged to perform an ____engagement or an___ engagement in the area of compliance attestation.

Answer 357

agreed-upon procedures

examination (Audit)

Question 358

A practitioner is asked to attest on an entity’s compliance with terms of a contract with a third party, and the practitioner does not audit the financial statement of the entity. Which of the following types of attestation engagements may be performed related to compliance?

Answer 358

Agreed-upon procedures or examination

Question 359

The Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern.”

Where would you find this statement (what report)

Answer 359

audit report

Question 360

On August 13, a CPA completed fieldwork on an engagement to audit financial statements for the year ended June 30. On August 27, an event came to the CPA’s attention that should be disclosed in the notes to the financial statements. The event was properly disclosed by the entity, but the CPA decided not to dual date the auditor’s report and dated the report August 27. Under these circumstances, the CPA was taking responsibility for:

Answer 360

all subsequent events that occurred through August 27.

Question 361

hich of the following best describes the process of identifying, assessing, and responding to risk of material misstatement on a financial statement audit?

Answer 361

Cumulative and iterative

Question 362

March, CPA, is engaged by Monday Corp., a client, to audit the financial statements of Wall Corp., a company that is not March’s client. Both entities are nonissuers. Monday expects to present Wall’s audited financial statement with March’s auditor’s report to First Federal Bank to obtain financing in Monday’s attempt to purchase Wall. In these circumstances, March’s auditor’s report would usually be addressed to:

Answer 362

Monday Corp., the client that engaged March.

Question 363

Because the auditor’s responsibility is to the client company, the address of the report should be the stockholders and/or the board of directors of the company that engaged the auditor.

Answer 363

true

Question 364

When unaudited financial statements of a nonissuer are presented in comparative form with audited financial statements in the subsequent year, the unaudited financial statements should be clearly marked to indicate their status and:

Answer 364

the report on the unaudited financial statements should be reissued ORRRRRRR the report on the audited financial statements should include a separate paragraph describing the responsibility assumed for the unaudited financial statements.

Question 365

When an auditor qualifies his or her opinion because of a scope limitation, the wording in the opinion paragraph should indicate that the qualification pertains to the _____on the financial statements and not to the scope limitation itself.

Answer 365

possible effect

Question 366

An auditor decides to issue a qualified opinion on an entity’s financial statements because a major inadequacy in its computerized accounting records prevents the auditor from applying necessary procedures. The opinion paragraph of the auditor’s report should state that the qualification pertains to:

Answer 366

the possible effects on the financial statements.

Question 367

Due to a scope limitation, an auditor disclaimed an opinion on the financial statements taken as a whole, but the auditor’s report included a statement that the current asset portion of the entity’s balance sheet was fairly stated. The inclusion of this statement is:

not appropriate because it may tend to the auditor’s disclaimer of opinion.

Answer 367

overshadow

Question 368

Dual dating the report for a subsequent event that has occurred after the original date of the auditor’s report, the auditor has chosen not to extend his responsibility (and procedures) either to all subsequent events occurring through the date of the report or to all events occurring since the original date of the auditor’s report. IT IS ONLY LIMITED TO THE

Answer 368

Subsequent event referenced

Question 369

Zag Co. issues financial statements that present financial position and results of operations but Zag omits the related statement of cash flows. Zag would like to engage Brown, CPA, to audit its financial statements without the statement of cash flows although Brown’s access to all of the information underlying the basic financial statements will not be limited. Under these circumstances, Brown most likely would:
refuse to accept the engagement as proposed because of the client-imposed scope limitation.

Answer 369

False – it is not a client imposed limitation

Question 370

Zag Co. issues financial statements that present financial position and results of operations but Zag omits the related statement of cash flows. Zag would like to engage Brown, CPA, to audit its financial statements without the statement of cash flows although Brown’s access to all of the information underlying the basic financial statements will not be limited. Under these circumstances, Brown most likely would:

Answer 370

Explain that they have to qualify the audit opinion due to omitting the statement since management declines to present it

Question 371

Disclose all the ___reasons for the adverse opinion is necessary when giving an adverse opinion

Answer 371

substantive

Question 372

basic element of the auditor’s standard report of a nonissuer
An audit includes assessing significant ____made by management.

Answer 372

estimates

Question 373

The use of inappropriate accounting principles

What type of opinion (2)

Answer 373

qualified or adverse

Question 374

Unreasonable accounting estimates

What type of opinion (2)2

Answer 374

qualified or adverse

Question 375

In which of the following paragraphs of an auditor’s report of a nonissuer does an auditor communicate the specific financial statements covered by the audit?

Answer 375

Introduction

Question 376

The introductory paragraph in the auditor's report should:
1
2
3
4

Answer 376

Identify entity
state f/s have been audited
identify title of each statement
Specify period covered

Question 377

“____opinion—…because of the effects of the matters discussed in the preceding paragraph(s),…do not present fairly…ended.

Answer 377

Adverse

Question 378

The company failed to make a count of its physical inventory during the year and the auditor was unable to apply alternative procedures to verify inventory quantities.
what type of opinion

Answer 378

disclaim

Question 379

A client has capitalizable leases but refuses to capitalize them in the financial statements. Which of the following reporting options does an auditor have if the amounts pervasively distort the financial statements? what opinion?

Answer 379

adverse opinion – material gaap departure

Question 380

In planning an integrated audit, which of the following matters does the auditor not evaluate as to whether they are important to the company’s financial statements and internal control over financial reporting?
Design of internal control over compliance with environmental regulatory reporting

Answer 380

AICPA/PCAOB doesn’t address compliance

Question 381

Knowledge obtained in the course of other engagements should be obtained when evaluating as to whether they are important to the company’s financial statements and internal control over financial reporting

Answer 381

true

Question 382

The auditor’s preliminary judgments about materiality, risk, and other factors relating to the determination of material weaknesses should be considered when the company’s financial statements and internal control over financial reporting

Answer 382

true

Question 383

auditor is unable to obtain sufficient appropriate audit evidence to support management’s assertions about the nature of a matter involving an uncertainty and its presentation or disclosure in the financial statements, the auditor should:
consider the need to express a ____opinion or to ____an opinion because of a ____

Answer 383

qualified
disclaim
scope limitation.

Question 384

For agreed upon procedures, Terms of uncertain meaning (such as read, general review, limited review, check, or test) should not be used in describing the procedures unless such terms are defined within the agreed-upon procedures.

Answer 384

Yep
Agreed upon procedures are VERY specifc
Recalculate the aging category for a randomly selected 25 accounts receivable invoices as of June 30, 20XX, based on the date of sale per the customer’s invoice IS AN EXAMPLE

Question 385

hen an accountant compiles projected financial statements, the accountant’s report should include a separate paragraph that:

Answer 385

describes the limitations on the usefulness of the projection.

Question 386

When performing an attestation engagement related to a client’s prospective financial statements, the accountant should ensure that the client discloses all ______ that are used for the prospective financial statements.

Answer 386

significant assumptions

Question 387

The client is not required to disclose the significant ____used for the prospective financial statements, but must disclose the significant assumptions used

Answer 387

assertions

Question 388

Who is responsible for determining the sufficiency of agreed-upon procedures to meet the needs of the specified party in an agreed-upon procedures engagement?

Answer 388

Specified parties

Question 389

Financial forecast can be used for ___ & ___purpose

Answer 389

General and Limited

Question 390

Financial forecast is an expected future position

Answer 390

true

Question 391

Financial projections are prospective financial statements that present, to the best of the responsible party’s knowledge and belief, given one or more _____assumptions,

Answer 391

hypothetical

Question 392

Opinion on prospective F/S

Answer 392

Yes

Question 393

Objectives of prospective financial information are obtaining reasonable assurance that (2)

Answer 393

Presented in accordance w/ AICPA
Assumptions supported given hypotehtical assumption
Expess opinion in written form

Question 394

When a CPA examines a client’s projected financial statements, the CPA’s report should:
state that the CPA performed procedures to evaluate management’s ____

Answer 394

assumptions.

Question 395

When a CPA examines a client’s projected financial statements, the CPA’s report should:
explain the principal differences between historical and projected financial statements.

Answer 395

FALSE YOU DONT DO THAT

Question 396

Agreed upon procedures adhere to what Standard?

Answer 396

Standards for Attestation Engagements (SSAE).

Question 397

The prospective financial statements include a summary of significant assumptions. Must be included to accept an ____ engagement

Answer 397

agreed upon procedure

Question 398

A nonissuer engaged a practitioner to perform agreed-upon procedures on specified matters. The date of the practitioner’s report would ordinarily be determined by the occurrence of which of the following events?

Answer 398

Completion of agreed upon procedures

Question 399

In a compilation of a projection, the CPA would assemble the financial statements based on management’s ___

Answer 399

assumptions,

Question 400

In a compilation of a projection, the CPA would assemble the financial statements
are presented according to __guidelines

Answer 400

AICPA

Question 401

In a compilation of a projection, The compilation report should
:state that the compilation was performed in accordance with ____ standards established by the _____

Answer 401

attestation

AICPA

Question 402

In a compilation of a projection, The compilation report should
state that the compilation is ___in scope

Answer 402

state that the compilation is limited in scope

Question 403

In a compilation of a projection, The compilation report should
explain that the CPA assumes no responsibility to _____

Answer 403

update the report for future events

Question 404

In a compilation of a projection, The compilation report should
state that the hypothetical assumptions used in the projection are reasonable in the circumstances.

Answer 404

FALSE

Question 405

Government Auditing Standards require the auditor to:

describe the ___of the auditor’s tests of ___with laws and regulations.

Answer 405

scope

compliance

Question 406

hen an audit firm includes a report on compliance with aspects of contractual agreements in the auditor’s report on the nonissuer’s financial statements, in which paragraph of the audit report should the report on compliance be included?

Answer 406

Other matter – bc it is not directly involved w/ the F/S

Question 407

An auditor’s report on financial statements of a regulated entity prepared in accordance with provisions of a government regulatory agency to whose jurisdiction the entity is subject should be issued by an auditor only if:
the financial statements are intended solely for filing with one or more regulatory agencies to whose jurisdiction the entity is subject.

Answer 407

Yep wtf

Question 408

Negative assurance should not be given unless the auditor has ___ the financial statements

Answer 408

audited

Question 409

Negative assurance should not be given if the auditor has expressed an ___opinion or ____ an opinion on the financial statements to which these covenants relate.

Answer 409

adverse

Disclaimed

Question 410

Reports are considered special reports when issued in conjunction with: ___ of ____ related to audited financial statements.

Answer 410

compliance

regulatory requirements

Question 411

_____engagement does not include an evaluation of the support for the assumptions underlying the projection.

Answer 411

Compilation of a financial projection

Question 412

if the practitioner believes that one or more significant assumptions do not provide a reasonable basis for the forecast, or a reasonable basis for the projection given the hypothetical assumptions, he or she should express an ____opinion

Answer 412

adverse

Question 413

Under Government Auditing Standards, reports for financial and compliance audits should include a report on the auditor’s consideration of ____. Therefore, under ___, an auditor should report on the ___of the auditor’s testing of internal controls.

Answer 413

internal controls
GAS
scope

Question 414

To express an unmodified opinion using an unmodified report covering single-year financial statements:
____financial statements are not presented—the prior year’s financial statements audited by another CPA are ____.
the prior report expresses an ____

Answer 414

comparative
not presented
unmodified opinion.

Question 415

Comfort letters ordinarily are addressed to the client’s ________ and signed by the client’s ________.

Answer 415

Underwriter

CPA

Question 416

Underwriters of securities often request the assistance of the independent accountant when issuing____ by requesting a ____

Answer 416

Initial stock offerings

comfort letter

Question 417

Because a comfort letter is not an audit report, the independent accountant can only provide ____

Answer 417

negative assurance

Question 418

An entity prepares its financial statements on its income tax basis. A description of how that basis differs from GAAP should be included in the:

Answer 418

Notes to F/S

Question 419

Income Tax basis is what type of framework

Answer 419

special purpose

Question 420

An auditor may express an opinion on an entity’s accounts receivable balance even if the auditor has disclaimed an opinion on the financial statements taken as a whole, provided the:

report on the accounts receivable is presented ___

Answer 420

separately (different report)

Question 421

If information accompanying the basic financial statements has been subjected to auditing procedures, the auditor may include in the auditor’s report on the financial statements an opinion that the accompanying information is fairly stated in:

Answer 421

All materially respects

Question 422

What is an auditor’s responsibility when engaged to report on supplementary information accompanying the basic financial statements?
1. ___ paragraph
2 . ____ on supplementary info

Answer 422

Other matter

Separate report

Question 423

Before reporting on the financial statements of a U.S. entity that have been prepared in conformity with another country’s accounting principles, an auditor practicing in the United States should:
Disclaim opinion

Answer 423

FALSE - not necessary. Any opinion can happen

Question 424

Before reporting on the financial statements of a U.S. entity that have been prepared in conformity with another country’s accounting principles, an auditor practicing in the United States should:

Answer 424

understand the accounting principles generally accepted in the other country.

Question 425

“The subjects that may be covered in a comfort letter include:’
____ Independence
An opinion as to whether the audited financial statements comply in form with the accounting requirements of the___
“____, and other financial information included in the securities offering.
“___assurance about whether certain ____information included in the securities offering complies regarding form, in all material respects, with Regulation S-K.”

Answer 425

CPA
 SEC
tables, statistics
Negative
Nonfinancial

Question 426

“The subjects that may be covered in a comfort letter include:’
Negative assurance concerning whether the entity’s internal control procedures operated as designed during the period being audited

Answer 426

No – fuck internal control w/ comfort letters

Question 427

comfort letter does not state or repeat an ____about the fairness of presentation of the statements.

Answer 427

opinion

Question 428

auditor is required to determine the acceptability of the financial reporting framework applied to the special-purpose financial statements by obtaining an understanding of:
the ___of the financial statements,
the intended ___, and
management’s steps taken in determining the ____

Answer 428

purpose
users
applicable financial reporting framework.

Question 429

an entity makes a material change in accounting principle, how is the audit report impacted?
An____paragraph is required to be added to reference the ____discussing the change.

Answer 429

emphasis-of-matter

footnote (note to F/S)

Question 430

Financial statements are considered special purpose financial statements when:
prepared in accordance with either a ___or an other ___basis of accounting.

Answer 430

contractual

comprehensive

Question 431

. If a separate report is issued for supp. info, the report should state that the other data accompanying the financial statements are presented only for _____ purposes and that the information has been compiled from information that is the ____without _____

Answer 431

supplementary analysis
representation of management
audit or review,

Question 432

Cash Basis
Tax Basis
Regulatory Basis
Contractual Basis
All examples of what

Answer 432

special framework

Question 433

When the auditor reissues a report of the financial statements, the date of the reissued report should be:

Answer 433

same date of original report

ONLY CHANGE IF SUBSEQUENT EVENT HAPPENED

Question 434

Which of the following would be an appropriate title for a statement of revenue and expenses prepared using a special-purpose framework?
Statement of income—_____

Answer 434

regulatory basis

Question 435

A CPA is permitted to accept a separate engagement (not in conjunction with an audit of financial statements) to audit an entity’s schedule of accounts receivable and schedule of royalties. ONLY IF the report is ____

Answer 435

restricted

Question 436

The auditor’s report on internal controls and compliance with laws and regulations in accordance with Government Auditing Standards (the “Yellow Book”), is required to include:
uncorrected misstatements that were determined by management to be immaterial.

Answer 436

FALSE

Question 437

In its annual report to shareholders, Lake Co. (a nonissuer) included a separate management report that contained an assertion about the effectiveness of its internal control over financial reporting. Lake’s auditor is expressing an unmodified opinion on Lake’s financial statements but has not been engaged to examine and report on this management assertion. What is the auditor’s responsibility concerning such report?

The auditor has no obligation to read the management report or to verify the accuracy or appropriateness of its contents.

Answer 437

FALSE - YES YOU DO

Question 438

In its annual report to shareholders, Lake Co. (a nonissuer) included a separate management report that contained an assertion about the effectiveness of its internal control over financial reporting. Lake’s auditor is expressing an unmodified opinion on Lake’s financial statements but has not been engaged to examine and report on this management assertion. What is the auditor’s responsibility concerning such report?

auditor should read the management report and consider whether it contains a ____

Answer 438

material misstatement of fact.

Question 439

When reporting under ___, the auditor is required to provide in all audits a written report on internal control for distribution to specific legislative and regulatory bodies,

Answer 439

Government Auditing Standards

Question 440

A CPA is reporting on comparative financial statements of a nonissuer. The CPA audited the prior year’s financial statements and reviewed those of the current year in accordance with Statements on Standards for Accounting and Review Services (SSARS). The CPA has added a separate paragraph to the review report to describe the responsibility assumed for the prior year’s audited financial statements. This separate paragraph should indicate:

Answer 440

the reasons for the change from an audit to a review.

Question 441

An auditor may report on selected financial data derived from audited financial statements that he or she has audited. Such a report should be ___to the data derived from the audited financial statements.

Answer 441

limited

Question 442

In performing a financial statement audit in accordance with Government Auditing Standards, an auditor is required to report on the entity’s compliance with laws and regulations. This report should:
state that compliance with laws and regulations is the responsibility of the entity’s ___.

Answer 442

management

Question 443

In performing a financial statement audit in accordance with Government Auditing Standards, an auditor is required to report on the entity’s compliance with laws and regulations. This report should:

provide an opinion on overall compliance with laws and regulations.

Answer 443

FALSE

Question 444

An opinion on the appropriateness of other comprehensive basis of accounting used is ___

Answer 444

not required.

Question 445

In reading the annual report that contains the audited financial statements, the auditor discovers a material inconsistency that management refuses to correct. What action should the auditor take in response?

Answer 445

Withhold the auditor’s report until the correction is made

OR Include other matter paragraph / withdrawal

Question 446

When providing an audit report on governmental financial statements, the auditor should also report on internal control over financial reporting and on compliance with laws, regulations, and provisions of contracts or grant agreements. This information may be in _____

Answer 446

the same or in separate reports.

Question 447

An independent auditor is issuing an audit report for a governmental entity and plans to issue separate reports on internal control over financial reporting and compliance with laws and regulations. The auditor should do which of the following?
State in the audit report _____

Answer 447

that separate reports will be issued

Question 448

In order to form an opinion on whether supplementary information is fairly stated
Either an unmodified or ___audit opinion on the related financial statements is issued.

Answer 448

qualified

Question 449

In order to form an opinion on whether supplementary information is fairly stated
the auditor issued an audit report on the financial statements that contained neither an ___ opinion nor a ___of opinion

Answer 449

adverse

disclaimer

Question 450

In connection with a proposal to obtain a new client, an accountant in public practice is asked to prepare a written report on the application of accounting principles to a specific transaction. The accountant’s report should include a statement that:
any difference in the ____, ____, or ____presented may change the report.

Answer 450

facts, circumstances, or assumptions

Question 451

An auditor is reporting on condensed financial statements for an annual period that are derived from the audited financial statements of an issuer. The auditor’s opinion should indicate whether the information in the condensed financial statements is fairly stated in all material respects:
in relation to the______

Answer 451

complete financial statements.

Question 452

Information that a designated accounting standard requires to accompany an entity’s basic financial statements but is not considered to be a part of the basic financial statements, is commonly referred to as ___________________ with professional standards.

Answer 452

RSI - Required Supplementary Info

Question 453

When audited financial statements are presented in a client’s document containing other information, the auditor should:
____the other information to determine that it is ____with the audited financial statements to identify __

Answer 453

read
consistent
material inconsistencies

Question 454

If an accountant issues a document including both a separate restricted-use report and a general-use report, both reports should be restricted to the specified parties. T/F

Answer 454

False

Question 455

When the prior-period financial statements were audited and the audit report is not reissued, the REVIEW report on the current financial statements should include ____ paragraph indicating that the financial statements of the prior period were ___; the date of the prior-period auditor’s report; the___ issued on the prior-period financial statements; if the opinion was modified, the substantive reasons for the modification; and that ___auditing procedures were performed after the date of the previous report.

Answer 455

an other-matter
previously audited
opinion
no

Question 456

If an external accountant is engaged to prepare financial statements in accordance with the Statements on Standards for Accounting and Review Services (SSARSs), and such financial statements contain a known departure from the applicable financial reporting framework that management refuses to correct, the accountant should:

Answer 456

disclose known departure

Question 457

When an accountant determines the financial statements contain one or more departures from GAAP, the first action is to ask management to___

What if management refuses?

Answer 457

revise the financial statements.

If management refuses, consider modifying one or more paragraphs to illustrate the departure and disclose the dollar effects

Question 458

If prior-period compiled financial statements have been restated and the predecessor accounting firm decides not to reissue its report, the successor accounting firm may be engaged to

Answer 458

may be engaged to reissue the prior-period report.

Question 459

If the predecessor accountant does not reissue his or her report and the successor accountant is not engaged to report on the prior-year financial statements, the successor accountant should indicate in the ___paragraph of his or her compilation or review report that a predecessor accountant reported on the financial statements of the prior period before restatement.

Answer 459

introductory

Question 460

When an accountant is not independent with respect to an entity, which of the following types of compilation reports may be issued?
A compilation report with___ that notes the accountant’s lack of ___may be issued in the ___ paragraph

Answer 460

special wording
independence
FINAL

Question 461

For compilations, The date on the report should be the date of ____

Answer 461

completion of the procedures

Question 462

For compilations, A statement that a compilation is limited to presenting in the form of financial statements information that is the representation of ___

Answer 462

management

Question 463

If management declines to present supplementary information required by the Governmental Accounting Standards Board (GASB), the auditor should issue:
an ___with an additional ___paragraph.

Answer 463

unmodified opinion

explanatory

Question 464

When a broker-dealer or other financial intermediary, besides an underwriter or other party with a due diligence defense under section 11 of the Securities Act of 1933, requests a comfort letter but does not provide a representation letter, the accountant should:

Answer 464

not provide a comfort letter but may provide another form of letter.

Question 465

If adequately disclosed in the financial statements, an uncertainty about an entity’s ability to continue as a going concern or other accounting matters (other than those involving a change in accounting principles) may be, at the accountant’s discretion, emphasized in the accountant’s report (but will not require a modification to the standard compilation or review report).

Answer 465

Not a question. This is a statement.

Question 466

If properly disclosed in the financial statements, which of the following would ordinarily cause an accountant to modify his or her standard compilation or review report?

Uncertainty about the entity’s ability to continue as a going concern
Inconsistency in the application of accounting principles

Answer 466

Neither

Question 467

In a review of comparative financial statements, the reporting entity restated the prior year’s financial statements to correct a prior-year known departure from GAAP. How should the continuing review accountant address this change in the current period’s review report?
Include an ____ paragraph indicating the date of the previous review report and the reasons behind the prior-period restatement, and the implications on the previous conclusion.

Answer 467

other-matter

Question 468

To reissue the auditor’s report on financial statements that have been neither restated nor revised, the auditor should use the _____date on the reissued report.

Answer 468

original report

Question 469

Using the reissued report release date, or the current-period auditor’s report date, would extend the auditor’s responsibility for____

Answer 469

subsequent events to that date.

Question 470

is engaged to prepare financial statements that substantially omit all disclosures. What are the requirements under the Statements on Standards for Accounting and Review Services (SSARS) for this type of engagement?

Answer 470

Disclose such omission in the financial statements

Question 471

when the auditor is performing an audit of financial statements prepared in conformance with a regulatory basis of accounting, and the financial statements are intended for general use, the auditor’s report should be modified to:

express an opinion about whether the special-purpose financial statements are presented fairly, in all material respects, in accordance with ____, as well as a separate ___about whether the financial statements are presented fairly, in all material respects, in conformance with the regulatory basis of accounting.

Answer 471

GAAP

opinion

Question 472

When an independent U.S. auditor is engaged to report on financial statements prepared for use in another country, the auditor should perform audit procedures that are necessary to comply with:
___and the auditing standards of the other country or International Standards on Auditing (ISAs) when specifically _____to do so.

Answer 472

U.S. GAAS

requested

Question 473

ISA stands for what

Answer 473

international standards on auditing

Question 474

An auditor reporting in accordance with the Uniform Guidance rules on a schedule of findings and questioned costs would not include a ____opinion as to whether all questioned costs have been reported.

Answer 474

disclaimer of

Question 475

A discretionary emphasis-of-matter paragraph is included in a review report. How is the standard review report modified?
indicate that the accountant’s conclusion is ____with respect to this matter

Answer 475

not modified

Question 476

For emphasis of matter paragraphs, the conclusion is modified with respect to this matter

Answer 476

FALSE - no its not

Question 477

An auditor may report on condensed financial statements that are derived from a complete set of audited financial statements only if the auditor:
All info is fairly stated in the ____ statements

Answer 477

complete

Question 478

For which of the following events would an auditor issue a report that omits any reference to consistency?
A change in the useful life used to calculate the provision for depreciation expense….why this?
B/C a change in accounting estimate (such as a change in the useful life of a depreciable asset) is accounted for prospectively and does not affect the ___of financial statements between periods. So you would omit any reference to this change.

Answer 478

comparability

Question 479

Uncertainties can be emphasized in the audit report T/F

Answer 479

true

Question 480

An entity is a larger component of a business unit, what can you do in the the audit report in relation to this

Answer 480

include a emphasis of matter paragraph

Question 481

In which of the following should an auditor’s report refer to the lack of consistency when there is a change in accounting principle that is significant?

Answer 481

emphasis of matter paragraph

Question 482

Emphasis of matter paragraphs are ___ the opinion paragraph

Answer 482

after

Question 483

If a review accountant is unable to obtain sufficient appropriate evidence to support a limited assurance conclusion, the review accountant should:

Answer 483

withdrawal

Question 484

If a review accountant is unable to obtain sufficient appropriate evidence to support a limited assurance conclusion, the review accountant should: change the scope of the engagement to a compilation, regardless of the nature of the evidence that was not able to be obtained.

Answer 484

FALSE – you withdrawal

Question 485

For special purpose frameworks, state that the financial statements are fairly presented (as appropriate) according to ____basis.

Answer 485

the special framework

Question 486

Before reissuing a compilation report on the financial statements of a nonissuer for the prior year, the predecessor accountant is required to:
compare the prior year’s financial statements with those of the____

Answer 486

Current year

Question 487

Before reissuing a compilation report on the financial statements of a nonissuer for the prior year, the predecessor accountant is required to:
obtain a letter from the successor accountant pertaining to knowledge of any matters having an effect on the ____ financial statements.

Answer 487

PY

Question 488

When an accountant is engaged to compile a nonissuer’s financial statements that omit substantially all disclosures required by GAAP, the accountant should indicate in the compilation report that the financial statements are:
not designed for those who are_____

Answer 488

not informed about such matters.

Question 489

An auditor determines that the entity is presenting certain supplementary financial disclosures of pension information that are required by the GASB. Under these circumstances, the auditor should:
compare the required supplementary information for ___with the audited financial statements.

Answer 489

consistency

Question 490

For RSI (Required Supplementary Info.), Compare the information for consistency with management’s responses T/F

Answer 490

True

Question 491

For RSI (Required Supplementary Info.),
Make inquiries of management regarding the measurement and presentation of the information

Answer 491

True

Question 492

When an accountant is engaged to compile a nonissuer’s financial statements that omit substantially all disclosures with no reference to basis but are otherwise in conformity with a special-purpose framework, the accountant should disclose which of the following in his or her report?
The financial statements were prepared in conformity with a _____ of accounting other than ____.

Answer 492

comprehensive basis

GAAP

Question 493

accountant desires to issue a single combined report covering some subject matter that requires restriction of use to specified parties and other subject matter that is for general use:
the combined report should be ____.

Answer 493

restricted in use

Question 494

n auditor is engaged to report on selected financial data that is included in a client-prepared document containing audited financial statements. Under these circumstances:
the selected data should be ____from the underlying accounting and other records used to prepare the audited financial statements.

Answer 494

derived

Question 495

An entity engaged an accountant to review its financial statements in accordance with Statements on Standards for Accounting and Review Services (SSARS). The accountant determined that the entity maintained its accounts on an other-basis of accounting other than generally accepted accounting principles (GAAP). In this situation, the accountant most likely would have taken which of the following actions?
___the review report to reflect the fact that the financial statements were presented on an other-basis of accounting

Answer 495

Modified

Question 496

An accountant is permitted to review financial statements that are prepared on a comprehensive basis of accounting other than GAAP.

Answer 496

False - yes they can

Question 497

For Reviews, CPA Requests that management justify the use of the other comprehensive basis of accounting in the management representation letter

Answer 497

FALSE they dont need to justify

Question 498

Financial statements are allowed to be prepared using a comprehensive basis of accounting other than generally accepted accounting principles, to be appropriate it must include:

1. a description of the ____, including a summary of significant accounting ____and description of the primary differences from ___,,
2. . disclosures similar to those required by ____if the financial statements contain items similar to those included in financial statements prepared in accordance with GAAP.

Answer 498

special purpose framework
policies
GAAP
GAAP

Question 499

If a predecessor accountant is asked to reissue a previous year’s compilation report, what is the date that should be used on that reissued report?
____ the report if the prior-year financial statements are restated or the previously released report is revised based on information that became known to the predecessor accountant.

Answer 499

Dual-date

Question 500

If a predecessor accountant is asked to reissue a previous year’s compilation report, what is the date that should be used on that reissued report?
The date of the original report, even if modifications to the report are made

Answer 500

False -if modifications are made - you dual date

Question 501

financial statements of a prior period have been audited by a predecessor auditor whose report is not presented, the successor auditor should name of the predecessor auditor and the length of time he or she was associated with the client in the intro paragraph

Answer 501

FALSE - The successor auditor would have no reason to name the predecessor

Question 502

he risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the:

Answer 502

effectiveness of the audit.

ACCEPT EFFECT

Question 503

assessing control risk too low relate to the:

Answer 503

effectiveness of the audit.