Mod 1 Wrong Answers Flashcards
2 possible circumstances justifying departure from GASB statement standards are…
1 new legislation
2 new form of business transaction
CPAs are only allowed to depart from a GASB statement only when results of the standard would be…
Misleading
When a supervisor departs from GAAP, the CPA under there supervision can…
Determine whether there are responsibilities to communicate matter
To third party
Discreditable acts framework…
Does not exist in the CPA profession
Accounting and consulting services do not normally impair independence because…
The member’s role is advisory in nature
When a CPA contracts with a client to supervise the client’s office personnel, they are…
Performing a management function which impairs independence
Due care does not require…
Obtaining specialty accreditation
Due care requires a member to discharge…
Professional responsibilities with competence and due diligence
Competence represents the…
Attainment and maintenance of level of understanding and
Knowledge that enables member to render services with facility
And acument
Due care establishes limitations of a member’s capabilities by…
Dictating that consultation or referral may be required when
Professional engagement exceeds personal competence of member
A member in public practice shall not…
For a commission recommend or refer to a client a product or
Service
A CPA can’t recommend for a commission refer any…
Product or service supplied by a client
A CPA can’t receive a commission when Member or member’s firm perform for that client…3
1 audit of financial statements
2 Compilation of financial statement when member expects
Third party to use financial statement/report doesn’t disclose
Lack of independence
3 examination of prospective financial info
A CPA may purchase a product and…
2) any profit on sale would not…
Resell it to a client
2) constitute a commission
A fully secured loan that a CPA takes from a compilation client, is considered what when they are asked to audit the client a year later?
Grandfathered (independence was not required)
If independence was not required at the time the loan was obtained from the client and the CPA is asked to perform an audit, the CPA is considered…
Independent
Of the five member board of the PCAOB…
No more than 2 members may be CPAs
The portion of the report issued on a CPA firm’s quality control is…
Not ordinarily made publicly available
Most of the PCAOB report, other than the portion on quality control is…
Made available to the public
Audit reports based on international auditing standards must include…
Location where auditor practices (city, country)
Whether accounts receivable are confirmed is based on…2
1 auditor’s assessed risk of material misstatement and
2 how audit evidence, from other planned audit procedures,
Reduce that risk
Identify the body that enforces the audit requirements of ERISA
Department of Labor
When compiling financial statements for a non public company for the past year and issuing a publicly available report, the CPA’s…
Independence is not required
For performance of a review of a Nonpublic company’s annual financial statements.
What standards provide guidance?
Statements on Standards for Accounting and Review Services
SSARS
For examination of a client’s financial forecast.
What standards provide guidance?
State,nets on Standards for Attestation Engagements (SSAE)
