Review Engagements (SSARS) M4 Flashcards

1
Q

What does a Review Report state?

A
  • “I am not aware of any material modifications that should be made to the accompanying financial statements.” (negative or limited assurance)
  • A review “includes primarily applying analytical procedures to management’s financial data and making inquiries of company management.”
  • A review “is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion.
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2
Q

What should be flagged on each page of the f/s in a review engagement?

A

Each page should be marked “See Independent Accountant’s Review Report”.

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3
Q

How should the practitioner handle a material departure from GAAP during the review of financial statements?

A
  • The accountant should recommend that the financial statements be revised to conform to generally accepted accounting principles.
  • If the financial statements are not revised, then the accountant might consider modifying the report,
    or, if modification is inadequate, withdrawing from the engagement.
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4
Q

How should the practitioner handle a scope limitation during the review of financial statements?

A

Accountants must be able to perform whatever procedures they deem necessary, and if those procedures are not accomplished, the review is incomplete. A review that is incomplete will prevent the issuance of a review report.

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5
Q

\What procedures are performed for a review?

Only available for non-issuers

A
  • No audit procedures are done.
  • A review engagement is based on inquiry and analytical procedures.
  • Inquiring about related party transactions.
  • Required to obtain a client representation letter from the owner, manager, or chief executive officer, and, if appropriate, the chief financial officer.
  • When performing a review, inquiries should be made with members of management that have direct financial and accounting responsibilities. For example,
    the inquiries would include: the accounting principles/practices used by the entity and the
    method of applying them; any unusual or complex situations that may affect the financial
    statements; material subsequent events; and, significant journal entries or adjustments.
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