other professional services Flashcards
Mill, CPA, was engaged by a group of royalty recipients to apply agreed-upon procedures to financial data supplied by Modern Co. regarding Modern’s written assertion about its compliance with contractual requirements to pay royalties.
Mill’s report on these agreed-upon procedures should contain a (an)
A. Disclaimer of opinion about the fair presentation of Modern’s financial statements.
B. List of the procedures performed (or reference thereto) and Mill’s findings.
C. Opinion about the effectiveness of Modern’s internal control activities concerning royalty payments.
D. Acknowledgment that the sufficiency of the procedures is solely Mill’s responsibility
B
Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards?
A. The attestation standards provide a framework for the attest function beyond historical financial statements.
B. The requirement that the practitioner be independent in mental attitude is omitted from the attestation standards.
C. The attestation standards do not permit an attest engagement to be part of a business acquisition study or a feasibility study.
D. None of the standards of fieldwork in generally accepted auditing standards are included in the attestation standards
A
Accepting an engagement to examine an entity’s financial projection most likely would be appropriate if the projection were to be distributed to
A. All employees who work for the entity.
B. Potential stockholders who request a prospectus or a registration statement.
C. A bank with which the entity is negotiating for a loan.
D. All stockholders of record as of the report date
C - Financial projections are prospective financial statements that present expected results given one or more hypothetical assumptions. To utilize these projections appropriately, the parties must understand the assumptions which have been made. As a result, the distribution of attestation reports related to financial projections must be limited to responsible parties and those with whom they are negotiating directly. A bank with which the entity is negotiating for a loan would be an appropriate party to receive the entity’s financial projection
