Other Services & Reports

Question 1

projections

Answer 1

Projections present future results based on hypothetical assumptions in a “what-if” scenario.

In a projection, management does not necessarily agree with the hypothetical assumptions used in the projection as they may or may not materialize. Hypothetical assumptions may be external, such as projecting the effects of a change in interest rates that may or may not occur, or internal, such as converting to a new technology. Although a projection may be used to show what management believes will occur if current trends continue into the future, that is not necessarily the case

Question 2

who signs comfort letters

Answer 2

client’s independent auditors

Question 3

whats a comfort letter. who writes it to who?

Answer 3

auditor writes to underwriter in connection w a public offering.

CPA may provide negative assurance relative to the information being in conformity with GAAP since the auditor is familiar with GAAP and is only indicating that they did not identify any discrepancies, not that there aren’t any

Question 4

yellow book audit is required to report about the entity’s internal control, where can the auditor report this?

Answer 4

-audit report on fs stmt

OR

-separate report

Question 5

when is ‘disclaimer of opinion’ appropriate?

Answer 5

if the auditor was unable to obtain sufficient appropriate audit evidence to develop an opinion

scope limitation

Question 6

nonattest engagement

Answer 6

• does not need to be independent

EX: compilation or consulting services

Question 7

auditors duty while reviewing pro forma adjustments:

Answer 7

check math

Question 8

An agreed-upon procedures report will include:

Answer 8

1. indicate that the subject matter is the responsibility of the client’s management
2. that the procedures performed were those agreed upon with the specified parties.
3. Distribution of the report is RESTRICTED to such specified parties knowledgeable about the agreement; thus, the report will include a statement indicating such specified restrictions.

DOES NOT: provide limited assurance in an agreed-upon procedures engagement; only findings will be reported.

Question 9

SSAE

Answer 9

statement on standards for attestation engagements

Question 10

agreed-upon procedures engagement is an

Answer 10

attestation engagement, and the accountant is required to be independent

The report is required to be restricted

Question 11

yellow book audit requires

Answer 11

report on the tests performed to determine compliance with laws and regulations.

Question 12

GAGAS requires reporting of

Answer 12

Direct reporting of noncompliance (illegal acts) and reporting on internal controls.

Question 13

agreed-upon procedures engagement report is required to be

Answer 13

restricted

Question 14

When an agreed-upon procedures engagement is performed in respect to prospective financial statements,

Answer 14

a summary of significant assumptions is required to be presented in the report

Question 15

when is SSAE applicable

Answer 15

SSAE apply to engagements to in which the accountant expresses a written conclusion about the reliability of a written assertion by another party

This includes examinations, reviews, or agreed-upon procedures engagements

Question 16

Statements on Auditing Standards (SAS)

Answer 16

SAS are concerned with engagements to audit historical financial statements

Question 17

Statements on Standards for Accounting and Review Services (SSARS) applies to

Answer 17

compilations, reviews, and engagements to prepare financial statements

Question 18

Statements on Standards for Consulting Services (SSCS)

Answer 18

apply to consulting engagements that do not require independence or attestation

Question 19

ethical principles

Answer 19

1. Acting with integrity,
2. acting with the public interest in mind
3. assuring proper use of government information

Question 20

Generally accepted government auditing standards (GAGAS) use which of the following terms to describe a professional requirement to comply with a standard or provide a special explanation for not doing so

Answer 20

Presumptively mandatory requirement

“should”

Question 21

Unlike GAAS, reports under GAS require the auditor to report

Answer 21

on the results of tests of controls

report on internal control
noncompliance w laws and reg

Question 22

Reporting on the examination of prospective financial statements is

Answer 22

is an attestation engagement that requires the CPA to be independent

Question 23

date of the practitioner’s report would ordinarily be

Answer 23

A practitioner’s report on the results of agreed-upon procedures is dated at completion of the agreed-upon procedures.

Question 24

The report resulting from an engagement to apply agreed-upon procedures related to the financial statements will include

Answer 24

1. accountant’s findings
2. disclaimer indicating the procedures applied may not be sufficient for the purpose intended
3. statement restricting the distribution of the report only to parties knowledgeable about the agreed-upon procedures
4. No assurance is provided.

Question 25

OMB

Answer 25

Office of Management and Budget Circular A-133

Question 26

The OMB defines a subrecipient as

Answer 26

a nonfederal entity that expends federal awards received from another entity to carry out a federal program.

Question 27

If the prescribed Audit Report form of a government agency on behalf of the client differs significantly from GAAS, the auditor may

Answer 27

1. reword the prescribed form and sign it,
2. attach a separate audit report to the form, or
3. choose not to accept the audit engagement.