Other

Question 1

Pro forma

Answer 1

shows the effects on historical FS that might have resulted from a transaction that occurred after the BS date had the tranx occurred at an earlier date. Ex. effects of a business combo., disposal of a segment of a biz, issuance of securities or changes in capitalization.

Question 2

Requirements for reporting on pro forma FS

Answer 2

must have audited/reviewed the FS. (the level on of assurance on the pro forma cannot exceed the FS)
Should have an approp. level of knowledge of the acct practices of the entity involved.
The doc containing the pro forma info ref/includes the complete FS

Question 3

What is the obj of pro forma

Answer 3

to provide some degree of assurance as to:

• whether mgmts assumptions provide reasonable basis for presenting the effects of the tranx
• whether the pro forma adj reflect those assump
• whether the historical FS are approp. adj.

Question 4

Agreed upon procedures report

Answer 4

should include a statement of limitations on the use of the report. Intended to be used solely by the specified users and restrictions on distribution need to be clearly stated.

Question 5

What pro services are subject to SSAE

Answer 5

reporting on an entitys compliances with statutory requirements

Question 6

What type of opinion given on prospective FS

Answer 6

disclaimer of opinion.
restrict the distribution to the specified parties.
Not required to be independent

Question 7

what does a compilation report on projection include?

Answer 7

1. a paragraph describing the limitations on the presentations usefulness
2. statement that a compilation is limited in scope and does not allow the expression of any assurance
3. disclaimer of resp for updating the report for event occurring after the report date.
4. also provides a caveat that the prospective might not be achieved

Question 8

Which prospective FS are appropriate for general use?

Answer 8

Financial forecast. (projection must have limited use)

Question 9

What does a projection not provide?

Answer 9

any assurance on the prospective financial info or the underlying assumptions

Question 10

A financial forecast should include a statement..

Answer 10

There will usually be differences between the forecasted and actual results

Question 11

what type of opinion should be issued when significant assumptions do not provide a reasonable basis for a financial forecast?

Answer 11

adverse

Question 12

An accountant should make the client aware that when compiling a financial projection,

Answer 12

the eng does not include an evaluation of the support for the assumptions underlying the projections

Question 13

What is the purpose of an MD&A review

Answer 13

to express negative assurance as to whether there is reason to believe:
The presentation does not include the elements required by the SEC.
The amounts are not accurately derived from FS
Underlying info does not provide a reasonable basis for the MD&A presentation

Question 14

What assertions embodies MD&A presentation

Answer 14

Occurrence
Completeness of the explanation
Consistency with FS
Presentation and Disclosure

Question 15

What type of assurance is an exam of MD&A

Answer 15

positive assurance

Question 16

What is assurance services

Answer 16

independent prof services that improve the quality or context of info for decision makers

Question 17

An examination of Internal control over fin reporting can be either

Answer 17

design effectiveness or operating effectiveness

Question 18

What are the 4 conditions that must be met for the auditor to examine internal control in an integrated audit

Answer 18

• mgmt must accept resp for the effectiveness of the entitys internal control
• mgmt must evaluate the effectiveness of the entitys internal control using suitable and available criteria
• mgmt must support its assertion about the effectiveness of the entitys internal control with sufficient approp evidence
• mgmt must provide its written assertion about the effectiveness of the entitys internal control in a report that accompanies the auditors report

Question 19

What does it take to be a covered member?

Answer 19

Partners or managers must provide ten or more hours of nonattest services

Question 20

Bill of lading

Answer 20

a detailed list of a shipment of goods in the form of a receipt given by the carrier to the person consigning the goods

Question 21

What is the purpose of tests of controls

Answer 21

to provide reasonable assurance that controls are functioning as designed

Question 22

What would most likely be included in a mgmt rep letter?

Answer 22

a confirmation that the entity has complied with contractual agreements

Question 23

What happens when the deviation rate in the auditors sample exceeds the tolerable rate

Answer 23

the auditor will assess control risk at a higher level and the pop. deviation rate will be less than the tolerable rate

Question 24

For SOC reports, whats type 1

Answer 24

report that only addresses the suitability of design

Question 25

for soc reports, whats type 2

Answer 25

report that provides info on both the suitability of design control and control operating effectiveness

Question 26

What are goods sold on consignment

Answer 26

goods are sent to an agent (consignee) who sells the goods for the consignor. the consignor cont to own the goods until they are sold, so the goods appear as inventory in the acct records of the consignor

Question 27

People that commit fraud usually have

Answer 27

incentive or pressure
opportunity
ability to rationalize

Question 28

if the A believes that the customers are not likley to respond to a confirm what type of confirm should be used

Answer 28

positive

Question 29

What is a stated control objective

Answer 29

the specific control objective identified by mgmt that if achieved, would result in the material weakness no longer existing

Question 30

Material weakness

Answer 30

a deficiency in ICFR such that there is a reasonable possibility that a material misstatement will not be prevented or detected on a timely basis. Must express an adverse opinion

Question 31

Significant deficiency

Answer 31

a deficiency in ICFR that is less severe than a material weakness, yet important enough to merit attention by those responsible

Question 32

If there is a scope limitation

Answer 32

Auditor should disclaim or withdraw